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Delta and Pine Land Company

Delta and Pine Land Company

One Cotton Row
Scott, Mississippi 38772
U.S.A.
Telephone: (662) 742-4500
Fax: (662) 742-4196
Web sites: http://www.deltaandpine.com; http://www.deltapineseed.com

Public Company
Incorporated:
1978
Employees: 555
Sales: $260.5 million (1999)
Stock Exchanges: New York
Ticker Symbol: DPL
NAIC: 11511 Support Activities for Crop Production

The Delta and Pine Land Company (D&PL) is a leader in cottonseed production, best known for the Deltapine, Paymaster, and Sure-Grow brands of cotton seed. The company provides its crossbred and genetically engineered cotton seed, as well as soybean seed, to agricultural enterprises worldwide. Commanding more that 60 percent of the U.S. market for cotton seed, D&PL breeds for fiber quality and cultivation characteristics, as well as for durability with picker or stripper harvest equipment and machinery used to transform cotton to fabric. In 1995 the company began working with chemical giant Monsanto, using the latters Bollgard and/or Roundup Ready genes in cotton and soybean varieties for purposes of pest and herbicide resistance. Worldwide seed research and distribution involves breeding, testing, seed conditioning, such as the application of pesticides or fungicides, and cotton delinting. D&PLs research facilities are located in the United States, China, Australia, South Africa, Argentina, Brazil, Greece, and Spain. Company headquarters are located in the delta region of Scott, Mississippi, 15 miles north of Greenville.

Cotton Farming in the Early 20th Century

The companys earliest origins may be traced to its founding as a land speculation corporation chartered in 1886. The owners of the property in Bolivar County in the Mississippi delta region sold their wooded lands to timber interests; interestingly, not a single pine tree existed on the land. D&PL as it came to be recognized originated in 1911 when British textile manufacturers acquired land near the Mississippi River to supply cotton to their mills in Manchester, England. (Their source of long fiber cotton from Egypt had experienced low crop yields, and pirates assailed many of the vessels carrying cotton from North Africa to England.) Directors of the Fine Cotton Spinners and Doublers Association, Ltd. (FSA) became interested in investing in a U.S. cotton plantation when they met J.W. Fox, director of the Mississippi Agricultural Experiment Station (MAES), at the World Cotton Conference in Brussels. After a visit to Bolivar County, FSA negotiated with L.K. Salsbury for the acquisition of an estimated 36,000 acres from over a dozen property owners, as well as from Salsbury, for approximately $3 million.

Because an 1890 federal law prohibited farming operations from owning more than 12,500 acres of land, the British capitalists initially formed three companies. FSA organized operations under the Mississippi Delta Planting Company, which leased land from the other two companies, the Triumph Planting Company and the Lake Vista Planting Company. Salsbury became president of Mississippi Delta Planting Company and Fox managed the land holdings. The three companies would consolidate under the charter of D&PL in 1919 with the acquisition of D&PLs nearly worthless stock. Since the charter dated to before the 1890 law, the company was exempt from the land ownership limitation.

FSA invested $1.5 million in their new cotton plantation with mixed results. D&PL cleared virgin land, drained the soil along the bayous, and constructed cabins for tenant farmers. The first years yield was only 2,800 bales of cotton, 500 pounds per bale, using hand and mule labor. The land was unable to produce the long staple cotton to the standard that FSA required and the company never used cotton fiber from the U.S. plantation in its mills. Short staple cotton sold on the open market at a higher profit, however, and D&PL proved to be a valuable investment for FSA whose sources in Egypt rebounded before World War I.

D&PL faced many difficulties in the early years, including drought, heavy rains, and an infestation of boll weevils which fed on cotton. MAES had initially researched the boll weevil problem before it reached Bolivar County in 1911. Research involved cultivation techniques and the crossbreeding of new varieties of cotton to avoid the populous season of the pests. At the MAES Delta Branch Station, Early C. Ewing pioneered hybrid cotton varieties to produce fast-fruiting and early maturing varieties of cotton for that purpose. D&PL hired Ewing in 1915 for its Cotton Research and Improvement Program where Ewing continued his work on pest control and crossbred cotton varieties for fiber length, strength, uniformity, and high crop yield. D&PL adopted the name Deltapine for these new cotton varieties.

In the companys first decades D&PL also contended with heavy rains and high water levels on the Mississippi River. The levee broke in 1912 and 1913, but sharecroppers were soon able to plant at higher elevations. A bridge built over Lake Bolivar in 1914 allowed cultivation of land on the far side, after it had been cleared of virgin timber and thousands of rattlesnakes.

While the levees held during the floods of 1916 and 1922, during the flood of 1927 the Mississippi River overflowed as much as 100 miles inland. The $500,000 damage sustained by D&PL involved the loss of 100 homes, 200 mules by drowning, and, of course, their loss of arable land. Specifically, the river deposited a two- to six-foot layer of sand on 5,000 acres of land, making some the companys best land unfit for crops. With Oscar Johnston as president, D&PL responded by planting grasses and converting the land to cattle grazing. The river receded too late in 1927 to plant on most of the land, and D&PL sharecroppers produced only 40 bales that year.

D&PL Thrives through the Great Depression and World War II

Under Johnstons leadership D&PL became a thriving cotton plantation, even through the Great Depression. Prior to the Government Cotton Control Program, designed to limit market surplus in the early years of the Depression, D&PL planted 14,000 to 18,000 acres. Regarded as a highly efficient organization, the cotton plantation was divided into 11 units, each supervised by a unit manager. Sharecroppers included 1,400 workers and their families. In 1936 D&PL plantations yielded approximately 15,000 bales of cotton on 11,700 acres. Sharecroppers earned about $1,000 from their cotton crop and supplemented that income on the one-half acre provided to each family for gardening and personal use.

D&PL was the largest, most successful plantation in the country and attracted visitors from countries around the world, including Turkey, Australia, Egypt, France, China, and South Africa. D&PLs cotton plantation averaged 9,130 acres between 1933 and 1943 and produced an average yield of 653.3 pounds of cotton fiber per acre and 980 pounds of seed. A new variety of cotton introduced in 1942, Deltapine 14, yielded 737 pounds per acre. Acreage for corn averaged 2,183 acres between 1933 and 1943, while 7,736 acres provided food, animal feed, and grazing lands.

D&PL gradually converted to mechanized methods of planting and cultivation during World War II. In 1945 6,300 acres of cotton were cultivated by 612 sharecropper families, involving 1,547 workers, averaging ten acres per family plus seasonal workers. Use of Deltapine cotton varieties spread across the southern cotton states from Texas to North Carolina. Experimental stations in South America allowed D&PL to test its seeds during the winter in the northern hemisphere, speeding the process of developing and testing new varieties from parent lines.

As clothing manufacturers changed to synthetic fibers, cotton began to lose some of its share of the fiber market, creating a cotton surplus in the late 1950s. The change was gradual, from a 88.3 percent share of the fiber market in 1920, cotton declined to a 80.6 percent share in 1940, and to 65 percent in 1956. Private and government efforts aimed to strengthen cottons share of the fiber market by strengthening the quality of cotton fiber. With Charles R. Sayer as president, D&PL increased its research budget by 50 percent between 1951 and 1957. A new, smooth leaf variety developed by D&PL at this time improved the quality of cotton and reduced waste. At 1957 prices, a $150 bale of cotton would be valued $7 to $10 more per bale. Negative effects of the cotton surplus on D&PL were offset by federal farm supports, which gave D&PL nearly $1.2 million in 1957 and expansion of the cattle herd.

Product Development: 1960s-1980s

After several years of supplying cotton seed to western farmers, D&PL began to expand operations into the southwest and west. The company opened its Western Division Office in Brawley, California, providing a sales office and quality control station to the Imperial Valley, and also located a sales representative in Chandler, Arizona. D&PL eventually attained 98 percent of the seed market in the Imperial Valley and 95 percent of the market in Arizona. The Western Division added a complete research facility in Casa Grande, Arizona. In 1961 D&PL began to develop Deltapine cotton varieties for the dry conditions of Texas, New Mexico, and parts of Oklahoma. The research station in Lubbock, Texas, added a full-time plant breeder in 1966. After ten years of research, the Southwestern Research Program released two new varieties of Deltapine cotton in 1971, while another two varieties, introduced two years later, were bred for cotton farmers in Arizona.

Company Perspectives:

Deltapine Seed cotton researchers and breeders draw from superior genetics and the best practices of the past to modify and produce diverse conventional and transgenic varieties. These varieties provide the highest yield potential and offer the features farmers want.

In 1978 Courtaulds pic, which had absorbed FSA, sold D&PL to Southwide, Inc., a holding company based in Memphis. Southwide sold a majority of D&PLs acreage to Prudential Life Insurance, approximately 25,000 acres of crop land, 4,000 to 5,000 acres of woodlands, and the rest cattle grazing areas. Southwide kept 90 acres for research and office facilities and leased 8,000 acres from Prudential for cultivation. Assets included two cotton gins, a delinting plant, a cottonseed processing plant, rice processing and storage plant, and a soybean and small grains plant. Roger Malkin became chairman and CEO of D&PL.

In the early 1980s D&PL introduced several new cotton and soybean varieties which remained in use for several years. After ten years of research on soybeans D&PL began to market soybean seed in 1980. New cotton varieties included the high yield Deltapine Acala 90 which produced a premium quality fiber and proved adaptable to different geographic regions. D&PL introduced two Acala varieties of cotton specifically for the San Juaquin Valley; Deltapine 50 and Deltapine 20 provided good fiber quality, strong yield potential, and a short maturity rate. Short maturity reduced costs as farmers used less water and agricultural chemicals, while early harvest lowered risk due to potential poor weather in the fall. By 1985 D&PL was marketing ten varieties of cotton seed and six varieties of soybeans; approximately 20 percent of 11 million acres of cotton crops in the United States were planted with some variety of Deltapine. Deltapine 50 remained one of the companys most popular varieties, used in 12.3 percent of upland picker cotton crops in the United States in 1993.

D&PL focused operations on the cotton seed market as the company sold its corn and sorghum business to Mycogen Plant Science. The sale involved the exchange of a sorghum processing plant for a cotton seed delinting facility in Lubbock. Development of cotton varieties continued with Deltapine 51 which yielded a higher quantity of cotton lint per cotton boll. New varieties designed for specific cotton growing regions included two new varieties applied to the mid-south and semi-arid desert valleys, while another variety, launched in 1994, was designed for the high plains of Texas. D&PL also released five new soybean varieties in 1994.

International and Technological Growth in the 1990s

D&PLs international division was formed in 1988 with two employees; by 1996 it would employ a workforce of 45. Sales in 1988 realized $350,000 and reached $2.3 million in 1990. The companys first breakthrough in the international market came after poor weather conditions in Paraguay increased that countrys need for cotton seed. D&PL exported $6 million worth of cottonseed to Paraguay in 1992 and $2.1 million in cottonseed the following year. Satisfaction with Deltapine varieties prompted a joint venture to breed and process cottonseed in Paraguay.

D&PL became a public company in 1993 raising $34 million for international business activities and development of genetically engineered seeds. D&PL entered into a joint venture with government agencies in Singapore, the Cotton Research Institute and the Chinese Academy of Agricultural Sciences, to research and market cotton varieties in China. China, the largest consumer and producer of cotton worldwide, was still importing some cotton. New cotton varieties developed there would by marketed within China by the venture, D&PL China, and outside China by D&PL.

By 1994 D&PL sold cottonseed in 13 countries, primarily in South America, through export and to local markets through its subsidiaries. D&PL captured an 80 percent share of the market for cottonseed in Mexico as well as large market shares in Greece and Spain. The company added cotton seed breeding facilities and processing plants in Australia and South Africa, while Deltapine cottons were tested for use in Bulgaria, Brazil, Ecuador, and several southern African countries. Turkeys Ministry of Agriculture approached D&PL to develop a program to privatize the government operated seed industry there.

A collaborative research agreement with chemicals giant Monsanto Company came to fruition in November 1995 when the Environmental Protection Agency (EPA) approved Monsantos Bollgard (Bt) gene for use with certain cotton varieties for pest control. Bt was derived from Bacillus thuringiensis, a soil bacteria which produced a protein fatal to the bollworm and the tobacco budworm (but not to animal or human life), when ingested via the cotton. D&PL spliced the Bollgard gene into some of its Deltapine varieties. In anticipation that the technology would be approved, the EPA permitted D&PL to plant 28,000 acres of NuCOTN for seed inventory in 1995. D&PL and Monsanto also formed a new joint venture with Chinese agencies in late 1995 to produce and market the genetically altered cotton seeds.

D&PL introduced NuCOTN to farmers in 1996 and expected savings on the cost of insecticides to range from $30 to $80 per acre. Farmers in eastern Texas using D&PLs NuCOTN reported insect damage to cotton crops in July as the unusually hot summer swelled the bollworm population. Unwilling to risk crop loss, farmers sprayed insecticides on an estimated 450,000 acres of NuCOTN. Of the 1.8 million acres planted with the Bollgard cotton varieties, pest damage to the Texas crops resulted in an extremely poor cotton yield on 18,000 acres. Monsanto paid damages to 25 Texas farmers seeking remuneration for low crop yield. Though conflicting research emerged after the first harvest of NuCOTN, D&PLs own study showed an average increase yield of 8.6 percent. For the year ending August 30,1996, D&PL revenues increased to $153.2 million, a 54.8 percent increase due to the sale and licensing of NuCOTN varieties.

Key Dates:

1886:
Delta & Pine Lands earliest incarnation is formed as land speculation company.
1915:
D&PL begins selling cotton seed under the brand name of Deltapine.
1919:
Assets of D&PL acquired for corporate charter by the Fine Cotton Spinners and Doublers Association, Ltd. (FSA; later known as Courtaulds pic).
1927:
Flood of Mississippi River damages cotton crops.
1936:
Cotton production profitable for D&PL despite Great Depression.
1957:
Drop in cotton consumption prompts concern.
1961:
Companys Western Division office opens in California.
1978:
Courtaulds sells D&PL to Southwide, Inc.
1988:
An International Division is formed at D&PL.
1993:
D&PL is spun off as a public company.
1996:
D&PL introduces genetically engineered cotton.

D&PL expanded its market share for cottonseed in the United States in anticipation of combining biologically engineered properties with existing varieties of cotton. In 1994 D&PL acquired Paymaster Cottonseed from Cargill, Inc. for $14 million, obtaining the Paymaster and Lankart tradenames and trademarks as well as seed inventory and breeding stock. In 1996 the company acquired the Hartz Cotton from Monsanto for $6 million. Through a $70 million stock transaction D&PL merged with Sure-Grow Seed, Inc., a deal that included the acquisition of Ellis Brothers Seed, Inc. of Alabama; Mississippi Seed, Inc.; and Arizona Processing, Inc. D&PL planned to cross breed the Sure Grow brand of cotton with Monsantos Bollgard and Roundup Ready technologies, the latter a gene resistant to a Monsantos Roundup herbicide used to kill weeds.

D&PL and Monsanto formed international joint ventures as well to produce, condition, and market Bollgard and Roundup Ready cotton seed. In 1997 Hebei Ji Da Cotton Seed Technology Company Ltd. began construction on a cotton seed conditioning and storage facility in Chinas Hebei Province. The new joint venture constructed an acid delinting facility with the capacity to condition seed for up to two million acres. The delinting process removed lint left on cotton seeds after ginning by soaking seeds in a solution of ten percent sulfuric acid and 90 percent water, then heating. The conditioned seeds produced a better harvest because they were less vulnerable to disease. After three years of testing of D&PLs Bollgard varieties with excellent results, the venture produced and conditioned enough of the seed for 500,000 acres for the spring 1998 planting but sold enough for 200,000 acres in the Hebei province. Similar joint ventures were established in the Anhui province of China, in Argentina, and in Brazil.

D&PL introduced cotton and soybean seeds engineered with the Roundup Ready gene for the 1998 spring planting season. Of the 812,000 acres sown with Roundup Ready cotton seed, 30,000 acres of cotton crops experienced heavy losses when sprayed with the Roundup herbicide. D&PL blamed the losses on atypical weather conditions in the five counties of Mississippi where they occurred, but critics blamed insufficient testing. Roundup Ready soybeans also generated controversy due to concerns about contaminating the gene pool of the worlds food supply.

The controversy over bioengineering did not stop cotton and soybean growers, however. D&PLs transgenic seed was sown in approximately 6.7 million acres in 1999, compared to 3.8 million acres in 1998. Transgenic seed varieties accounted for 80 percent of D&PLs total unit sales. With increased sales in Australia and China, revenue for the year ending August 30, 1999 reached $260.5 million, an increase of 35.5 percent from $192.3 million for 1998.

In March 1998 D&PL received approval of a patent for Control of Plant Gene Expression; this generated even greater controversy than had the Roundup Ready Soybeans. Jointly held with the U.S. Department of Agriculture, the patented gene was designed to protect proprietary rights to bioengineered seed varieties, as D&PL had been concerned about protecting intellectual property rights of its seed varieties abroad. Labeled the terminator, the gene would kill the seed of its own plant after the crop matured, thus preventing farmers from saving and planting successive generations of seeds. Critics argued that the gene made farmers dependent on large companies for seed stock and potentially polluted the seed of conventional plants. Moreover, if the wind carried pollen with the terminator gene to a nearby farm, any contaminated seeds would not germinate. The American Corn Growers Association met with Department of Agriculture Secretary Dan Glickman to encourage him to abandon the technology.

Monsantos disavowal of the terminator technology did not interfere with an agreement to merge with D&PL, announced in May 1998. Monsanto eventually dissolved the agreement, however, and withdrew its filing for approval from the Department of Justice (DOJ) in December 1999. Delays, caused by a DOJ antitrust investigation into whether Monsanto would unfairly dominate the bioengineered cotton seed market, prompted Monsanto to terminate the merger agreement late in 1999. Having bailed out of the agreement, Monsanto ended up having to pay D&PL an $81 million termination fee, according to their original contract, and dissatisfied D&PL shareholders sought to bring a suit for punitive damages. Despite these legal entanglements and the failed merger with Monsanto, D&PL remained a highly competitive force in its industry. While some analysts speculated that the company remained ripe for acquisition, company representatives maintained that D&PL was well positioned to remain an independent company.

Principal Subsidiaries

Arizona Processing Inc.; Greenfield Seed Co.; D&M International LLC (50%); D&M Partners (50%); D&PL Argentina, Inc.; D&PL China PTE, Inc.(40%); D&PL Mexico, Inc.; Deltapine Paraguay, Inc. (40%); D&PL South Africa, Inc.; D&PL International Technology Corp.; Delta Pine De Mexico, S.A.; DeltaPine Australia PTY, Limited; Hebei Ji Dai Cotton Seed Technology Company, Inc.(China; 40%); Paymaster Technology Corp.; Delta and Pine Land International, Ltd.; Turk DeltaPine, Inc.

Principal Competitors

Dow Chemical Company; Pioneer Hi-Bred International, Inc.; DeKalb Genetics Corporation.

Further Reading

Blake, Ed, Delta Seed Plantation Has Colorful History, Pontotoc Progress, May 8, 1986, p. 8.

Brandfon, Robert L., Cotton Kingdom of the New South: A History of the Yazoo Mississippi Delta from Reconstruction to the Twentieth Century, Cambridge, Mass.: Harvard University Press, 1967.

Byrne, Harlan S., Seeds of Success, Barrons, September 12, 1994, p. 24.

Cantrell, Wanda, Delta and Pine Land Getting into Corn Seeds, Clarion/Jackson Daily News, January 19, 1986, p. H5.

Cohen, Judith Radler, Monsanto Maintains Delta is on Track, Mergers and Acquisitions Report, July 19, 1999.

Connor, Charles, Cotton Seed Company Stock Soars on Patent News, Commercial Appeal, March 12, 1999.

, Mississippi Timber and Land Firm to Consolidate Operations, Cut Jobs, Commercial Appeal, October 16, 1997.

Delta & Pine Land Begins NYSE Trading After Stock Split, PR Newswire, December 18, 1995.

Delta & Pine Land Company Files Lawsuit Against Monsanto, PR Newswire, January 18, 2000, p. 3,651.

Delta & Pine Land Tackles Performance Issues, Agri Marketing, February 1998, p. 62.

The Delta Blues?, Agri Marketing, November 1996, p. 22.

Dixon, Mary, Seeds Spell Success for Delta Pine, Clarion/Jackson Daily News, October 20, 1985, p. 13.

Galarza, Pablo, Delta & Pine Land Co. Scott, Miss. Cotton-Picking Problems Benefit Seed Producer, Investors Business Daily, May 26, 1994, p. 1.

Hansen, Bruce, Delta Pine Joins Fortune-Seekers in China, Memphis Business Journal, January 17, 1994, p. 1.

Monsanto Pays Out $81 Million Break-Up Fee, Marketletter, January 3, 2000.

Myerson, Allen, R., Breeding Seeds of Discontent; Cotton Growers Say Strain Cuts Yields, New York Times, November 19, 1997, p. ID.

Myerson, Allen, R. Monsanto Paying Delta Farmers to Settle Genetic Seed Complaints, New York Times, February 24, 1998, p. 9D.

Sewell, Tim, Delta and Pine Land to Foster New Growth through Reorganization into Divisions, Memphis Business Journal, April 7, 1997, p. 8.

Stannard, Fred Jr., Cotton Campaign: Growers, Government Push Drive to Regain Sales, Eliminate Glut, Wall Street Journal, April 1, 1957, p. 1.

State Firm Gets Million, Jackson Daily News, February 24, 1959.

Steyer, Robert, Cotton Firm Eying China; Monsanto a Part of One Venture, St. Louis Post-Dispatch, June 2, 1996, p. IE.

Steyer, Robert, Monsanto Makes Bid to Buy Worlds Largest Cotton-Seed Company, St. Louis Post-Dispatch, October 8, 1999.

, Monsanto Rumor Could Endanger Delta & Pine Deal; Merger Speculation Causes Cotton Seed Companys Stock to Fall, St. Louis Post-Dispatch, November 11, 1999, p. Cl.

, Monsanto Sells Cotton Seed Unit to Mississippis Delta and Pine Land Co, St. Louis Post-Dispatch, February 6, 1996.

Tansey, Geoff, Bitter Battle of Terminator Seeds, Financial Times, June 17, 1999, p. 28.

Williams, Wirt A., ed., History of Bolivar County, Mississippi, Jackson, Miss.: Hederman Brothers, 1948.

Mary Tradii

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Delta and Pine Land Company

Delta and Pine Land Company

1 Cotton Row
Scott, Mississippi 38772
U.S.A.
Telephone: (662) 742-4000
Toll Free: (800) 511-7333
Fax: (662) 742-4196
Web site: http://www.deltaandpine.com

Public Company
Incorporated:
1919
Employees: 555
Sales: $257.80 million (2002)
Stock Exchanges: New York
Ticker Symbol: DLP
NAIC: 111920 Cotton Farming; 111110 Soybean Farming

Delta and Pine Land Company (D&PL) is the largest breeder, producer, and marketer of cottonseed in the United States. D&PL produces conventional cottonseed and cottonseeds genetically engineered as insecticides and herbicides. The company also produces soybean planting seeds containing a gene tolerant to herbicides. The company sells its products in more than a dozen countries, deriving the bulk of its international sales from Argentina, Australia, Brazil, China, South Africa, and Turkey.

Origins

D&PL's corporate roots in the area surrounding Scott, Mississippi, were planted by a group of businessmen in Manchester, England. The businessmen, owners of private textile mills in the region surrounding Manchester, wanted to secure a reliable supply of long staple cotton to feed their mills. The mill owners were part of the Fine Cotton Spinners and Doublers Association, the organization through which they created the predecessor to D&PL. In 1911, the Fine Cotton Spinners and Doublers Association purchased 38,000 acres in the area around Scott, a sparsely populated, rural area known as the Delta and Piney Woods region of Mississippi. The mill owners were forced to divide their property into three plantations. A Mississippi law passed in 1890 restricted farming operations by a single owner to no more than 12,500 acres. Consequently, the Fine Cotton Spinners and Doublers Association formed three companies: The Mississippi Delta Planting Company, The Triumph Planting Company, and The Lake Vista Planting Company. The acreage around Scott was farmed by these three entities until the British mill owners were able to find a way to bring their property under the control of a single entity. In 1919, they discovered a dormant land company named Delta and Pine Land Company whose 1886 charter predated the law restricting farm ownership. By acquiring D&PL, the mill owners were able to operate their 38,000 acres under one company.

Although D&PL originally existed as a cotton producer, the company achieved its greatest success as a breeder of cotton planting seeds. D&PL developed into the largest such company in the United States, aided by the extensive plant breeding programs the company launched over the years. The company concentrated on producing varieties of cotton planting seed for cotton varieties grown in Arizona and east of Texas. Through its plant breeding programs, D&PL developed a gene pool capable of producing cotton varieties with superior traits that benefited both farmers and textile manufacturers. D&PL's cottonseeds could improve crop yields, a benefit to farmers, and the company's seeds could produce cotton with improved fiber characteristics, a benefit to textile manufacturers.

D&PL achieved its greatest success late in the 20th century when the company's financial might exponentially increased. Technological advancements, product diversification, and growth-minded management contributed greatly to the company's transformation. The new era of fast-paced growth began in 1978, when a group of U.S. owners led by Roger Malkin acquired D&PL. Under Malkin's leadership, D&PL made its first important diversification. In 1980, the company began marketing soybean planting seeds in the United States. The decade's most important achievement occurred later in the decade, once the company gained the executive who would lead it through its most prolific years of growth.

The Influence of Biotechnology in the 1990s

In 1988, a veteran of the agricultural seed business joined D&PL as executive vice-president. The arrival of Murray Robinson roughly coincided with the company's first concerted push overseas, a move that drew its impetus from Robinson. When Robinson joined D&PL, the company sold its cottonseed and soybean seed strictly to U.S. farmers. No one except the chief executive officer, he noted, had a passport. Robinson pushed for overseas expansion not long after joining D&PL, realizing, as he reflected in a June 11, 2001 interview with Business Week, that "for this company to grow long-term, it would have to participate globally."

Overseas sales eventually would account for a significant percentage of D&PL's financial growth, particularly during the late 1990s. Growth during the latter half of the 1990s also would be aided greatly by technological innovation, specifically by advancements in biotechnology. Although D&PL was one of the first seed suppliers to take full advantage of genetically altered seeds, the company did not develop the genetic material. Instead, the company had an invaluable partner, the giant chemicals, food ingredients, drug, and agricultural conglomerate, Monsanto Co. Based in St. Louis, Missouri, Monsanto already was deeply involved in the genetic engineering of food crops by the time D&PL was making its first steps overseas.

Plant science technology made its first leap forward in 1983, when Robert Fraley created the first genetically engineered plant, a petunia. From there, scientists in the biotechnology field went on to create genetically superior crops of corn, wheat, tomatoes, potatoes, and soybeans, among a host of other biotechnological improvements in the food supply. By the beginning of the 1990s, Monsanto was drawing attention for its work in developing pest-resistant cotton, particularly cotton that repelled bollworms and budworms. Every year, farmers in the United States used 100 million pounds of agricultural chemicals on their crops. Roughly 15 percent of the chemicals were used to kill insects, with cotton farmers ranking as the greatest users of insecticides, accounting for 40 percent of the total used on crops. Monsanto's efforts sought to reduce the use of insecticides by using a naturally occurring microbe found in soil called Bacillus thuringiensis, or B.t. B.t. produced a toxic protein lethal to budworms and bollworms, causing paralysis and death when ingested by the insect. Spraying B.t. on crops was not a viable option. The microbe washed away with rainfall and lost its insect-killing potential when exposed to sunlight, forcing Monsanto scientists to discover another way of incorporating B.t. into cotton. Researchers devised a way to take the protein gene from the microbe and insert it into the genetic structure of the cotton plant. Trials of Monsanto's genetically altered cottonseed proved successful in 1990, piquing interest. Monsanto awaited regulatory approval by the U.S. Environmental Protection Agency (EPA), hoping to begin marketing its development by 1995.

As the 1990s progressed, Monsanto became increasingly interested in biotechnology. Once a company whose mainstay business was in chemicals, the company sought to transform itself into a bioengineering concern with a focus on food and nutrition. Robert Shapiro, named chief executive officer and chairman of Monsanto in 1995, spearheaded the transformation, announcing the divestiture of the company's chemicals business and investing heavily in biotechnology interests. Shapiro's vision of Monsanto dovetailed nicely with D&PL's position as the nation's leading producer of cottonseed. In 1992, the complementary strategic orientations of the companies led to the first of several collaborative biotechnology licensing agreements. Under the terms of the agreements, D&PL was given the right to market Monsanto's B.t., or "Bollgard," gene technology. In March 1995, the two companies formed D&M International, LLC to introduce insect-resistant cotton planting seed in international markets. Later in the year, in October, the EPA completed its initial registration of the Bollgard gene technology, paving the way for commercial sales of cottonseed containing the Bollgard gene.

After years of waiting, D&PL commenced commercial sales in the United States of cotton planting seed containing Bollgard gene technology in 1996. D&PL was the only company licensed to market Monsanto's Bollgard gene technology. At this point, D&PL ranked as the largest breeder, producer, and marketer of cotton planting seed in the country, controlling roughly 40 percent of the market. The introduction of B.t. cotton strengthened an already strong company, capturing 13 percent of the U.S. cottonseed market within the first year of its introduction. D&PL's relationship with Monsanto grew in other directions as well, adding several more genetically altered products to its portfolio. In February 1996, the two companies executed what was called the Roundup Ready Gene License and Seed Agreement, giving D&PL another genetically altered cottonseed variety. Monsanto's Roundup Ready gene made cotton plants tolerant to contact with the company's most popular herbicide, Roundup. D&PL began marketing Roundup Ready cottonseeds in 1997, adding further luster to its financial growth.

By the fall of 1997, there was clear evidence of the gains achieved through D&PL's relationship with Monsanto. During the company's third fiscal quarter, sales rose 40 percent to $166 million in large part because of the success of the two Monsanto-developed products. The company's stock nearly doubled as well, jumping from a low of $20 per share in 1996 to $37.06 per share by September 1997. The year also saw the Monsanto-D&PL partnership produce a new product. In February, the two companies executed a Roundup Ready Soybean License agreement that enabled D&PL to begin marketing genetically altered soybean planting seeds. The following year, D&PL began selling cottonseed varieties containing both the Bollgard and Roundup Ready genes.

Company Perspectives:

Delta and Pine Land Company looks forward to the future of agriculture and the seed industry and pledges to continue the dependable, dedicated efforts that have led American farmers to recognize us as the industry leader.

D&PL and Monsanto in the Late 1990s

The relationship between Monsanto and D&PL reached a significant juncture not long after the pair's collaboration on genetically altered seeds reached the market. In May 1998, the announcement was made that the two companies would merge, a deal that was valued initially at $1.8 billion. For 19 months, the proposed merger awaited approval by the U.S. Department of Justice. The months of waiting were in vain, as the merger collapsed, causing a furor that would drag on for months. In January 2000, roughly a month after withdrawing its filing seeking clearance from the Antitrust Division of the U.S. Department of Justice for the D&PL merger, Monsanto agreed to a $50 billion merger, completed in March 2000, with Pharmacia & Upjohn Inc., igniting D&PL's furor. "For a year and a half, we exercised every reasonable effort and a tremendous amount of time, energy, and money to make this merger happen," a D&PL executive was quoted as saying in the January 24, 2000 issue of Feedstuffs. Monsanto paid D&PL the $81 million required by the merger agreement because it had terminated the contract, but D&PL wanted far more in compensation. The company filed a lawsuit against Monsanto in January 2000 demanding compensation for damaging its relationship with its customers and for the diversion of management's time. D&PL, in the January 24, 2000 issue of Feedstuffs, demanded "not less than $1 billion in compensatory damages, as well as punitive damages in an amount to be proved at trial."

In the wake of the litigious activity, D&PL and Monsanto continued to do business together. The benefits to each party were too great to sever all ties. By 2001, thanks to the affiliation between the two companies, D&PL enjoyed a stranglehold on the U.S. market for genetically altered cottonseed, controlling 85 percent of the market. The company's dominance in the U.S. market was impressive, but its progress overseas provided perhaps the most encouraging news as the 21st century began. Murray Robinson's vision of turning D&PL into a multinational concern had materialized, adding decided vigor to the company's financial health. D&PL sold its conventional and genetically altered cottonseeds in 16 foreign countries by the time the company's 90th anniversary arrived, gleaning the fruits of international expansion. By 2001, international sales accounted for 10 percent of the company's total revenues, and were increasing at a 35 percent annual clip. D&PL derived the majority of its international sales from countries where it maintained a presence, such as Argentina, Australia, Brazil, South Africa, Turkey, and China. For example, in China, the world's third largest cotton producer, D&PL's cottonseeds were used by more than one million farmers through joint venture companies in two of the country's 23 provinces. Thanks to the boost in sales provided by its involvement in foreign markets and to the advent of genetically altered seeds, the company recorded average annual sales growth of 20 percent between 1997 and 2000. Earnings recorded a decidedly more robust pace of growth, increasing at an average annual rate of 142 percent. Revenues by the end of 2000 reached more than $350 million. Before D&PL's genetically altered cottonseeds entered U.S. and foreign markets, annual revenues were $190 million.

D&PL's lawsuit against Monsanto extended into 2002. If successful in its court case, the company expected to make a tremendous financial gain; regardless of the court proceedings, however, D&PL presided as the country's preeminent producer of cottonseed. In the years ahead, D&PL promised to figure prominently in the biotechnology industry, its market position posing a formidable threat to other competitors. The company had secured control of the U.S. market, leaving it to apply the same tight grip on foreign markets.

Key Dates:

1911:
The Fine Cotton Spinners and Doublers Association acquires 38,000 acres in the area surrounding Scott, Mississippi.
1919:
The Delta and Pine Land Company (D&PL) is acquired, giving control of three plantations to a single entity.
1988:
Murray Robinson joins D&PL as executive vice-president.
1995:
D&M International, LLC is formed by Monsanto Co. and D&PL to market genetically altered cottonseed internationally.
1996:
D&PL begins selling insect-resistant cottonseed in the United States.
1998:
A merger between Monsanto and D&PL is announced.
1999:
The merger with Monsanto collapses.
2000:
Monsanto agrees to a $50 billion merger with Pharmacia & Upjohn Inc.; dissatisfied with an $81 million settlement it received after its own failed merger, D&PL files suit against Monsanto for $1 billion in damages.

Principal Subsidiaries

D&M International, LLC; Deltapine Australia Pty. Ltd.; D&PL South Africa, Inc.; Turk Deltapine, Inc.

Principal Competitors

Pioneer Hi-Bred International, Inc.; Savia, S.A. de C.V.; Syngenta AG.

Further Reading

Androshick, Julie, "Seeds of Doubt," Forbes, September 22, 1997, p. 268.

"D&PL: A Leader in the Cotton Revolution," Agri Marketing, September 2003, p. 46.

"DPL Acquires Remaining Interest in D&M International from Pharmacia," Feedstuffs, June 10, 2002, p. 23.

"DPL Announces Transition Plan," Feedstuffs, June 24, 2002, p. 6.

"DPL Realigns Management, Positions," Feedstuffs, September 10, 2001, p. 8.

"DPL Wins Favorable Opinions Against Monsanto," Feedstuffs, December 3, 2001, p. 8.

Hicks, Ed, "Delta Expands Scott Cotton Facility," Memphis Business Journal, November 23, 2001, p. 9.

Howie, Michael, "Delta Land & Pine Sues Monsanto for Breach of Contract," Feedstuffs, January 24, 2000, p. 5.

McDonald, Duff, "Ewe and Your Money: How to Profit from Discoveries," Money, April 1997, p. 71.

Northway, Wally, "D&PL Records Loss, Signs Deal," Mississippi Business Journal, January 13, 2003, p. 8.

Sewell, Tim, "Delta Land and Pine to Foster New Growth Through Reorganization into Divisions," Memphis Business Journal, April 7, 1997, p. 8.

Sikora, Martin, "Trying to Recoup the Cost of Lost Opportunities," Mergers & Acquisitions Journal, March 2000, p. 12.

Taylor, Gary, "Delta Rich Cotton Pickings," Chemistry and Industry, July 15, 2002, p. 9.

"This Cotton Is No Puffball," Business Week, June 11, 2001, p. 119.

Jeffrey L. Covell

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