BASF plans to expand capacity in crop protection

BASF, the world’s biggest chemical company, plans to get more than $2 billion in annual sales from genetically modified crops developed jointly with Monsanto Co., boosting a unit that’s bucking the global recession.

Including research separate from the Monsanto venture, BASF has a pipeline for genetically modified plants that could reach $2.5 billion in sales by 2020, the Ludwigshafen, Germany-based Company said in a presentation on its Web site.

Agricultural solutions, the smallest of BASF’s six businesses by sales, was the only one that reported an increase in second-quarter operating profit. BASF and Monsanto, the world’s biggest seed producer, agreed in 2007 to spend as much as $1.5 billion on joint research on developing plants that are more resistant to threats like cold, bugs and pesticides.

 
Plant biotechnology, currently a research-only branch of BASF’s agricultural solutions business, will become an operating division with its own sales and earnings in 2011 or 2012 when the new products start coming to market, spokeswoman Ingrid Nienaber said by telephone.

 
BASF also plans to spend more than 100 million euros ($144 million) this year expanding capacity in crop protection, which includes herbicides, fungicides and pesticides, even as overall capital expenditure declines. Protection products scheduled to be on the market by 2014, including some introduced as early as 2002, have a peak sales potential of 2.1 billion euros, the German company said in the presentation.

Slumping orders for plastics, coatings and catalysts forced BASF and rivals such as Dow Chemical Co. to cut jobs and curtail production. While group sales and profit at BASF are forecast to decline in 2009 year, the agriculture unit predicts an increase in earnings and a profit margin target of at least 25 percent, according to Stefan Marcinowski, the BASF board member responsible for Agricultural Solutions.

Crop protection will get a bigger share of BASF’s research budget as agriculture withstands an economic slump that has hurt demand for its other products, Marcinowski said in an interview in May.