Bayer is working hard to move past the controversy surrounding the glyphosate-based herbicide Roundup, and has been sending top managers to the US in increasing numbers to enhance its image. Last year, board member Rodrigo Santos, head of the Crop Science division, attended an innovation summit in New York to highlight Bayer's agricultural sector as a sustainable and socially responsible partner.

And in June, Frank Terhorst, the Crop Science Division Head of Strategy and Sustainability Officer, traveled to Chicago to reinforce a message to media and agricultural industry representatives – Bayer is not a crisis-ridden corporation burdened by lawsuits, but a nimble innovation-driven company with significant growth potential.

In Chicago Bayer announced in an innovation update that it aims to launch ten „blockbusters“ over the next decade. These agricultural products are expected to each contribute over 500 million euros to Bayer's research and development pipeline, totaling more than 32 billion euros. The Crop Science division aims to double its addressable market to over 200 billion euros through a focus on regenerative agriculture.

„Business models are evolving“, Terhorst emphasised in an interview with Börsen-Zeitung. He views the US as much more advanced than the European Union in fields adjacent to traditional agriculture, which are expected to significantly contribute to future revenue potential.

„We still lack reliable framework conditions in Europe, for example, to establish a carbon business model“, said Terhorst. This pertains to products, services, and concepts intended to assist farmers in reducing or compensating for carbon dioxide emissions and storage. Meanwhile, similar programs are already a reality in the United States and markets like Brazil. „We are losing a lot of time in Europe“, Terhorst lamented.

The European Green Deal, which aims for a climate-neutral economy by 2050, has drawn criticism within agriculture. It proposes increasing the share of organic farming to 25% of agricultural land, with Germany's coalition government aiming for 30% by 2030.

Brussels also plans to reduce nutrient losses such as phosphorus, nitrogen, and potassium by at least 50%, decrease fertilizer use by at least 20%, and maintain soil fertility. The use and risks of chemical pesticides are expected to decrease by 50%, and the decline in pollinators such as bees is projected to be reversed by 2030.

However, scientists and agricultural associations argue that these requirements could lead to reduced production and increased prices. This could result in increased imports of agricultural products from regions with lower standards. To effectively absorb carbon, replace fossil resources, and increase biomass, a consistent CO2 pricing mechanism is deemed necessary instead of a policy based solely on bans. Existing plans to expand emissions trading, according to the German Farmers' Association, are not comprehensive enough.

„We don't need to retreat from the goals of the European Green Deal, but rather complement them“, Terhorst emphasises. „Competition and innovation climate need stronger consideration.“ Over the past 20 years, Germany and the EU have not considered agriculture as strategically important, a stance that must change under the new EU Commission. „Agriculture not only ensures food security but can also be part of the solution in other sustainability areas“, Terhorst says.

He points, for example, to biofuel production. In 2022, Bayer expanded their share of Covercress to 65%, with involvement from companies like Chevron and Bunge. They've developed genetically modified field pennycress, which farmers can grow as a cover crop during seasons when their fields would otherwise lie fallow. This not only helps maintain soil quality, but also generates additional income for farmers.

The Covercress plant is a rich source. From five kilograms of its seeds, it is possible to generate one liter of plant oil. This makes it more potent than soy. Through its use as biofuel, the dependence on petroleum and thus the CO2 footprint in numerous industries can be reduced. For farmers, the process works like this. They receive the contract from the company in St. Louis to grow Covercress and subsequently sell the mature oilseeds back to them, earning yields of up to $500 per hectare.

According to Terhorst, the faster advancement of biofuel innovation in the US compared to Europe is also attributable to the secondary effects of the Inflation Reduction Act. As a result of the subsidy policy, US oil and energy companies have invested billions in expanding their capacity. „Demand will follow“, says the Bayer strategist.

Meanwhile, Bayer also aims to score with novel herbicides and fungicides. These destruction agents are intended to help combat climate change. On one hand, this should reduce the use of agricultural machinery powered by fossil fuels. On the other hand, the soil retains a lot of CO2 that is not released by refraining from ploughing. However, since weeds can no longer be controlled through soil cultivation, according to the trade association Crop Life International, an increased use of chemical agents is necessary.

Glyphosate also plays a potentially crucial role in the agriculture of the future. Since its acquisition of Monsanto for over 60 billion dollars, Bayer has been grappling with a wave of lawsuits regarding Roundup in the US, and launched a multi-billion-dollar program in 2020 to settle the majority of the claims without admission of liability. Thousands of cases are still pending. So far, the Glyphosate litigation has cost the company more than 10 billion euros.

„The burden on our reputation weighs more heavily in Germany and Europe than in North America, where the legal disputes are pending“, states Terhorst. The lawsuits have naturally been „a massive financial burden for the company.“ Following the previous settlements, the question now is under what conditions the rest of the lawsuits can be settled. „Every verdict counts“, emphasises Terhorst.

Bayer aims to support its new herbicides with genetic modifications that allow soybeans to tolerate an increasing number of highly potent herbicides. However, these new products have not sparked much enthusiasm among investors. The stock has been down over 24% since the beginning of the year. The agricultural sector, whose revenues in the first quarter adjusted for currency and portfolio effects decreased by 3%, has recently been more of a burden.

Terhorst notes that the Crop Science division has „performed significantly better than all competitors“ – some industry representatives have shrunk by over 20%. Given this, the competitive position is relatively satisfactory. „But of course, we have the ambition to monetize what we are putting into our pipeline now“, he adds. Bayer intends to maintain its investment volumes in research and development compared to previous years. Before special items, expenditures in 2022 amounted to 2.6 billion euros.

In a few years, the additional market potential of 100 billion euros in the agricultural sector „will be much more tangible“, says Terhorst – taking into account the competition as well. One competitor, Syngenta, is under Chinese control. In this environment, it would be advisable for Europe and North America to mutually support their respective agricultural economies through better-coordinated regulatory frameworks.