Monsanto, the world's leading producer of genetically engineered seed, recently promised to double crop yields in the next 20 years through use of its products. Does the science exist to support this claim? During today's OnPoint, Monsanto CEO Hugh Grant discusses the use of genetically engineered seeds to increase yields, reduce drought and fight world hunger. He responds to criticism about the negative health and environmental impacts of genetically engineered crops. Grant also gives his company's take on the food-to-fuel issue and renewable fuels mandates.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. With us today is Hugh Grant, CEO of Monsanto, an agricultural biotechnology company, and also the leading producer of genetically engineered seed. Hugh, thanks for coming on the show.
Hugh Grant: Thank you for having me.
Monica Trauzzi: Hugh, there's a lot of political talk right now about how renewable fuels mandates in the U.S. and Europe are impacting crops and food supplies around the world and whether we should be using crops at all to produce fuel. What is Monsanto's take on the issue and how can technology sort of help minimize that issue posed by a food to fuel?
Hugh Grant: Yeah, I think it's a tough choice for when you say choose food or fuel. And I think at Monsanto, as we look at this issue, the real challenge is how do you increase yields and how do you lift yields to the point where you can afford to do food and fuel and feed and fiber? So, I think the energy discussion around biofuels, whether you're in Brazil with cane ethanol, the U.S. with corn ethanol, and Europe with biodiesel from canola or soy or palm oil, I think the bigger contributory effect to the demand curves we're seeing right now is dietary shifts and a whole bunch more people eating a lot more stuff in India and in China. And ethanol contributes to that, but there's a much larger macro play here on just simply more people eating more stuff. We have to be able to satisfy both of these.
Monica Trauzzi: OK, so you're talking increase in crop yields and your company has said that you could potentially double crop yield in the next 20 years. Is the science there to back that up? How do you do that?
Hugh Grant: Yeah, the science is there so it's a lofty goal, but it isn't a moon shot. So I think, in the next 20 years, we've set a goal in corn, soy, and in cotton to double yields in those key crops that double them with a third less consumables. So, a third less water, a third less fertilizer. So I think, from a science perspective, the real trick in this is how do you double yields on this same space? So how do you double yields in exactly the same footprint and use a third less material to get there? And to your question is the science there, for us, it's better seed, improved genetics through breeding, combined with our new drought tolerant technology. So, as you double, I think the introduction of drought tolerant genes that allow a product to sip instead of gulp and later, in the next decade, better use of nitrogen. So, crops that utilize fertilizer better. They're not too far away. Those are just right around the corner.
Monica Trauzzi: And we were talking about water usage before the show and crops drinking up the water.
Hugh Grant: Yeah.
Monica Trauzzi: Where do you see that discussion going? If we don't do anything about it, where may we end up?
Hugh Grant: I think it's our next real challenge. Agriculture in the U.S. consumes 70 percent of the fresh water. We can see now the real conflict emerging between urban use of water and rural use of water. You see it in California today. So I think as we look towards stumbling yields, increasing the product in that same footprint, we need to figure out how to use less water to do that. And at Monsanto, I think in corn we're shooting for about 2012, 2013 for our first drought tolerant seeds. So it's coming soon.
Monica Trauzzi: This all sounds really good, but a lot of people are skeptical about genetically engineered seed and they're fearful about the health impacts that this may have. Is your company at all concerned? Do you feel a burden to protect the public's health as well has try to double crop yields in 20 years?
Hugh Grant: Yeah, absolutely. It's an industry, so Monsanto operates inside that industry. It's very heavily regulated. So in the U.S. its FDA, EPA, and USDA are the regulatory bodies and if we invented a new technology at the table here today it's 10 years before it's commercialized. So these are very, very thoroughly tested. They're extremely thoroughly tested both here and around the world. But it's going to take, in my opinion, it's going to take some of these technologies to unlock the opportunity of doubling yield. I don't think we're going to get there without the promise of some of these technologies in the future.
Monica Trauzzi: But are there still some unknowns about the public health impacts?
Hugh Grant: I don't think so.
Monica Trauzzi: And do we then need to choose between having a food or having food that we don't really know the impacts of?
Hugh Grant: No, I think that's another unacceptable choice. I really don't think that's the case. Let me try and put this in perspective. These crops were first launched in 1996, so we're 12 years in to the commercialization of these crops around the world. So 12 million farmers planting these crops now, a billion and a half acres have now been planted and harvested without a single issue. So I think, again, as you look to the next 20 years and you look at the demand curves, we never seen a demand like this for food since the end of the second world war. So I'm much more focused on how do you meet that demand curve with safe, healthy foods? And how do you try and satisfy that demand curve in places like India and China because we're growing that food here in the U.S. and in Brazil and Argentina. And I think these technologies have got a big part to play.
Monica Trauzzi: There's a huge focus now on organic food and organic farming. How does what you're talking about compare to that?
Hugh Grant: I think you're going to need both. I don't think it's an either/or. If you look at farming in the U.S., yields have doubled since 1960. So, from 1960 to 2000 yields have doubled and we're talking about trying to double those yields again in the next 20 years. Organic farming has struggled to keep pace with that kind of yield improvement, but I think if you set this up as an either/or then you're choosing winners and losers. And I think there's space for all these kinds of agriculture going forward. I think we'll look back on this and smile at this setup of winners and losers the way we discuss this today.
Monica Trauzzi: What's the driving business strategy here behind Monsanto? I mean you guys obviously make more money the more seeds you get out there. So is it the more hungry people you have around the world the more money you guys make?
Hugh Grant: No, I think we make -- so our business model is -- so it all starts with a teeny, tiny little seed. And our business model is based on how we deliver more yield on an acre. And these seeds, for the last 12 years, have been steadily increasing yield and, as a result of increasing yield, farmers have been buying more of those seeds. So in its simplest form you could say about Monsanto we're all about yield. If you look to a lot of hungry people around the world, and this is going to be the next five to 10 years for our contribution to this, we've recently announced that we would donate all of our new drought technologies and all of our seed know-how in collaboration with Mexican seed breeders out at the CIMMYT cert station, an African NGO funded by the Gates and Howard Buffett foundations. And specifically your question, how do you serve pieces of the world that can't afford seed today? They're still working the ancient seeds. I think the partnership mechanism of how governments, companies, philanthropic organizations, and NGOs come together is a snapshot to the future. We're going to have to figure that out I think.
Monica Trauzzi: How do you convince local farmers to try something new, to perhaps try a new farming method or use new seed types?
Hugh Grant: Yeah, farmers are innovators. So if you think about it, farmers live inside their corporation and their whole focus is transferring their wealth and transferring their lands to their sons and daughters, so their adoption of new technologies are based on small steps. So normally they'll run trials or they'll visit trials run by local government organizations. They'll try some seed in a small area of the farm, they'll measure the yields, they'll watch that, and they'll go step by step. And whether that's in Iowa, in Malawi, in southern India, in Argentina, it's exactly the same processes. It's incremental steps based on success.
Monica Trauzzi: It's no secret that Monsanto has faced a slew of criticism and some lawsuits for the projects that you've undertaken. But you guys seem to push forward full force ahead and you continue producing and doing research and development and producing new products. What's the driving force behind that and why haven't you been deterred by all these lawsuits and all this criticism?
Hugh Grant: Yeah, I think you have to balance this stuff. You can't force farmers into doing things they don't want to do. So our success is driven entirely by the productivity that we deliver to farmers. And, if you think about it, farmers make a decision every spring. So every spring they wake up and they decide what they're going to plant this year. And we compete for a share of that farmer's decisionmaking. And the reason that we've been successful is we're delivering productivity on that farm, whether you're a one acre farmer, well, actually less than an acre in India or a thousand acre farmer in Iowa. And my enthusiasm and the enthusiasm of the teams that I work with at Monsanto is seeing the leverage that we bring farmers around the world and that's pretty cool stuff.
Monica Trauzzi: All right, we're going to end it right there on that note. Thanks for coming on the show.
Hugh Grant: Thank you very much.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.