ARGENTINA – Argentine crop technology company Bioceres Crop Solutions SA has reported a 16% decline in its shares in New York trading, marking the company’s most significant drop in two years.
This decline followed a disappointing earnings report for the quarter ending June 30, where Bioceres’ financial results fell short of market expectations.
The company cited challenges in rolling out its genetically modified (GM) HB4 wheat strain, which is designed to tolerate drought and resist glufosinate herbicide.
Bioceres is attempting to become the first company to successfully commercialize genetically modified wheat, an endeavor complicated by longstanding consumer and environmental opposition to GM crops intended for human consumption.
While the United States Department of Agriculture (USDA) recently approved HB4 wheat for cultivation, deeming it no more of a plant pest risk than traditional wheat varieties, the path to global market acceptance remains uncertain.
The company has faced a slow rollout in Argentina, where HB4 wheat is most advanced. Despite some progress, with around 20 flour mills now purchasing HB4 and hundreds of thousands of hectares planted, expanding beyond tightly controlled environments has proven challenging.
CEO Federico Trucco emphasized that the company underestimated the level of validation required to achieve broader market adoption, particularly amid high royalty fees and persistent doubts about GM wheat.
The USDA’s approval for HB4 wheat marks a critical step for Bioceres, joining Argentina, Brazil, and Paraguay in authorizing its use.
However, major international wheat buyers like Japan, Mexico, and the Philippines have yet to approve the strain, raising concerns about potential trade boycotts. The hesitation is reminiscent of Monsanto’s failed attempt to commercialize GM wheat two decades ago when international backlash halted the initiative.
Despite these challenges, Bioceres reported an 18% increase in quarterly revenue, driven by HB4 wheat sales and a favorable winter wheat season in the southern hemisphere.
However, the company’s net income and adjusted EBITDA showed little change, reflecting the mixed impact of its current market strategy. Trucco remains optimistic, noting that while fully monetizing the opportunity could take several years, recent approvals have already enhanced the company’s credibility in the global market.
Moving forward, Bioceres plans to focus on expanding HB4 wheat’s footprint in the United States and convincing new markets, such as Japan and South Korea, of its benefits.
However, significant barriers remain in parts of Asia, North Africa, and the Middle East, where the product is still banned. Trucco remains cautiously optimistic about the long-term potential of HB4 wheat, emphasizing that regulatory success must translate into broader market acceptance over time.
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