A company driven by the desire to improve global sustainability, Monsanto India is not only helping the farmers in the country increase their yield but simultaneously educating them about practices that help improve their lives. Recognizing the immense business potential in India with 25 percent of world’s cotton fields and combining this with its breakthrough research in Bt gene (bacillus thuringiensis), Monsanto has helped millions of farmers live a more prosperous and healthier life.
Innovation
In spite of the fact that local Indian farmers plant more acres of cotton than in any other country in the world, their average yield was among the lowest. The major reason for this dismal yield was that insects, particularly bollworm, cut their useable cotton yield by half, forcing the farmers to spray insecticides liberally in the hope of increasing their return. The consequence was poor crops, unhealthy working conditions, and hence a low standard of living for these millions of farmers and their families.
Understanding this omnipresent problem, in 1996 Monsanto embarked on the project to introduce a cotton seed with Bt gene specifically designed to protect cotton against bollworms. The road was long and required partnerships and approvals from various stakeholders. As a chemical company, Monsanto already had a presence in India since 1949. To introduce this variety of seed, it entered into a joint venture with an Indian seed company called Maharashtra Hybrid Seeds Co. Ltd., creating Mahyco-Monsanto Biotech, or MMB. The new technology entered a six-year testing and review period by India’s Genetic Engineering Approval Committee comprising of representatives from four different ministries, including Health, Agriculture, Environment & Forests, Science & Technology. The government was especially careful in their review because this was the first biotech agricultural product to go through the regulatory process, and opposition had arisen in other parts of the world.
While the regulatory review was in progress, Monsanto began to ramp up, growing their Indian operations from 40 to 400 people. In consonance with its philosophy of improving health of the farmers, the company launched an initiative to educate them about safety. This was done by making the vehicles safe, providing boots to guard against snakes and the use of protective gear when spraying. To overcome the ignorance borne of rampant illiteracy, the company held meetings, provided demonstrations, and helped the farmers understand what they could expect in the future once the Bt gene cotton seed was introduced. The idea was to create a mutually beneficial and long-term relationship that did not stop at the sale of the product. These efforts helped in establishing positive reputation for the company amongst the farmers and other stakeholders. The product, Bollgard, received regulatory approval in 2002. MMB has subsequently licensed the technology to 20 other Indian companies, and 60 Bt seed hybrids have now been approved in India.
Impact
In its first year on the market, 50,000 Indian farmers planted Bollgard cotton. That number tripled by the second year, and by the third year, 350,000 farmers had planted Bollgard cotton. Adoption continues to grow, with the number of Bollgard acres planted tripling again this past season. In an extensive 2005 survey, farmers planting Bollgard cotton reported that they spent an average of 25% less on pesticide spraying, saw an average 64% increase in their cotton yield, and experienced an average of $330 net profit growth per hectare of plantation.
As a result of the increased yield and good agriculture practices, prosperity flowed into the lives of many. Farmers could clear debts, improve their housing and purchase vehicles. The improved standard of living has percolated into the community with more children going to school, increasing the hope of higher literacy levels. A study by the University of Reading, reported that hospitals recorded a dramatic drop in spraying-related illnesses. Since most Indian farmers use no protective gear when they spray, the technology in the Bollgard cotton that reduces use of insecticides and increases farmers’ profits has the potential to positively impact the lives of more than 4 million Indian farmers.
As for the profitability of the company, though financial information specific to Bollgard cotton in India is not publicly available, the company has witnessed overall growth at a dizzying pace. Profit After Tax (PAT) during the quarter (Q3 2007) increased 25% over the corresponding period last year. The Net Sales for the nine month period ended December 31, 2007 were up 9% vs. the corresponding period last year.
Inspiration
With burgeoning population and limited farmland in India, the only way to self-sufficiency is to increase the yield of the existing farms. A sensitivity toward the conditions of Indian farmers in terms of small size of the farms was evident in the technology that was built into the seed making it size-neutral and hence appropriate for the farmers.
Entering the Indian market with Bollgard was a sound business decision as India represents the largest cotton acreage in the world, and with the social challenges described above, it was an ideal opportunity to introduce a technology that would improve their economics as well as decrease health and environmental risks associated with insecticide spraying. Once the business decision was made, Monsanto focused on acting in a responsible way to improve the local communities. Local operations have lived up to the commitment of creating healthier communities by conducting programs such as providing veterinary care to farm animals and inoculating children against disease. The hope for the future is to continue to create more export opportunity, extend the application of the technology to more crops, and elevate the standard of living of the local population. Because of the changes brought about by Monsanto’s keen business acumen, high quality research and determination to equip millions of small farmers with the potential to bring prosperity in their lives, it may well be applauded for turning the tide of a country.
The World Inquiry editorial team edited this profile from the original submission of the interviewer or other source. The views expressed do not necessarily represent Case Western Reserve University, the Weatherhead School of Management or the Center for Business as an Agent of World Benefit. More >>
