Monsanto buys stake in Australian wheat breeder

* Acquires 19.9 percent interest

* Hopes to introduce biotech wheat in next decade

KANSAS CITY, Aug 26 (Reuters) - Monsanto Co MON.N has acquired a 19.9 percent minority interest in InterGrain Pty Ltd, an Australian cereal breeder, in its effort to bring biotech wheat to world markets, the company said on Thursday.

The stake is part of a collaboration agreement that includes the exchange of wheat germplasm for breeding aimed at developing wheat varieties with improved yield performance, enhanced disease resistance and drought tolerance, as well as improved end use qualities, the companies said.

InterGrain is a 3-year-old breeding company focused on wheat and barley that was established by the state government of Western Australia and the Grains Research and Development Corp (GRDC).

Australia, like the United States, is a major wheat producer and exporter.

“We are committed to developing advances in breeding and biotechnology to deliver improved wheat yield and productivity,” said Monsanto Chief Technology Officer Rob Fraley.

Monsanto is hoping to introduce what would be the world’s first biotech wheat in the next decade.

St. Louis, Missouri-based Monsanto is already a leading developer of corn and soybeans genetically altered to tolerate herbicide treatments and resist pests, and had hoped to commercialize an herbicide-tolerant “Roundup Ready” spring wheat in 2004. But industry opposition forced the company to shelve the plan.

Now Monsanto is focused on a drought-tolerant and higher-yielding wheat which will be more appealing to farmers. The company has also been working to overcome critics who fear that biotech wheat could curtail exports to countries where consumers are suspicious of genetically engineered foods.

Shares in Monsanto edged up 34 cents at $56.20 in morning trading on the New York Stock Exchange. (Reporting by Carey Gillam; editing by Jim Marshall)