China’s decision to grant approval to DowDuPont Inc’s Enlist E3 soy seeds is likely to lead to U.S. farmers opting for Enlist S3 rather than Monsanto’s Roundup Ready line of seeds since China, can easily reject shipments of unapproved varieties.
Investors and analysts view China’s approval of importing DowDuPont Inc’s genetically modified soybean as a strategic measure adopted by Beijing. As a result of this decision, U.S. farmers may no longer opt for Bayer-owned Monsanto’s Roundup Ready line of seeds since have developed higher tolerance against its chemicals.
China’s clearance could eventually see U.S. farmers planting DowDuPont’s Enlist E3 soybeans, which has been developed to resist three herbicides.
This is strategic since in 2018, China had purchased 60% of all U.S. soy exports, worth about $12 billion. With the ongoing trade war, Beijing could very well reject shipments of unapproved varieties.
Ever since the trade war started, U.S. farmers have struggled to sell their crop.
According to Michael Underhill, chief investment officer at Capital Innovations, which incidentally owns shares of DowDuPont, China’s approval of Enlist E3 soy is likely to lead to the company getting huge orders.
“When I think about how big of a deal this is, I think about the Led Zeppelin song ‘When the Levee Breaks,’” Underhill said. “Competition is going to get fierce. It forces everyone to get sharp and up their game.”
Significantly, Enlist E3 soybeans are bred to resist the herbicides glyphosate, glufosinate and 2,4-D. They will fiercely challenge Monsanto’s Roundup Ready 2 Xtend soybeans which can resist glyphosate and dicamba, which is a newer version of a chemical.
DowDuPont is happy to see that China’s regulator had approved its seed traits, said Corteva Agriscience, the agriculture unit of DowDuPont.
As per Darren Wallis, Bayer AG’s spokesman, the Roundup Ready 2 Xtend soybeans were the number one trait platform in the market.
In 2018, U.S. farmers had planted Xtend soybeans on nearly 45% of soy acres. According to Bayer, which acquired Monsanto for around $63 billion in 2018, dicamba and Xtend seeds work well to control weeds.
According to Cleveland Research Company, the Enlist platform of herbicides and chemical resistant seeds could win a comparable market share to Bayer’s Xtend platform.
“We envision Xtend’s U.S. soybean market share eroding several years out as Corteva pushes its own Enlist platform,” reads a report from Cleveland Research Company.
Enlist E3 soybeans
DowDuPont developed the Enlist E3 soybeans with a seed company called MS Technologies, said Harry Stine, the chief executive of Stine Seed who is affiliated with MS Technologies.
Enlist E3 soy is likely to be launched in the United States in 2020 since it is still to get approval from the Philippines, said Stine. He expects U.S. farmers to widely adopt it in 2020.
Significantly, Enlist E3 soy may find an opening with farmers unhappy with Bayer’s dicamba-resistant Xtend soybeans. Monsanto has already been sued by farmers who say dicamba drifts away from where it is sprayed and damages nearby fruits, vegetables and other crops that cannot tolerate the chemical.
Enlist E3 soybeans can be sprayed with an herbicide based on the chemical 2,4-D.
“It does not drift at all,” said Stine. “That’s what sets it apart from other things.”
Many U.S. farmers are looking for viable alternatives.
Richard Wilkins, a Delaware farmer who grows about 400 acres of soybeans who is also a former chairman of the American Soybean Association, has not planted Xtend soybeans since dicamba can damage nearby vegetables.
Wilkins is now looking to buy Enlist E3 and has already placed enquiries regarding its availability.
“If there are some varieties that will work on any of my farm, then I probably will give it a try,” said Wilkins with regard to Enlist E3 soy.