{"id":24413,"date":"2017-11-15T17:52:36","date_gmt":"2017-11-15T22:52:36","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/how-monsanto-is-weathering-climate-change\/"},"modified":"2017-11-15T17:52:36","modified_gmt":"2017-11-15T22:52:36","slug":"how-monsanto-is-weathering-climate-change","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/how-monsanto-is-weathering-climate-change\/","title":{"rendered":"How Monsanto Is Weathering Climate Change"},"content":{"rendered":"

As a company focused on improving farmers\u2019 yields through agricultural biotechnology, Monsanto is uniquely positioned in the face of more volatile weather patterns caused by climate change. Perhaps most commonly associated with developing genetically modified seeds, Monsanto has extensive reach in agriculture – approximately 80% of U.S. corn and more than 90% of U.S. soybeans were grown with Monsanto seed technology as of 2014.[1]<\/a> With this scale, Monsanto\u2019s ability to direct its research and development capacities to develop seeds which can thrive in more extreme weather conditions holds considerable promise. On the other hand, its supply chain stands to be negatively affected by climate change.<\/p>\n

At first glance, it may seem counter intuitive to link volatile weather to Monsanto\u2019s supply chain management. In actuality, they are closely connected. The timing and composition of what farmers choose to order from distributors of Monsanto seed are tied to the weather.[2]<\/a> Since many of its products are produced in advance of a given growing season, Monsanto has to rely on early forecasts which are variable and not necessarily accurate.[3]<\/a> Increasing uncertainty in the weather due to climate change compounds this complexity and the uncertainty of the forecasting process. In light of this, Monsanto stands to mitigate risk by tackling this issue head on.<\/p>\n

In response to the threat of climate change, Monsanto has taken several steps. In addition to setting a goal of becoming carbon neutral by 2021, Monsanto also acquired Climate Corp, a company dedicated to supplying farmers with better weather and agricultural predictions, for $930 million in 2013.[4]<\/a>,[5]<\/a><\/sup> The acquisition of Climate Corp results in a win-win situation for both farmers and Monsanto: farmers are able to make more informed decisions in the face of increasingly volatile weather patterns, and Monsanto gains access to real-time, highly granular data that can inform both its future research and improve its supply chain management. As Doug Gurian-Sherman of the Union of Concerned Scientists in Washington, DC, said: \u201cMonsanto and other companies face a problem with the need for farmers to purchase seed well before they will know whether the expensive engineered traits will be needed\u2026it would be very helpful to be able to have some prediction of the likelihood of drought at the time of seed purchase.\u201d[6]<\/a><\/p>\n

In the short term, Monsanto continues to expand the reach of Climate Corp, announcing just days ago that the platform would be expanded to certain regions of Europe for the 2018 growing season.[7]<\/a> Over the medium term, Monsanto seeks to make this technology a platform that other farm supply companies can use to provide services to farmers.[8]<\/a> Monsanto can further focus on making this a more significant revenue driver for the company, as the investment has had limited returns thus far.[9]<\/a><\/p>\n

Beyond just mitigating the negative effects of volatile weather patterns through data science, Monsanto should also consider the opportunities climate change presents given its agricultural biotechnology focus. As shown below in Exhibit 1, climate change stands to substantially decrease yields in the future. [10]<\/a> Going forward, Monsanto should investigate how different geographies will evolve due to climate change and subsequently devote research and development funds to developing seeds specifically for these new conditions. Monsanto is in a unique position to leverage its research and development capacities to address these urgent needs.<\/p>\n

Exhibit 1:<\/strong>[11]<\/strong><\/a><\/p>\n

\"\"<\/a><\/p>\n

Additionally, Monsanto should consider the implications of scaling its supply chain to meet increased demand. The United Nations\u2019 Food and Agriculture Organization estimates that the level of food production must double to feed a projected population of 9.7 billion by 2050, even as climate change impacts weather patterns.[12]<\/a> Monsanto could either approach this from the perspective of scaling production to meet increased demand or investing more heavily in research and development to produce even higher yielding seeds.<\/p>\n

Lastly, Monsanto can further seek to mitigate its supply chain risk by contributing more actively to combating climate change. While committing to being carbon neutral is certainly a step in the right direction, Monsanto could invest further in fighting deforestation, for example, which is a significant driver of climate change.[13]<\/a><\/p>\n

Even with these challenges and opportunities, open questions for Monsanto remain. Monsanto\u2019s push into data science is enhancing its supply chain management in the face of climate change, but is it moving the company too far away from its core competency as an agricultural biotechnology company? Additionally, Monsanto is viewed controversially due to debate around genetically modified versus organically produced foods.[14]<\/a> Does this controversy hurt Monsanto\u2019s ability to achieve its mission of \u201c[f]eeding the world through math\u201d in response to climate change?[15]<\/a><\/p>\n

(756 words)<\/p>\n

[1]<\/a> Dan Mitchell, \u201cWhy Monsanto always wins,\u201d Fortune, June 26, 2014, http:\/\/fortune.com\/2014\/06\/26\/monsanto-gmo-crops\/, accessed November 2017.<\/p>\n

[2]<\/a> Stephen Graves, Cristian Gutierrez, Mitchell Pulwer, Herpaul Sidhu, and Gary Weihs, \u201cOptimizing Monsanto\u2019s Supply Chain Under Uncertain Demand\u201d (paper, Massachusetts Institute of Technology and Monsanto, October 1996), http:\/\/web.mit.edu\/sgraves\/www\/resume\/index.htm, accessed November 2017.<\/p>\n

[3]<\/a> Stephen Graves, Cristian Gutierrez, Mitchell Pulwer, Herpaul Sidhu, and Gary Weihs, \u201cOptimizing Monsanto\u2019s Supply Chain Under Uncertain Demand\u201d (paper, Massachusetts Institute of Technology and Monsanto, October 1996), http:\/\/web.mit.edu\/sgraves\/www\/resume\/index.htm, accessed November 2017.<\/p>\n

[4]<\/a> Monsanto, \u201cTackling Climate Change,\u201d https:\/\/monsanto.com\/company\/sustainability\/climate-change\/, accessed November 2017.<\/p>\n

[5]<\/a> Alexia Tsotsis, \u201cMonsanto Buys Weather Big Data Company Climate Corporation For Around $1.1B,\u201d Techcrunch, October 2, 2013, https:\/\/techcrunch.com\/2013\/10\/02\/monsanto-acquires-weather-big-data-company-climate-corporation-for-930m\/, accessed November 2017.<\/p>\n

[6]<\/a> Jeffrey Fox, \u201cMonsanto buys Climate Corporation for $1.1 billion,\u201d Nature Biotechnology<\/em> 31, 1064 (2013), Nature Publishing Group via HOLLIS+, accessed November 2017.<\/p>\n

[7]<\/a> \u201cThe Climate Corporation Expands Its Industry-Leading, Global Digital Agriculture Platform into Europe,\u201d The Climate Corporation press release (November 13, 2017).<\/p>\n

[8]<\/a> Jacob Bunge, \u201cMonsanto to Expand Computerized Farming Effort,\u201d The Wall Street Journal, August 17, 2016, https:\/\/www.wsj.com\/articles\/monsanto-to-expand-computerized-farming-effort-1471410064, accessed November 2017.<\/p>\n

[9]<\/a> Jacob Bunge, \u201cMonsanto to Expand Computerized Farming Effort,\u201d The Wall Street Journal, August 17, 2016, https:\/\/www.wsj.com\/articles\/monsanto-to-expand-computerized-farming-effort-1471410064, accessed November 2017.<\/p>\n

[10]<\/a> Beth Kowitt, \u201cThe Paradox of American Farmers and Climate Change,\u201d Fortune, June 29, 2016, http:\/\/fortune.com\/2016\/06\/29\/monsanto-farmers-climate-change\/, accessed November 2017.<\/p>\n

[11]<\/a> Beth Kowitt, \u201cThe Paradox of American Farmers and Climate Change,\u201d Fortune, June 29, 2016, http:\/\/fortune.com\/2016\/06\/29\/monsanto-farmers-climate-change\/, accessed November 2017.<\/p>\n

[12]<\/a> Beth Kowitt, \u201cCan Monsanto Save the Planet?\u201d Fortune, June 6, 2016, http:\/\/fortune.com\/monsanto-fortune-500-gmo-foods\/, accessed November 2017.<\/p>\n

[13]<\/a> Roddy Scheer and Doug Moss, \u201cDeforestation and Its Extreme Effect on Global Warming,\u201d Scientific American, https:\/\/www.scientificamerican.com\/article\/deforestation-and-global-warming\/, accessed November 2017.<\/p>\n

[14]<\/a> Beth Kowitt, \u201cCan Monsanto Save the Planet?\u201d Fortune, June 6, 2016, http:\/\/fortune.com\/monsanto-fortune-500-gmo-foods\/, accessed November 2017.<\/p>\n

[15]<\/a> Beth Kowitt, \u201cCan Monsanto Save the Planet?\u201d Fortune, June 6, 2016, http:\/\/fortune.com\/monsanto-fortune-500-gmo-foods\/, accessed November 2017.<\/p>\n","protected":false},"excerpt":{"rendered":"

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