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Seeds & Traits Regional and Product Sales

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This sector has largely been ignored to date as BASF have remained predominantly in the crop protection chemicals sector. The situation is likely to change very soon as they signed an agreement with Bayer on 13th October to buy their LibertyLink™ seeds and traits operations and assets, along with the glufosinate herbicides business. This would expand their presence in canola/oilseed rape, cotton, corn and soybeans to a great extent. The purchase is expected to be completed during Q1 2018 when and if the acquisition, of Monsanto by Bayer, is approved by the regulators in North America, Europe and elsewhere.

Currently it is mainly Clearfield™ technology licensed to seed growers e.g. KWS for sugar-beet, maize, oilseeds (rapeseed/canola) for applications of imidazolinones in Europe and Africa. Clearfield™ technology licensed to seed growers for applications of imidazolinones in sugar-cane LatAm & canola, other crops in Canada and USA.

BASF signed collaboration agreements in 2015, with EMBRAPA in Brazil to develop herbicide-tolerant seeds with new varieties still in progress. Clearfield™ technology has made a name for itself with a significant number of farmers adopting these non-genetically engineered varieties in North and South America, Europe, Africa and Australia.

Payment of royalties and licensing fees (mainly Monsanto) which contribute directly to the bottom line declined (16.7%) in Q3 and (15.2%) during the first 9 months of 2017 due to the reduction of corn-planted hectares. This is expected to increase with sales of DroughtGard™ corn hybrids and varieties in Latin America and North America during Q4 2017 – H1 2018.

Licensed-out income is dependent on sales of drought-tolerant corn seeds shared with Monsanto. BASF earns 40% of the trait fee income for its contribution, currently in North America and expanding in Latin America. Cropnosis forecasts strong growth from H2 2017 through to 2022 as BASF will receive advance payments from Monsanto, KWS and Bayer for drought-resistant, dicamba and soon, the glufosinate herbicide-tolerance traits and seeds and other traits.

Farmer interest is certainly increasing in rain-fed areas with chronically low precipitation and the trait is very likely to expand in parts of North, Central and South America as well as Africa, eventually possibly to China as well. The outlook for the year-end 2017 is no growth in corn growing areas of North America, with a possible increase in Latin America during Q4 2017.

BASF reports plant biotechnology expenditure in their “Others” segment grouped under corporate spending.