Our Commitment to Produce More, Conserve More

Remarks by Hugh Grant, Chairman and CEO, at the Seminar on the Future of Agriculture, Columbia University, June 9, 2008

Good morning. During the coffee break someone said, ‘I’m looking forward to your pearls of wisdom.’ But you are the thought leaders. This is a diverse group in every sense of the word, and I’m hoping the pearls of wisdom emerge as a consequence to the conversations that we’ll have today.

I wanted to also recognize and thank Monsanto’s Biotechnology Advisory Council. This is the group that has delivered pearls of wisdom to Monsanto for the last seven years. And this is a homecoming week of sorts because we have many of the alums of the advisory council with us today. I’m really pleased to welcome them.

And I wanted to acknowledge Ruth Oniango, one of the founding members of the advisory council. She’s from Kenya. She’s not here today, but at a very early stage Ruth told us to demonstrate courage. And part of the reason we’re here today is her constant encouragement. So, Ruth’s with us in spirit, if not in person.

At Monsanto, a company that’s involved in agriculture, it feels as if we’re in the middle of a whole bunch of issues – water, food availability and pricing, food or fuel versus food and fuel, climate change and the impact that climate change has on agriculture as well as the potential mitigating effect that agriculture could have on climate change. And, as a backdrop to all that, habitat preservation, and how agriculture works toward improving habitat preservation.

So, we – the collective we of agriculture – are increasingly in the middle of these important intersections. Today we have the opportunity to engage in dialog on what we’re committing to doing relative to those intersections.

Before I get to the what of these commitments, let me talk about the why. As a company wholly focused and dedicated to agriculture, if you buy the rationale that agriculture’s at the intersection of so many of these points, then it’s our responsibility, a responsibility that has grown within my company over the past four or five years, particularly as we have engaged in dialog – some of it tough, often painful – with our advisory council. And that’s a dialog that’s extended to the field. It’s engaged farmers and policymakers. And it’s involved many people in this room. And that’s why I’m so encouraged to see so many of you here today. So, that’s the why.

The what? Our commitment has three parts. And they cascade. The first is that we aim to double yields in our key crops by 2030. Our key crops are corn, soybeans and cotton. It doesn’t cover rice and wheat, but I’ll come back to those a little later.

The second commitment follows from that. We’ll double yields but consume a third less resources. Those resources fall in the baskets of land, water and energy. Inside energy you have the whole derivative of fertilizer. And by doubling yields and making the commitment to be more resource efficient, there’s an opportunity to contribute significantly to habitat preservation. So, we’ll be producing more and conserving smarter.

And the third and final commitment is the algebra of “if.” If you successfully double, if you double by consuming less and preserving habitat more efficiently, then you have an opportunity of significantly contributing to improving farmers’ lives. And this commitment applies broadly to all farmers, but it will play out dramatically in smallholder agriculture.

These commitments apply to every sphere of our business, and increasingly our business will be dedicated to promoting a more sustainable agricultural model. That’s not because it’s warm and fluffy or great PR. It’s a production model that is becoming inevitable.

I’ve asked many of you, ‘What is sustainability?’ Sustainability is – in my experience – like religion or politics. Everybody’s got their own view, those views are very heartfelt, and everybody’s right. As I think about sustainability, it’s how do we produce enough? How do we produce enough food, feed, fiber and energy? How do we produce enough of those things and protect the environment and ensure that we’re maintaining perspective on habitat preservation? How do we produce more and conserve more simultaneously? Those are encompassed in my version of sustainability.

The demand curves for agriculture production are alive and well. The estimate is that by 2050 we will need to produce as much food as we did on this planet in the last 10,000 years. It’s abstract, but the need is for that kind of trajectory.

If you take something more concrete, in 1980, per capita consumption of meat in China was 20 kilograms, or about 40 pounds of meat per capita, per year. Last year it was 50. So if you think about a grain-to-meat conversion ratio of between five and eight to one, that’s somewhere between 250, 300 kilos and 400 kilos of grain per capita. If you bank on American yield levels, that’s 120 to 140 million acres of production. Or about the crop production of one America to satisfy a 50 kilogram per capita meat intake in China.

The question is how do you satisfy that demand without chopping down another tree? How do you intensify production, but in a way that maintains habitat preservation? How do you get more out of every patch of soil? How do you get more out of every unit of fertilizer? How do you get more out of every gallon of water?

This isn’t just an African conversation. Today, India, Brazil and Mexico are producing 50 bushels of corn per acre. Last year, America produced an average of 150 bushels of corn per acre. So a piece of this is access to tools, because the tools drive productivity. And the main tools that we have are breeding and biotechnology.

Today, Africa’s producing less than 25 bushels per acre of corn, in many places less than that. And yet in the First World we see yields in excess of six to eight times that. The novel thing about biotech in agriculture is that it’s scale neutral. Seeds deliver scale neutrality whether you’re a one-acre smallholder in Uganda or a 1,000-acre grower in the Mississippi Delta. And the benefits of using biotech seeds are roughly the same. That’s a unique proposition, and it also enables ancillary technologies like conservation tillage, where you can scratch the soil instead of plowing it over and unlocking much needed soil moisture.

Water is also a concern, a growing concern. The squeeze we’ve seen recently in energy, the squeeze we’ve seen in food, is the kind of squeeze we’ll see in the future with water. In fact, the water squeeze will dwarf some of the others.

Agriculture in this country gulps its way through 70 percent of the fresh available water. That leaves 30 percent for all the Coke and Pepsi, all the swimming pools, all the stuff that you wash, including yourself, and everything that you drink. But the 70 percent for agriculture here becomes 90-plus percent in Africa.

The water competition is now on between countryside and city. As of last year, there are more people living in cities than there are in rural communities. The scale has tipped in terms of who gets first call. The squeeze is on for fuel and food and water. And once again, agriculture is at the center of that squeeze.

In about five years, Monsanto will be in a position to launch the first generation of new seeds that demonstrate drought tolerance. After three years of intense field trials in America, we’re now seeing these seeds yielding eight to 10 percent more in dry land corn environments. After we launch in corn, I anticipate that the next crop will be cotton. These drought-tolerant crops have the potential to improve productivity significantly and reduce the environmental impact – an example of how you do more with less.

But the conundrum for a commercial institution is, how do you allow Africa to access these technologies? The delays that we’ve seen in the last 12 years are no longer acceptable. In fact, left to their own devices, drought-tolerant technologies would become accessible in Africa in the next 20 to 25 years based on what we’ve seen in the last dozen years with technologies used here in the United States. As a commercial institution looking forward to launching these technologies, the old world model of saying, ‘You’re African, you don’t deserve these,’ or ‘You’re African, you just have to wait,’ is bad for business. And increasingly it will become a societal prerequisite that the hierarchy of technology access is no longer tolerated.

As we roll out these technologies out in Iowa, in Missouri and Illinois, it’s our responsibility to at least ensure the choice of access in emerging economies as soon as we possibly can. We’ve been working with a broad coalition to try to ensure this, and yet today many parts of Africa remain closed and productivity continues to fall behind.

When I was at college, the big question was, ‘Can India feed itself?’ When you look at the progress in India, the debate now is when does the growth rate overtake America’s? How sustainable is this GDP expansion?

Last year I was in southern India, driving down a dusty road. There was a farmer at the end of the field row with an old wooden plow, a buffalo in front of him. And he’s taking a break. And the birds are down behind him pecking through the dusty soil. The plow is a pre-Biblical piece of equipment. He’s on a cell phone.

I was going to a farmer’s meeting. We met a couple of hundred growers in a tent in the middle of a field. Scottish guy, American company, Hindi translator. And their first question was, ‘When is drought tolerance coming?’ There’s a technology compression here. There’s no justifiable reason for what we’ve seen happening in India not at least having the option of that same thing occurring in Africa.

I don’t need to tell you about Africa. You know more than I do; many of you have been there more than I have. Half the citizens in Sub-Saharan Africa are impoverished. Estimates suggest that 70 percent of them work in agriculture, and I suspect it’s more than that. One in four are hungry, and even more are malnourished. Hunger and malnutrition undermine the quality of life and impact the efficacy of medicine. They depress the immune system and open them up to infections that shouldn’t really be considered life threatening. The challenges are huge.

Our experience there is our collaboration with the Millennium Village Project. We’ve gained better insight into how to work together. Many of you know the Malawi story. In a nutshell, it goes like this: 2004, Biblical droughts in Malawi. We mailed a million-dollar check through the World Fund food program and the Red Cross for food distribution. Pallets of food are delivered in trucks. They fall out of the belly of planes. And after the dust settled, a team at Monsanto said, ‘You know, there is another way of doing this.’ And the interesting thing for me was these were people deep in the organization that took this on themselves. This wasn’t corporate think. This was people doing smart stuff. The next year we sent seed instead of dollars, and we started building up experience on white corn, hybrid white corn. Yields increased by 50 percent to above 32 bushels per acre.

But, here’s the interesting thing. A ton of grain delivered to a village in Malawi back then cost about $400. It fed a family of six for a year. To grow the same ton of grain using a handful of seeds and a splash of fertilizer costs about 40 bucks. Both costs have probably doubled since then, but the leverage is the same at about 10X. And in the business world, you don’t see 10X leverages very often. And what happened in Malawi? They moved from being a recipient of aid to a supplier of grain.

And the bitter irony of Malawi grain flowing into Zimbabwe is only trumped by Malawi selling grain to the World Food program. That’s extraordinary. That’s not a Monsanto story. That’s a story of collaboration, a lucky break in weather, and giving smart farmers the tools to succeed. It’s impressive, but it doesn’t change Africans’ fate until more is done and until there’s a scalability factor in taking this and doing it on a much larger stage. But the bottom line is driven by better seed. And if you’ve got decent genetics in your seed, you can start this process.

Across Africa, there are still gigantic roadblocks. One that really stops us is how do you get a regulatory architecture in place to start field trials? How do you do a trial to test the seed in African soil? Regardless of biotech’s role in this, we continue to be committed to the Millennium Village Project and linking seed hybrids to tools to African villagers. Hybrid seed has been around in France and in the Midwest of America for 60 years. How can you tell people they don’t deserve the tools that have been in other places for 60 years?

Success at the grass roots level has as much to do with durable relationships as it does with brilliant science. The relationships, the linkages and the networks that we’ve built are the leverage that will advance this.

In four or five years, I can see drought-tolerant seeds being available in the United States. I can see nitrogen-efficient seeds being available a little bit after that. And the responsibility that we have is narrowing the gap of time when they become available in other parts of the world. Monsanto has a part to play, but we can’t do it on our own.

Skeptics would say that business has no part in this. Well, maybe the checks from business are interesting, but mail the checks and don’t come yourself. Skepticism is a corrosive commodity that Africa can afford less and less. And the Old World order of ‘You’re wrong, I’m right,’ is an unfortunate model. It reminds me of one of my colleagues definition of futility, where you keep executing the same behavior and hope for a different outcome. The way forward is to try to behave differently. We need to move forward as partners, or we continue to cast stones and pretend that we can do it on our own.

But the track record for governments, for NGOs, or for companies has not been stellar. In March, we were proud to enter into a collaboration. And I’m really pleased to see Mpoko Bokanga of AATF here today, because the partnership that was formed, the Water Efficient Maize for Africa, I hope in years to come, will provide drought-tolerant tools to smallholders growing white maize in sub-Saharan Africa. It’s a partnership with AATF, with the International Maize and Wheat Improvement Center (CIMMYT) out of Mexico, with four national research centers, and Monsanto. The goal is to provide drought tolerance on a royalty-free basis, which will stabilize yields as it lifts yields to higher levels. The project is funded by the Bill and Melinda Gates Foundation and by Howard Buffet’s foundation. It’s the first major partnership that we’ve entered into like this, and I hope, not the last.

I talked earlier about our commitments in doubling corn, soy and cotton yields. But we don’t do wheat and we don’t do rice. When you look see the photographs of food riots and people fighting for a bag of rice or wheat, it’s horrific. At the same time, governments are investing less in agriculture. We decided that we would prime the pump. We will set up a $10 million yield prize that focuses specifically on rice and wheat yields because they’re increasingly becoming orphan crops. If you look at the yield trajectories in wheat and particularly in rice, there needs to be more public sector reinvestment and basic research. I hope that NGOs, governments and our colleagues in the corporate sector will dive in to this arena as well.

In summary, demand is on the rise. We haven’t seen anything close to this since American ships were crossing the Atlantic to feed a war-torn Europe. This is an unusual period for all of us. But it’s not a function of getting old; it’s a change. And it’s a change, not only because people are eating differently, but also because we had a dry couple of years in Australia and because we’re seeing some product flowing into biofuels.

In this period of change there is some hope. And my hope will come as a consequence of field trials getting started and the first drought-tolerant crops being tested in African soil. It will take six to eight years. Until you plant the first seed, you don’t begin. So, in agriculture as well as being at the intersection of many things, we seem to have a monopoly in rhetoric. With every spring that passes, another opportunity passes in starting field trials. I hope that soon we’ll have a chance to look back and think of this time today when we actually pressed the button and started solid research.

Demand will continue. But we have a choice in agriculture. The choice for us is whether we continue to preserve – or waste – important natural resources. Because there is an absolute need for yields to double. So it’s not a “what,” it’s the “how” we do it. And the how starts in the Midwest of America, and it needs to wash through in Brazil, India and Mexico. And eventually, it will lead to a field in Malawi. For governments, for NGOs, for companies like mine, we have to figure out how to work better together. As Ruth Oniango told me, we need to show more courage. I can tell you for this company, as long as I’m here, we’ve made that choice. I stand ready, as we all do at Monsanto, to do our part and work with you.