The U.S. Department of Agriculture (USDA) recently indicated
towards potentially approving
The Dow Chemical Company's
) Enlist corn and soybean seed varieties after having completed an
assessment of their environmental impact. The final regulatory
decision is expected to come out once the public review and
feedback process of the "Draft Environmental Impact Statement"
(DEIS) published by the government body is complete.
Dow's 'Enlist' labeled seeds are a part of the advanced weed
control system developed by it, that are genetically modified to
tolerate the application of more effective herbicides as weeds in
the U.S. are growing increasingly resistant to the glyphosate-based
herbicides most commonly used today.
Regulatory approvals have held back the commercialization of
these seeds as well as the associated herbicide developed by Dow.
However, the company now expects to launch the advanced corn and
soybean seed varieties in the U.S. by 2015, after a delay of almost
two years. We believe that timely regulatory approvals for the
Enlist weed control system could potentially boost Dow's market
share in the robust agricultural products market significantly.
See Our Complete Analysis For Dow
What Is The Enlist Weed Control System?
The Enlist Weed Control system includes seeds that are
genetically modified to tolerate the new herbicide from Dow, Enlist
Duo. This herbicide contains 2,4-D that adds another mode of action
to the glyphosate-based herbicides. The technology aims at
providing higher crop yields through better protection against
tougher weeds, which are growing resistant to the glyphosate.
Commercial application of the system requires both the new seed
traits as well as the new herbicide to be approved by the
What's Driving The Use of Herbicide Tolerant
Weeds pose several problems to farmers as they not only compete
with planted crops for sunlight, soil nutrients and water, but also
give shelter to pests that can harm the crop. These problems reduce
crop yield significantly. Earlier, farmers tackled weeds primarily
by tilling the fields before planting the crop. However, due to
many economic disadvantages of tilling,
no-till farming techniques
started gaining momentum during later half of the 20
In 1996, Monsanto introduced the most successful and widely
adopted technique in the form of Roundup Ready weed control system.
It comprised of seeds that were genetically altered to tolerate
glyphosate-based herbicides. Modified genetics ensured that the
glyphosate-based herbicides, which were effective on a broad
spectrum of weeds, did not harm the crop. Since then, herbicide
tolerant crops have significantly driven the global market for
genetically modified (
) crops. Today, these crops occupy more than 60% of the total area
covered by GM crops globally.
The Growing Need For Improved Technology
With weeds growing increasingly resistant to the
glyphosate-based herbicides, there is a growing need for a more
effective herbicide tolerant weed control system in order to
sustain and further enhance crop yields. According to a
third-party research conducted by Dow, cropland acres with weeds
resistant to the glyphosate-based herbicides increased around 50%
in 2012 alone and around 80% over the last two years, to reach over
65 million acres.
Because of the sheer size of the herbicide tolerant crops
market, a successful commercial launch that can potentially replace
the widely used Roundup Ready system can boost Dow's share in the
GM seeds market significantly. Moreover, the fact that Monsanto was
the first one to get a license to the Enlist herbicide tolerant
trait from Dow, indicates that the technology has a huge potential
to capture the fast-growing GM seed market. (See: Dow And
Monsanto Deal Sets The Stage For Next Generation Of GM Seeds
Competition, Opposition And Regulatory Hurdles
In terms of competition, Monsanto, the leader in GM seeds market
has developed another herbicide tolerant system called the Roundup
Ready Xtend Crop system, which uses the new Roundup Xtend
herbicide. The Roundup Xtend herbicide adds dicamba as an
alternate action to the glyphosate-based Roundup herbicide. This
herbicide will have to be used with Roundup Ready Xtend seeds that
can tolerate the application of dicamba as well as glyphosate.
There is considerable opposition against the use of both these
weed control systems. In the case of Dow's Enlist system, primary
concerns are associated with its potential harmful impact on
specialty crops that are not genetically modified to tolerate the
inadvertent application of 2,4-D chemical used in the Enlist Duo
herbicide, due to its volatile nature and 'drift'. There are a lot
of health concerns related to the use of Enlist GMO crops as
well. These issues just add on to the ongoing protests against all
the GMO crops with growing noise around labeling of all food
items derived from these crops.
This opposition is also leading to extended reviews by the
regulatory authority in the U.S. In May last year, the USDA
extended its review of both, Dow's Enlist corn as well as
Monsanto's Roundup Ready Xtend soybean. Dow initially planned to
launch its Enlist corn for the 2013 planting season, which has now
been delayed by almost two years. Although the company has received
regulatory approvals necessary for launching its Enlist seeds and
herbicide in Canada, pending USDA approvals are delaying the launch
of these products there as well.
What Does It Mean For Dow?
We believe that the Enlist weed control system is a very potent
product for Dow, as a successful commercial launch after it gets
all the regulatory approvals, could result in incremental revenues
for the company in more than one ways. Firstly, it would mean
higher seed revenues for the company primarily driven by the
growing market need for better crop protection against
"superweeds". Secondly, the Enlist Duo herbicide, which the company
claims has been engineered to minimize the harmful effects
associated with the use of 2,4-D chemical, would also boost its
crop protection sales. Thirdly, it would enable the addition of a
proven weed resistance technology to the stacked trait combination
in the next generation SmartStax, which would further bolster seed
revenues. Lastly, it would also generate higher licensing revenues
for Dow, as more and more seed companies would want to sell a
successful technology to their customers.
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