Delayed product launches and poor farmer take-up contradict company’s business model that claims “a speedy development cycle using novel gene-editing technologies”
Calyxt gene-edited soybean flops in the US
Gene editing has been hyped as a way to bring products with attractive traits to market much more speedily. But so far very few products have emerged from the gene editing pipe line and those that have don’t seem to tally with the industry narrative.
Calyxt’s gene-edited soybean, for instance, has suffered poor farmer take-up, according to an article in the US-based investment magazine Seeking Alpha, reporting in December 2020.
The article says, “the company disappointed investors with delayed product launches and slow growth”, contradicting its business model that claims “a speedy development cycle using novel gene-editing technologies”.
The high oleic oil soybean is engineered not to produce unhealthy trans fats when cooking at high temperatures.
After its unprofitable commercialization of the high oleic soybean oil, Calyxt is reported to be shifting strategy to focus solely on seed production and tech licensing. At this point, the article says, Calyxt “needs to show its ability to be profitable. Gross margins remain negative as the company exits its crop commerce business and focus on grain seed sales and licensing.”
The article adds, “the adoption by farmers seems to be hindered by lower crop yields, an issue seen in other genetically engineered soybean seeds.” (emphasis added)
The company’s business model for the soybean was to sell the seeds to farmers to cultivate, extracting the high oleic oil to sell to food service companies, and crushing the plants to produce soybean meal to feed pigs.
The Seeking Alpha article comments, “The lack of experience in cultivation was soon evident”, as the company “was paying the farmers more to grow its seeds than it was charging customers for its oil”. Calyxt was paying premiums to farmers to enhance identity controls to allow traceability of the crops, one of its value propositions to customers.
But after almost two years of unprofitable operations, Calyxt decided to abandon its commercialization efforts of the high oleic oil and focus on seed production. The Seeking Alpha article says, “Exiting the food processing operations will simplify the business, lower demand for capital funding, and allow the company to focus on scientific innovations. The wind-down of farming operations will take from 12 to 18 months.”
Seeking Alpha’s analyst asks: If Calyxt’s high oleic seeds are superior to other soybean seeds in the market, why hasn’t there been more excitement among farmers for the product? He says the answer is its lower yield: “There is only so much premium a customer will pay for a healthier soybean oil alternative. The same goes for premiums on sustainability and eating local. This, combined with lower crop yield, measured in bushels per acre, make planting commodity soybean commercially more attractive than HOS [high oleic soybean] seeds.”
The story, along with reports that the Japanese gene-edited “sedative” tomato took 15 years to develop, fatally undermines the GMO lobby’s claims that gene editing can produce rapid solutions to our food and farming problems.
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