Seed giant Monsanto faces dropping stock price and problems with some new products

This year hasn't been kind to seed-giant Monsanto, which has seen its stock drop about 42 percent since the beginning of the year. "The giant of agricultural biotechnology has been buffeted by setbacks this year that have prompted analysts to question whether its winning streak from creating ever more expensive genetically engineered crops is coming to an end," Andrew Pollack of The New York Times reports. The company's stock, which peaked at $145 a share in mid 2008, closed at $47.77 a share on Monday.

Dropping stock prices haven't been the only problem for Monsanto as the company faces disappointing returns from a couple of new products. Last week the company learned its newest product, "SmartStax corn, which contains an unprecedented eight inserted genes, was providing yields no higher than the company’s less expensive corn that contains only three foreign genes," Pollack writes. "Monsanto has already been forced to sharply cut prices on SmartStax and on its newest soybean seeds, called Roundup Ready 2 Yield, as sales fell below projections." The company also faces an antitrust investigation from the Justice Department and growing reports of Roundup resistant weeds.

Additionally, sales of Monsanto’s Roundup are down this year under an onslaught of low-priced generics made in China, Pollack reports. "My personal view is that they overplayed their hand," William R. Young, managing director of ChemSpeak and a consultant to investors in the chemical industry, said of Monsanto. "They are going to have to demonstrate to the farmer the advantage of their products."

Brett D. Begemann, Monsanto's executive vice president for seeds and traits, said the company is already making changes under the advice of farmers, including changing the pricing formula for the company's newer products. "Technologically, they are still the market leader," Laurence Alexander, an analyst at Jefferies & Company, told Pollack. "The main issue going forward is do they get paid for the technology they deliver. The jury is still out on that one. It’s going to take a year or two of data to reassure people." (Read more)