I want to start by talking about the American farmer. I know they're facing a lot this year, high fertilizer costs, really volatile crop prices. What are you hearing from farmers here?
Yeah. You said it. I mean, the input conditions, the market conditions are challenging. And I think for a lot of farmers, they're kind of at the end of their rope. So I have tremendous respect for what they do. I think it's one of the things we miss in our highly industrialized society that we have such a small percentage of the population growing the food for the rest of us, and so I think people kind of lose touch with what it actually takes to make it happen.
And for the past five years, the government has stepped in to help farmers. Do you think a bailout is necessary again this year in the Farm Bill, and what do you expect?
Yeah, I'm not the expert to say on that. But I do know that farmers deserve better than what they've been getting I think from society, you know, a fair deal. I think they've been, this idea that some have touted that farmers are harming consumers or something, I think that is a lack of understanding of what it takes to run a farm and the values that American farm families share and what it means to them to grow healthy food.
And I think most people in this room probably know that Bayer sells seeds to these farmers. A few years ago, one of your competitors surpassed you in soybean seed market share. And I was going to ask what it takes to win back the American farmer, but I feel like you're kind of doing that now with advocating for them. So aside from advocating for the farmers, what does it take, with innovation or pricing, to win that back?
Yeah. Well, we're by far the market leader in corn, which is the biggest crop. In soy, we lost out a bit because we didn't have quite the right combination of traits, and we had a regulatory setback and that put us at a disadvantage. We've since reversed that setback and we're planning to bring out new trait packages starting next year. So I think we're very much on the climb up in soy, and very strong in corn. And I think in corn, just as an example, we have in the fields this year the breeding version of our new Preceon Smart Corn System.
Exactly. This is, that's not a very glamorous name, short corn, is it? But it turns out that corn growing 10 or 11 feet tall, that's not so handy when it comes to late-season storms.
Yeah, yeah. It also means that farmers often have to decide to preemptively spray pesticides because they can't get their sprayers out in the fields after a certain point. 'Cause the corn, once it gets over six feet tall, they really can't get their sprayers out there. So they're spraying chemicals, not knowing whether they'll need them sometimes, but just thinking, 'Well, we want to be sure.' So with our new short corn, they can do that anytime in the growing season, so they don't have to do that, which means less chemicals used, it means better resistance against storms, and then one of the benefits that we're seeing now is you can actually plant the corn more densely, so you could basically grow more corn on the same land. These are the kinds of innovations that, not only do farmers need this, but frankly, the world needs it so that we can feed a billion more people with the declining farmland that we have.
Right. And when it comes to seed traits, what is the biggest need there that you're trying to solve for? Is it climate changing, or pests, or the ability to not require pesticides? What problem are you trying to solve with your innovation on seed traits?
Yeah. Well, I mean, we're working on all of those things. We have seed traits already that convey, for example, resistance to certain pests, that make plants immune to certain herbicides. That's huge. If you look at America today, the vast majority of rogue crops are grown in a no-till system. Well, that no-till system is made possible by herbicide-resistant plants. And that's huge in terms of the energy it saves, the labor it saves, and the improvement on the land. Because basically when you till up the land, you're tilling up the carbon that's in the land, the rain comes and washes it, basically washes half of American topsoil out into the Gulf of Mexico. But now, with no-till cropping, basically you're keeping the topsoil whole. And so these are the kinds of advantages. But you asked, what are we working on now? I mean, a couple of things that are coming along, we can go deeper if you want, but things like nitrogen-fixing wheat and corn.
So many of you know that beans have a property of pulling elemental or atmospheric nitrogen into the ground and making it usable, like nitrogen fertilizer, whereas, for example, corn and wheat don't have that property. We're working with gene editing to convey that. That could be huge in terms of cost savings.
Because it would require less fertilizer.
Less fertilizer, which is less energy production, frankly, less runoff of fertilizer into rivers and nitrification, so this is big. So that would be big for farmers, but also huge for the environment.
Would it change what crops can be planted where?
It sure does. And for example, in poor countries, fertilizer is one of the number one items in GDP. I mean, if you look in parts of Africa and India, I mean, fertilizer is a huge government expense. They subsidize fertilizer so that the poor farmers will have enough fertilizer to grow the food they need, at least as much as they can.
So something like this is a tremendous innovation for people.
And with innovation, there also can be consumer backlash. We've seen that lately. You're facing the most consequential litigation right now with your herbicide, Roundup, glyphosate. What does that... what do those court cases and that litigation mean for the future of Bayer Crop Sciences, and even the farming community?
Yeah. Well, it's really important to understand the basis on this. So we have a product that has been available for 50 years in the U.S. and around the world. It's been probably the most thoroughly studied crop protection chemical of all time. It's been reviewed and approved and re-reviewed by the U.S. EPA, the European Food Safety Authority, the English authorities, Australian, New Zealand, Japan, and so on. There's not a single regulatory body in the world that has labeled it as carcinogenic. In fact, just the contrary. But that doesn't mean that we can't have thousands of lawsuits. And this is, lest anyone in the audience think this is a Bayer problem, actually, Bayer is gonna deal with this, but this is an American problem. And I don't know if you guys realize this, I don't know, maybe you don't think it's your problem, but maybe we'll take a little audience poll. Is that allowed?
Raise your hand if you think the litigation industry is costing your household, let's say, do you think $1,000? Who thinks it's costing your household $1,000 or more per year? Anybody? Okay. How about $2,000? Anyone? $2,000? $3,000? $4,000? Anyone? $4,000? Okay, keep, no, your hands should be up. I'm not joking. $4,300 per U.S. household, per year. And a lot of people in this room are probably above average, which means you're gonna be paying more than $4,300. And you might think, 'Well, how could that be? I mean, I know this is a problem for Bayer, but how is this affecting me?' Your car insurance. Maybe 50% of your car insurance premium is going to trial lawyers. Your home insurance. Again, probably 50% of your homeowner insurance, going to trial lawyers. Medical insurance. It's not 50%, thank goodness, okay. Maybe only 20%, or 15%. And so on. The cost of every product you buy. So if you take anything away from this, don't think, 'Oh, Bayer has a litigation problem.' Actually, you go out of here thinking, 'Hey, I have a litigation problem.' Think about that the next time you pay your insurance premiums.
But, so, it seems like the goal for Bayer now is to be able to end the lawsuits and move on.
And is there a world in which you move on without glyphosate? Like, would you stop making it because the lawsuits don't stop coming?
Well, we've said very clearly, if there's not a solution to the litigation problem on glyphosate, there won't be American-produced glyphosate.
Why do you specify American-produced?
Because if Bayer stopped making it,
We produce roughly half the glyphosate for the world and the other half comes from Asia.
