Monsanto Co. and BASF said Wednesday they would develop genetically modified wheat as part of an expanded joint venture.

The world's largest seed maker and the German chemical giant had dropped earlier plans for biotech wheat in 2004, concerned some export markets would not accept it, but declining production in the U.S. has sparked renewed farmer interest in developing a stronger variety of wheat.

Monsanto and its partner plan to add wheat to existing efforts to develop corn, soybean, cotton and canola that is more resistant to pests, herbicides and drought. They are boosting their potential spending on the efforts by another $1 billion to $2.5 billion.

The rising amount of acreage of genetically-modified corn and soybean being planted in the U.S. - often at the expense of wheat - defused some resistance from farmers who were worried that some exports markets would reject biotech crops.

"They really feel they need more ... research going into wheat, because they're lagging behind in terms of yield improvement," said Peter Eckes, president of BASF's plant science division.
Monsanto had been concentrating on boosting wheat yields through non-genetically modified breeding. Eckes said it would be 2020 before the first biotech products emerge.
Wheat is the world's second-largest crop after corn and a key U.S. export. Faced with better yields and revenue from genetically-modified seeds, farmers in Kansas are for the first time planting more corn and soybeans than wheat.

"There's no doubt that part of the reason we've been losing the battle for acres is we haven't been getting the research support," said Steve Mercer, spokesman at U.S. Wheat Associates, a trade group that represents farmers.

Monsanto and other genetically-modified seed producers still face substantial opposition in Japan and the European Union, but Mercer said the introduction of biotech wheat should not hurt U.S. exporters, despite "undeniable" concern in some markets.

One solution would be to separate genetically-modified and non-biotech shipments.
"It has happened in soybeans pretty readily, so I think we'll be able to set up a system in wheat as well," said Dana Peterson, chief executive of the National Association of Wheat Growers, which has already discussed the issue with export customers.

The first commercialized products from the Monsanto/BASF tie up, drought-tolerant corn, is expected for the 2012/2013 growing season. The 2007 pact sees net profits from biotech seeds split 60% to Monsanto and 40% to BASF.

Source: Wall Street Journal

By Ian Berry

- Kevin Kingsbury contributed to this article.