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  New Style Merging: AgrEvo
By
 Markus Heissler
 
Keywords:  AgrEvo; Agrochemicals; Private industry; Herbicide/pesticide tolerance.
Correct citation: Heissler, M. (1995), "New Style Merging: AgrEvo." Biotechnology and Development Monitor, No. 23, p. 21-22.

At the beginning of 1994, the two German companies Hoechst and Schering merged their agrochemical businesses in a new company: AgrEvo. With net sales of about US$ 2.2 billion in 1994, the joint­venture ranks amongst the first five in the global agrochemical market.

The decision of Schering and Hoechst, respectively the former Nos. 11 and 8 in the world agrochemical market, to join their activities was forced by the increasing competition in the crop protection business, allowing only a few big companies to survive. Free from the burden of its agrochemicals unit, Schering can now concentrate on pharmaceuticals. Hoechst, on the other hand, hopes to gain a more powerful position in the agricultural sector.
AgrEvo's (meaning 'agro­evolution') legal name is Hoechst Schering AgrEvo GmbH. Of the new company's shares, Hoechst Group holds a 60 per cent stake (of which Hoechst AG 43 per cent and Roussel­Uclaf (RU, France) 17 per cent), and Schering AG a 40 per cent stake.

Structure
Building on the expertise of the mother companies, AgrEvo offers a broad range of agrochemicals. Hoechst brought in its cereal herbicides and insecticides. Additionally, AgrEvo owns a 15 per cent stake in the leading German seed company Kleinwanzlebener Saatzucht AG (KWS). Currently KWS is conducting several field tests in Germany with virus resistant sugar beet. HoechstÕs seed business, comprising amongst others the Dutch vegetable seed company Nunhem Zaden BV, remained in the mother company. RU transferred its environmental protection products regarding public hygiene and household pesticides to AgrEvo. Schering provided AgrEvo with all its crop protection activities such as sugar beet herbicides and cereal fungicides.
AgrEvo plans to spend about 10 per cent of its annual turnover on R&D, which is approximately US$ 200 million. The company has around 1200 employees working at 4 research centres in France, Germany and the UK. Research on biotechnology is concentrated in the two centres in Frankfurt (Germany) and Chesterfordpark (UK).
With 70 subsidiaries worldwide, the synergetic effects of AgrEvo are expected in the fields of global distribution and production, as well as in R&D. At the same time, howerver, the joint venture has also led to the reduction of labour force. In 1994, AgrEvo reduced its staff from more than 9000 to 8000.

Markets
In 1994, AgrEvo held about 9 per cent of the total world market in agrochemicals. 93 Per cent of its turnover was earned through exports. European and North American markets (respectively accounting for 42 per cent and 19 per cent) were responsible for nearly two thirds of its total turnover. Moreover, in Latin America (mainly Brazil) and in East Asia (Japan, China, Korea, Taiwan), the company reached good sales. Africa is only of minor importance to AgrEvo, despite the fact that RU used to be a leader in the African agrochemicals market.
In the near future, the company predicts a more than proportional increase in sales on the North American and Asian markets. The company expects that its glufosinate herbicide for transgenic herbicide resistant oilseed rape (canola), soya bean and maize will soon be on the North American market. To strengthen its market position in Asia, AgrEvo recently bought the South­Korean agrochemical company Misung. For the Asian market, AgrEvo is currently concentrating on rice products. Despite its expectations of only a minor growth in the European market, AgrEvo recently took over the majority shares of the European agrochemicals distribution company Agro Stefes.

Herbicide resistance
In 1986 Hoechst initiated research in what the company calls 'green biotechnology'. Since 1989, the company has undertaken field tests with herbicide resistant maize, oilseed rape, soya bean and sugar beet in North America and Europe, despite the huge amount of criticism of the environmental effects of herbicide resistance. Currently AgrEvo is a front runner in R&D on transgenic herbicide resistant crops. This year the company got the final clearance from the health authorities and will introduce genetically modified oilseed rape on the Canadian market. This transgenic oilseed rape is resistant to AgrEvo's so far non­selective herbicide glufosinate. Last May, the UK authorities gave food safety clearance for the oil from the Canadian varieties.
Glufosinate has been marketed since 1984 and is registered in 50 countries. Currently AgrEvo sells 2500 tonnes of glufosinate per year. Because it destroys all green parts of a plant and is unable to distinguish between weeds and cultivated plants, it can only be used in plantation cultivations such as oil palm, rubber tree, coffee, banana, where it has no contact with the leaflets.
To widen the application of the non­selective glufosinate, Hoechst launched a research project to make cultivated plants resistant to the herbicide. Glufosinate breaks the ammonium metabolism of the plant. This leads to the breakdown of the photosynthesis process, which finally kills the plant. The companyÕs molecular biologists achieved resistance to glufosinate in crops through the introduction of the so­called PAT gene. This gene, extracted from the soil bacterium Streptomyces variate chromogenes, encodes the enzyme phosphinothricin acetyltransferase, which modifies glufosinate to stop the ammonium decontamination in the plant. The weed will be killed by glufosinate, but the cultivated plant with the PAT­gene will be spared.
AgrEvo spokesman Gerhard Waitz explained it as follows: "We want to offer an environmentally sound crop protection to the farmer, with less but even more target oriented chemistry". According to the company, glufosinate is supposed to lead to an overall lower application of herbicides. For the farmer the application of only one broad spectrum herbicide should be less labour intensive and cheaper, although the price will be dependent on the price of the crop­herbicide combination.
The benefits of herbicide resistance are heavily disputed (see also Monitor No. 13). Since AgrEvo started in 1994 with its first four field tests with transgenic maize and oilseed rape in Germany, environmental organizations have been accusing AgrEvo of its lack of research on possible allergic reactions and toxicity, including the possible toxic effects of the metabolites of glufosinate produced by the plant. According to these groups, AgrEvo has been unable to prove that the genetically engineered plants have no negative impact on human health, that mass application of the herbicide glufosinate would have no negative ecological impacts, and that it will in fact lead to lower use than currently is the case.
Markus Heissler

Lugeriplatz 21, 47057 Duisburg, Germany

Sources
AgrEvo, Grüne Gentechnik und Pflanzenschutz

Hoechst, Annual Report 1994

Schering, Annual Report 1994



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