Sowing Seeds in Monsanto

Biotechnology in the agricultural area has been making big gains by helping farmers cut costs and increase productivity. Investors searching for a long-term investment in an industry leader should take a hard look at Monsanto (MON - commentary - Cramer's Take), which has spent more than two decades performing molecular research to create seeds and herbicides that are changing the face of modern agriculture. Global demand for food and biofuels will provide Monsanto with opportunities for continued growth.

The company's foundational research and portfolio of products was built over a long period of time. Well-known herbicide Roundup was first commercialized in 1976 and the company's first genetic plant modifications were field-tested in 1987. In addition, Monsanto has developed products for corn, cotton, canola and soybeans. Monsanto operates in two major businesses: seeds and traits and agricultural productivity.

The seed division breeds plants that have higher crop yields and genetically modifies them to have new "traits" such as resistance to herbicides or insects. As key genetic research is completed for new plants, it becomes progressively easier to introduce new products in the form of desirable traits. The agricultural productivity division sells Roundup and other specialty agricultural herbicides.

Monsanto has a large pipeline of future products. The company started with plants that were genetically altered to be resistant to the company's flagship herbicide Roundup. From there other traits were added, such as insect resistance in corn and cotton. Now the company is working on combining multiple genetic traits for more advanced products. Better taste, zero trans fats and drought resistance are a few examples of future improvements that can be made through genetic modifications.

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At the time of publication, Gear had no positions in Monsanto.

Steve Gear was director of capital markets at Stockhouse.