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Developing markets hungry for genetically modified crops

Here's some mixed news for anyone betting that the best solution to growing food demand is genetically modified crops: Developing economies are showing the greatest demand growth, but the biggest market is making detours around the biggest names in seed production.

Typically, genetically modified crops are those that are designed to better withstand drought and insects – and it is a big business that is growing larger with the rising global population.

However, far from being the sole domain of wealthy economies, the Financial Times reports (via the International Service for te Acquisition of Agri-Biotec Applications) that developing economies are now home to more than half of the world's genetically modified crop area.

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The overall area grew 6 per cent in 2012, but growth was led by Brazil for the fourth year in a row, where GM crop-areas grew an amazing 21 per cent over 2011. As well, Sudan and Cuba have now begun to plant GM crops – even as Europe remains largely a hold-out.

But if the embrace of GM crops by developing economies sounds appealing to investors in Monsanto Co., one of the go-to names in genetically modified seeds, here is the downside: Brazil is developing some of its own seeds, suggesting that developing economies might not be such a great market afterall.

On Tuesday, Monsanto shares sliped 1.6 per cent even as the broader S&P 500 rallied to new five-year highs. However, the shares have surged nearly 46 per cent since mid-May.

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About the Author
Investing Reporter

David Berman has been writing about business and investing since 1995. He has written for a number of magazines, including Canadian Business and MoneySense. He worked at the Financial Post as an investing writer and daily columnist before moving to the Globe and Mail in 2008. More

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