After a three-year long battle, chemicals and seed giant DuPont won control of South Africa's largest seed company, and can now more effectively challenge Monsanto's dominance of the dark continent.
DuPont's Pioneer Hi-Bred division acquired an 80% stake in South Africa's Pannar, which has a large store of maize germplasm, one of the most important crops on the continent. By acquiring the seed company, DuPont now has access to one of the largest collections of genetic resources for the crop, which gives it a powerful wedge to pry loose more of its rival's market share. Monsanto, having bought two South African seed companies years ago, Sensako and Carnia, estimates it owns half of the South African maize market.
Genetically modified maize already accounts for 75% of the crop grown there, with hybrid corn seed sales totaling about $350 million annually. Pannar is steeped in selling GM seeds licensed from Monsanto, DuPont, and Syngenta, and the acquisition was opposed by many on the grounds that it would consolidate control of a domestic food staple into the hands of just two foreign multinational corporations. That's not unlike the uproar over U.S. pork producer Smithfield Foods selling itself to a Chinese company.
Unlike the Smithfield saga, however, pork's prominence in U.S. diets is nowhere near as universal as maize is in Africa. Mealie meal, a course flour made from maize, is a food staple in South Africa, Zambia, Zimbabwe, and elsewhere.
Moreover, because Pannar controls important stores of organic and hybrid traits that have been grown and developed in Africa over long periods of time, opponents worry that seed diversity will be threatened when two companies that have an interest in spreading GM seed control what seed is available on the market.
Yet, DuPont points to the low yields farmers in Africa have achieved thus far, where 86 million acres are available for corn production, but average yields fall short from what's achieved elsewhere. Where African farmers can achieve yields averaging two tons per hectare, Brazil gets nearly seven tons, and the U.S., where 86% of the corn crop is genetically modified, boasts nearly 10 tons.
Of course, since GM maize seed has such a preponderance of the market, it's easy to question whether even more such seed will be beneficial.
It's not just South Africa where DuPont is seeking to exert its influence, because that market already enjoys an advanced network of farms; rather, it's in the developing nations such as Mozambique and Tanzania where farmers are only just starting to develop commercial agriculture that DuPont will use Pannar's reach to leapfrog over Monsanto. It will use not just maize to do so, but also sunflower, sorghum, wheat, and soybeans.
Over the past two decades, Monsanto, Syngenta, Bayer, Dow Chemical, and DuPont -- call them the five fingers of death to non-genetically modified seed -- have together purchased more than 200 seed companies, and now completely dominate the seed market.
Terms for the latest deal were not disclosed, but DuPont says it's one of the biggest such deals its Pioneer unit has ever made, and is the largest for the company in Africa. The lights for non-genetically modified seed, however, just dimmed darker on the dark continent.
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The article DuPont to Spread GM Corn Further in Africa originally appeared on Fool.com.Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.