BY CAREY GILLAM

Tue Dec 10, 2013 12:12pm EST

Dec 10 (Reuters) - Monsanto Co, the world's largest seed company, said Tuesday that a deal with Danish company Novozymes to form a long-term research and development alliance should accelerate the release of microbial-based products designed to improve crop production.

The news helped to lightly lift shares in St. Louis-based Monsanto, and analysts said while the biological work is not likely to offer a near-term revenue boost, it does hold long-term promise.

"I like the transaction. This is a brand new opportunity," said BGC Financial equity research analyst Mark Gulley. "This supplements Monsanto's current crop protection portfolio."

Monsanto is known for its development of genetically modified crops and Roundup herbicide. The company has broad global market penetration of biotech corn, soybeans and other crops that have had their DNA altered to tolerate being sprayed with herbicide and to ward off harmful pests.

But resistance to Roundup and other crop protection chemicals has been a mounting problem for farmers, and Monsanto and rivals are racing to offer alternatives.

Monsanto has been working to build a new business platform in what it calls "biodirect" research, over the last two years, working to find ways to use bacteria and fungi to optimize the performance of crops and protect them from weeds and pests. The work is aimed at improving production of both row crops and fruits and vegetables.

The deal with Novozymes provides an "important head start" for Monsanto's work in this area and will help create more value for farmers faster, said Monsanto Chief Technology Officer Robb Fraley.

"By combining the capabilities of both companies, there is a unique opportunity to reach a global market... faster than either company or others in the industry could have accomplished on their own," said Fraley.

FULL STORY: http://www.reuters.com/article/2013/12/10/monsanto-novozymes-allian...

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