DuPont 2010 Annual Report Download - page 27

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Part II
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, continued
Segment Sales PTOI
(Dollars in billions) (Dollars in millions)
2010 $9.1 $1,355
2009 $8.3 $1,224
2008 $8.0 $1,087
Agriculture & Nutrition’s businesses leverage the company’s technology, customer relationships, and industry
knowledge to improve the quantity, quality and safety of the global food supply and the global production agriculture
industry. Land available for worldwide agricultural production is increasingly limited so production growth will need to
be achieved principally through improving crop yields and productivity rather than through increases in planted area.
The segment’s businesses deliver a broad portfolio of products and services that are specifically targeted to achieve
gains in crop yields and productivity, including Pioneerbrand seed products and well-established brands of
insecticides, fungicides and herbicides. The segment’s businesses operate across the food value chain from inputs for
producing agriculture products to global production and distribution of soy-based food ingredients to food quality
diagnostic testing equipment. Research and development focuses on leveraging technology to increase grower
productivity and enhance the value of grains and soy through improved seed traits, superior seed germplasm and
effective use of insecticides, herbicides and fungicides. The following are Agriculture & Nutrition’s operating
businesses:
Pioneer is the world’s leading seed brand and a world leader in improving crop yields with hybrid and varietal seeds
that improve grower yields and provide effective plant insect protection and herbicide tolerance. The principal products
of Pioneer are hybrid seed corn and varietal soybean seed, as well as sunflower, canola, sorghum and rice. Crops
grown from Pioneer seed are used to meet the global demand for animal feed, food, biofuels, and fiber. Sales of
Pioneer seeds amounted to 17 percent, 18 percent and 13 percent of the company’s total consolidated net sales for the
years ended December 31, 2010, 2009 and 2008, respectively. Agricultural seed research requires long-term
commitment, investment and innovation. Pioneer research is focused on results that deliver higher crop yields and a
consistent per acre income advantage for its customers. New product innovation is accomplished through an effective
integration of superior germplasm and value added native and biotechnology traits. In 2010, Pioneer benefited from the
North America launch of new soybean varieties and new Pioneerbrand corn hybrids. In April 2010, Pioneer received
EPA cultivation approval of OptimumAcreMax1 products, the first product with reduced and integrated corn
rootworm refuge with 2011 commercialization in North America. In October 2010, Pioneer received EPA cultivation
approval of OptimumIntrasectinsect protection products offering that will allow U.S. corn growers to reduce their
structured above ground refuge to a level of 5 percent in the Corn Belt. OptimumIntrasectinsect protection
products will be demonstrated to growers in 2011. Pioneer expects EPA cultivation approval for its next generation
integrated refuge insect control products in the second half 2011. These innovative and convenient products would
feature single-bag reduced refuge for both corn rootworm and corn borer. Upon EPA cultivation approval, multiple
product versions would be available for grower choice including but not limited to: OptimumAcreMaxTM products for
above-ground protection and OptimumAcreMaxTM Xtra products for above- and below-ground protection.
In December 2010, Pioneer and Syngenta AG (Syngenta) entered into an agreement to grant Pioneer a non-exclusive,
global license to Syngenta’s corn rootworm trait MIR604 (AgrisureRW) for corn seed. The trait provides protection
from below-ground coleopteran insects, including corn rootworm, a major corn pest in the U.S. and around the world.
The license gives Pioneer the right to commercialize corn seed containing MIR604, including the right to stack MIR604
with other traits through the expiration of the relevant patents. As part of the agreement, Pioneer is obligated to make
milestone and royalty payments assuming certain contingencies, including regulatory approvals, are met. The
contingencies related to the first milestone payment are expected to be met in 2011. Minimum payments under the
agreement are expected to total about $400 million over the next several years.
In September 2010, as part of the company’s strategy to deliver innovations that address the need for increased food
production to feed the world’s growing population, Pioneer announced that it had entered into an agreement to acquire
26
AGRICULTURE & NUTRITION