CHICAGO The U.S. recession is doing little to slow down Monsanto Co (MON.N) as farmers show willingness to pay a premium for high-tech seeds.
Despite concerns about a slowing rural economy and a downturn in major markets around the globe, the world's largest seed company is not pulling back on growth targets, Brett Begemann, executive vice president of Monsanto's global commercial business, said on Wednesday.
"We still feel really good about how our business is stacking up for this coming year," Begemann told the Reuters Food and Agriculture Summit in Chicago.
"I would never tell you that agriculture is recession-proof ... I will tell you that most people intend to continue eating," he said.
Even after price increases of 20-25 percent on some seed products, farmers are buying at a good pace ahead of the spring planting season for corn and soybeans, he said.
More than 70 percent of Monsanto's U.S. corn seed sales have been of its highest premium triple-stacked seed, which combines herbicide tolerance with traits that protect the plant from insects.
"We continue to see overall demand consistent with how we would have seen it a year ago. It's growing around the world," Begemann said.
Begemann said U.S. farmers were slower to buy seed this year than in the past, and Monsanto was expecting to see a decline in U.S. corn plantings this spring. But that would be offset by an increase in soybean acres, he said.
"Demand is still robust for those products," he said.
The global economic downturn and accompanying decline in commodity prices, along with worries about tight credit, have raised concern about farming investment.
But Begemann said there were few signs that tight credit was a serious problem for farmers.
Monsanto, which will announce second-quarter earnings on April 2, is on track for strong earnings growth over the next few years, he said.
The company is forecasting fiscal 2009 adjusted earnings of $4.40 to $4.50 a share, up from $3.64 in fiscal 2008.
Monsanto, which is based in St. Louis, Missouri, has said it expects earnings-per-share growth in both the second and third quarters to be in the 10 to 12 percent range.
A series of new products is expected to help the company offset declining revenue from its herbicide business.
This year, it will launch a new herbicide-tolerant soybean seed that enhances yields by 7 to 11 percent, Begemann said.
Next year the company plans to introduce its "SmartStax" corn product, which combines eight traits, including herbicide tolerance and insect control, into a single seed.
Monsanto is working on that with Dow AgroSciences.
Investments in vegetable seeds and sugar cane are also expected to fuel future growth as the company spends $2.6 million a day on research and development, Begemann said.
(Reporting by Carey Gillam; Editing by Ted Kerr)