Monsanto Scraps $90 Million GM Corn Facility Plans Due to Declining Profits

After the recent press release from Monsanto announcing that the company will cut about 3600 jobs globally, more news of the biotech company’s failure rises to the surface.

Plans to construct a $90 million GM corn processing plant in Independence, Iowa have reportedly been scrapped due to a ‘struggling farm economy.’ [1]

Monsanto notified the Iowa Economic Development Authority (IEDA) that it will not build a long-delayed seed corn production facility in Independence which would have created 47 full-time jobs and 800 seasonal positions. These jobs would have created $7.5 million in job creation tax credits for the company.

Joan Steckel, a Monsanto marketing representative, wrote in a letter to the IEDA:

“As announced this fall, we are going to focus on reducing our costs due to the market realities, the transformation opportunities within Monsanto, and to support our long-term growth. Monsanto is not closing their existing Independence research facility and they intend to stay in Independence for many years to come . . . The company has 1,619 employees in Iowa, including seven at the Independence facility.”

Monsanto had been planning for the new plant, which was to be constructed on a 150-acre site in Independence since April of 2008, and received two extensions of its tax credit agreement.

As for Monsanto’s recent decrease in sales, the company stated:

“Net sales for the quarter decreased over the prior year’s first quarter to $2.2 billion. Gross profit on an as-reported basis for the 2016 first quarter also decreased over the prior year period to $901 million. As expected, the decline in the quarter is due to weaker foreign currencies, glyphosate pricing and lower corn volumes in Latin America.

With the anticipated continuation of several global and industry headwinds that include the recent currency devaluation in Argentina, Monsanto expects full-year ongoing EPS guidance to be at the lower half of the range of $5.10 to $5.60.”

Another biotech company expecting to receive tax credits for creating new jobs associated with the Monsanto plant will have to forgo them as well. DuPont Pioneer had to cancel contracts for $13 million in tax benefits linked to creating 300 jobs for three projects. Fewer jobs will be available at three DuPont area plants in Iowa.

The company will not accept the tax benefits because it cannot create the required number of jobs.

Source:

[1] The Gazette