A battle is heating up between Monsanto (NYSE:MON) and DuPont (NYSE:DD) concerning genetically modified seed, and it not only involves prices, which have been fallen, but the number of traits the seeds offer to farmers.
DuPont has been positioning itself on the lower end, as farmers have been complaining for some time about the high price of Monsanto's seed, as prices had been depressed for a couple of years on their agricultural products.
Farmers weren't as concerned when crop prices had surged, but when profits started to fall, pricing on seed became a big factor.
DuPont challenged Monsanto with their seed with more traits, by going directly to the farmers and asking the question of whether they needed "Triple Stacks," referring to competing seeds from Monsanto.
The question planted doubt in the mind of farmers, and they responded by buying up the lower-tech corn of DuPont via their Pioneer unit, which are less expensive and only carry two genetic traits or less.
Realizing they couldn't compete on traits, DuPont went the pricing direction, which Monsanto handed them by increasing prices on new seeds to a level which opened the door to other options, which benefited DuPont.
After the newest seed products offered by Monsanto fell well short of estimates sales, they had to drastically cut their Roundup Ready 2 seeds by 75 percent, and the Smartstax seeds by 67 percent in order to get farmers to try them out.
Short term, DuPont has won this battle, but as food prices rice again, then farmers may not be as hesitant to pay better prices for Monsanto seeds, and may start considering the traits offered by Monsanto rather than the lower prices of DuPont.
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