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A New Monsanto Company (MON) Growth Initiative Sprouts Up

Thanks to the Environmental Protection Agency, you can now eat more of Monsanto Company (NYSE:MON)‘s herbicide Roundup in your food.

Because there wasn’t anywhere near as much coverage as there was for President Obama signing into law the so-called “Monsanto Company (NYSE:MON) Protection Act” — which prohibits federal courts from halting the sale of genetically modified or engineered seeds — the decision by the regulatory agency to increase the acceptable level of pesticides permitted on food crops went through without much of a fight (though the EPA received nearly 11,000 public comments opposing the move).

Monsanto Company (NYSE:MON)What it means is that Roundup will become an even larger profit center for the chemicals giant. Monsanto Company (NYSE:MON)’s agricultural productivity segment generated $1.2 billion last quarter, driven primarily by sales of its glysophate-based herbicide Roundup to farmers and a smaller portion to consumers, which is handled by Scotts Miracle-Gro Co (NYSE:SMG). Sales have risen 24% over the first nine months of the fiscal year, only a small portion of which is because of higher prices.

Roundup remains the largest crop protection brand globally, and because it genetically modifies seeds to survive an application of the herbicide, Monsanto Company (NYSE:MON) has oriented the focus of its crop protection business to support Roundup Ready crops sold to farmers. Buy seeds that can withstand Roundup, sell more Roundup to spray on crops.

A byproduct of this symbiotic relationship, though, is the creation of superweeds, weeds that have developed a tolerance to the herbicide and are spreading across farmland, impervious to man and machine. Because farmers who grow GM crops typically use 25% more herbicide, not less, than those who grow traditional seeds, the weeds are developing a thirst for it.

Yet it’s not just weeds that are growing resistant. Bugs, too, have become immune to the chemicals. Monsanto Company (NYSE:MON)’s GM corn, for example, was molecularly modified to kill pests like rootworm, but they’re making a comeback even as GM corn accounts for 86% of the country’s supply. Now we’ve got superinsects, too!

Just as Monsanto Company (NYSE:MON) is enjoying a surge in sales of Roundup, pesticide makers are witnessing greater sales of pesticides to combat these superbugs. Revenues at Sygenta rose 1.5% to $4.2 billion, FMC Corp (NYSE:FMC)‘s sales were 5% higher, and American Vanguard Corp. (NYSE:AVD)‘s surged 39% last quarter. The three companies account for three-quarters of all ground pesticides sold in the United States.

The greater use of pesticides may also be harming the honeybee population, as a nexus is being formed between colony collapse disorder and the role of neonicotinoids made by Syngenta, Bayer, and The Dow Chemical Company (NYSE:DOW) play.

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