All hail the biofuel boom
A UN official recently declared biofuels a "crime against humanity," because they leach agricultural resources from feeding people and direct them to feeding cars.
But one man’s crime is another’s boon. Surging biofuel use encourages farmers to maximize yield over all other considerations — and they do so by lashing the earth with all manner of chemicals.
That’s why shareholders in agrochemical companies are celebrating the explosive growth of biofuel use. Syngenta — the Swiss-based maker of herbicides, pesticides, and genetically modified seeds — has seen its shares more than double since the biofuel boom began.
Here’s how one Wall Street analyst put it after Syngenta delivered yet another quarterly report marked by strong profit growth, particularly in Latin America:
The underlying trends are strong, driven primarily by high and rising crop prices driving farming to seek to maximize yields, which in turn pulls through more intense crop chemical usage … We would expect the demand trends to be positive into 2008.
Monsanto — the dominant producer of genetically modified seeds and traits, and also a major pesticide purveyor — has also seen its shares more than double.
The firm is so jacked up about corn that it’s investing $155 million to double GMO seed production at its major plant in Nebraska.
Meanwhile, Germany-based chemical giant BASF — a major producer of fertilizer and herbicides — also reported robust profits, driven by a strong agrochemical demand in South America, source of much of the soy to meet Europe’s surging biodiesel demand.
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