How Much Money Does Monsanto Make From Roundup?


USDA-NASS Agricultural Chemical Use Survey data. Image source: Dr. Andrew Kniss .

Of course, the chart above also demonstrates spectacular growth in the use of glyphosate. That means Monsanto must be making money hand over fist from Roundup, right?

By the numbers

The latest full-year financial data submitted by Monsanto to the SEC is for the fiscal year ending August 2015. The company reports operational performance in two segments: seeds and genomics, and agricultural productivity. The former comprises seed sales and revenue earned from licensing genetic traits, while the latter comprises herbicide sales. Here's how revenue was split between the two segments in 2015:

Data source: SEC filings .

As you can see, Monsanto generates substantially more revenue from selling seeds and licensing genetic traits than from selling glyphosate herbicides. The relative importance of each segment holds when one considers gross profits, which are even more heavily skewed in favor of seeds and genomics:

Data source: SEC filings .

These data reflect the fact that Monsanto is only one of dozens of glyphosate manufacturers, most of which reside in China. Additionally, while $4.76 billion in annual sales is significant, in recent years the company has strategically focused on branded products with higher premiums than generic counterparts. In other words, margins are more important than volume, which means Monsanto's market share in terms of revenue is larger than its market share in terms of sheer volume of glyphosate produced.

While the company realizes that future growth will be driven by advances in its seeds and genomics segment, it is also investing nearly $1 billion in a manufacturing facility for dicamba, another widely used herbicide. The manufacturing facility will support the launch of a next-generation genetic trait -- Roundup Ready 2 Xtend -- that allows crops to tolerate both glyphosate and dicamba. The effort is aimed at combating weeds that are growing more resistant to glyphosate, but is likely to attract even more criticism from those wary of agricultural chemical use.

What it means

How much money does Monsanto make from Roundup? In 2015, the company made nearly $4.76 billion in sales and $1.9 billion in gross profits from herbicide products, mostly Roundup. That represents a significant portion of the global glyphosate market, although the company will continue to lose market share to generic competitors as demand grows. Therefore, as far as Monsanto is concerned, the road to the future will be paved with seeds and genomics products, not chemical herbicides.

Something big just happened

I don't know about you, but I always pay attention when one of the best growth investors in the world gives me a stock tip. Motley Fool co-founder David Gardner (whose growth-stock newsletter was the best performing in the U.S. as reported by The Wall Street Journal)* and his brother, Motley Fool CEO Tom Gardner, just revealed two brand new stock recommendations. Together, they've tripled the stock market's return over the last 13 years. And while timing isn't everything, the history of Tom and David's stock picks shows that it pays to get in early on their ideas.

Click here to be among the first people to hear about David and Tom's newest stock recommendations.

*"Look Who's on Top Now" appeared in The Wall Street Journal in Aug. 2013, which references Hulbert's rankings of the best performing stock picking newsletters over a 5-year period from 2008-2013.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.