In 2006, Brazil had over the past 15 years become one of the world’s most important agricultural suppliers, developing key export positions in soybeans and soymeal, sugar, and ethanol, as well as beef, poultry, and pork. In October 2006 Monsanto’s CEO, Jerry Steiner, prepared a recommendation to provide to the executives and the CEO, Hugh Grant for the firm’s research and commercial strategy for Brazil.
With an initial introduction in 1997, Monsanto’s soybeans were continually grown extensively in Brazil with many bumps on the road. Farmers found considerable cost advantages with using ‘Roundup’ soybeans that were smuggled across the border from neighboring Argentina. Roundup is a broad-spectrum herbicide sprayed on fields before or after harvest to kill weeds which Monsanto introduced in 1974. As a result, Monsanto devised an innovative program for the 2003-2004 harvest which used a point-of-delivery (POD) system. In this system, growers paid a post-harvest fee for those soybeans grown from seeds for which royalties had not been paid. Although there were initial concerns by farmers and grain companies, the system worked smoothly, with over 97% of farmers “self-declaring” their use of Roundup soybeans.
Due to the fact that Roundup is a non-selective herbicide, it cannot be used once the crop is growing. In order to bypass this, breeders developed a biotech solution which moved a gene from a soil bacterium that conferred resistance to Roundup in soybeans.