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Delta and Pine Land Company

 


Address:
One Cotton Row
Scott, Mississippi 38772
U.S.A.

Telephone: (662) 742-4500
Fax: (662) 742-4196
http://www.deltaandpine.com; http://www.deltapineseed.com

Statistics:
Public Company
Incorporated: 1978
Employees: 555
Sales: $260.5 million (1999)
Stock Exchanges: New York
Ticker Symbol: DPL
NAIC: 11511 Support Activities for Crop Production


Company Perspectives:


Deltapine Seed cotton researchers and breeders draw from superior genetics and the best practices of the past to modify and produce diverse conventional and transgenic varieties. These varieties provide the highest yield potential and offer the features farmers want.


Key Dates:


1886: Delta & Pine Land's earliest incarnation is formed as land speculation company.
1915: D & PL begins selling cotton seed under the brand name of Deltapine.
1919: Assets of D & PL acquired for corporate charter by the Fine Cotton Spinners' and Doublers' Association, Ltd. (FSA; later known as Courtaulds plc).
1927: Flood of Mississippi River damages cotton crops.
1936: Cotton production profitable for D & PL despite Great Depression.
1957: Drop in cotton consumption prompts concern.
1961: Company's Western Division office opens in California.
1978: Courtaulds sells D & PL to Southwide, Inc.
1988: An International Division is formed at D & PL.
1993: D & PL is spun off as a public company.
1996: D & PL introduces genetically engineered cotton.


Company History:

The Delta and Pine Land Company (D & PL) is a leader in cottonseed production, best known for the Deltapine, Paymaster, and Sure-Grow brands of cotton seed. The company provides its crossbred and genetically engineered cotton seed, as well as soybean seed, to agricultural enterprises worldwide. Commanding more that 60 percent of the U.S. market for cotton seed, D & PL breeds for fiber quality and cultivation characteristics, as well as for durability with picker or stripper harvest equipment and machinery used to transform cotton to fabric. In 1995 the company began working with chemical giant Monsanto, using the latter's Bollgard and/or Roundup Ready genes in cotton and soybean varieties for purposes of pest and herbicide resistance. Worldwide seed research and distribution involves breeding, testing, seed conditioning, such as the application of pesticides or fungicides, and cotton delinting. D & PL's research facilities are located in the United States, China, Australia, South Africa, Argentina, Brazil, Greece, and Spain. Company headquarters are located in the delta region of Scott, Mississippi, 15 miles north of Greenville.

Cotton Farming in the Early 20th Century

The company's earliest origins may be traced to its founding as a land speculation corporation chartered in 1886. The owners of the property in Bolivar County in the Mississippi delta region sold their wooded lands to timber interests; interestingly, not a single pine tree existed on the land. D & PL as it came to be recognized originated in 1911 when British textile manufacturers acquired land near the Mississippi River to supply cotton to their mills in Manchester, England. (Their source of long fiber cotton from Egypt had experienced low crop yields, and pirates assailed many of the vessels carrying cotton from North Africa to England.) Directors of the Fine Cotton Spinners' and Doublers' Association, Ltd. (FSA) became interested in investing in a U.S. cotton plantation when they met J.W. Fox, director of the Mississippi Agricultural Experiment Station (MAES), at the World Cotton Conference in Brussels. After a visit to Bolivar County, FSA negotiated with L.K. Salsbury for the acquisition of an estimated 36,000 acres from over a dozen property owners, as well as from Salsbury, for approximately $3 million.

Because an 1890 federal law prohibited farming operations from owning more than 12,500 acres of land, the British capitalists initially formed three companies. FSA organized operations under the Mississippi Delta Planting Company, which leased land from the other two companies, the Triumph Planting Company and the Lake Vista Planting Company. Salsbury became president of Mississippi Delta Planting Company and Fox managed the land holdings. The three companies would consolidate under the charter of D & PL in 1919 with the acquisition of D & PL's nearly worthless stock. Since the charter dated to before the 1890 law, the company was exempt from the land ownership limitation.

FSA invested $1.5 million in their new cotton plantation with mixed results. D & PL cleared virgin land, drained the soil along the bayous, and constructed cabins for tenant farmers. The first year's yield was only 2,800 bales of cotton, 500 pounds per bale, using hand and mule labor. The land was unable to produce the long staple cotton to the standard that FSA required and the company never used cotton fiber from the U.S. plantation in its mills. Short staple cotton sold on the open market at a higher profit, however, and D & PL proved to be a valuable investment for FSA whose sources in Egypt rebounded before World War I.

D & PL faced many difficulties in the early years, including drought, heavy rains, and an infestation of boll weevils which fed on cotton. MAES had initially researched the boll weevil problem before it reached Bolivar County in 1911. Research involved cultivation techniques and the crossbreeding of new varieties of cotton to avoid the populous season of the pests. At the MAES Delta Branch Station, Early C. Ewing pioneered hybrid cotton varieties to produce fast-fruiting and early maturing varieties of cotton for that purpose. D & PL hired Ewing in 1915 for its Cotton Research and Improvement Program where Ewing continued his work on pest control and crossbred cotton varieties for fiber length, strength, uniformity, and high crop yield. D & PL adopted the name Deltapine for these new cotton varieties.

In the company's first decades D & PL also contended with heavy rains and high water levels on the Mississippi River. The levee broke in 1912 and 1913, but sharecroppers were soon able to plant at higher elevations. A bridge built over Lake Bolivar in 1914 allowed cultivation of land on the far side, after it had been cleared of virgin timber and thousands of rattlesnakes.

While the levees held during the floods of 1916 and 1922, during the flood of 1927 the Mississippi River overflowed as much as 100 miles inland. The $500,000 damage sustained by D & PL involved the loss of 100 homes, 200 mules by drowning, and, of course, their loss of arable land. Specifically, the river deposited a two- to six-foot layer of sand on 5,000 acres of land, making some the company's best land unfit for crops. With Oscar Johnston as president, D & PL responded by planting grasses and converting the land to cattle grazing. The river receded too late in 1927 to plant on most of the land, and D & PL sharecroppers produced only 40 bales that year.

D & PL Thrives through the Great Depression and World War II

Under Johnston's leadership D & PL became a thriving cotton plantation, even through the Great Depression. Prior to the Government Cotton Control Program, designed to limit market surplus in the early years of the Depression, D & PL planted 14,000 to 18,000 acres. Regarded as a highly efficient organization, the cotton plantation was divided into 11 units, each supervised by a unit manager. Sharecroppers included 1,400 workers and their families. In 1936 D & PL plantations yielded approximately 15,000 bales of cotton on 11,700 acres. Sharecroppers earned about $1,000 from their cotton crop and supplemented that income on the one-half acre provided to each family for gardening and personal use.

D & PL was the largest, most successful plantation in the country and attracted visitors from countries around the world, including Turkey, Australia, Egypt, France, China, and South Africa. D & PL's cotton plantation averaged 9,130 acres between 1933 and 1943 and produced an average yield of 653.3 pounds of cotton fiber per acre and 980 pounds of seed. A new variety of cotton introduced in 1942, Deltapine 14, yielded 737 pounds per acre. Acreage for corn averaged 2,183 acres between 1933 and 1943, while 7,736 acres provided food, animal feed, and grazing lands.

D & PL gradually converted to mechanized methods of planting and cultivation during World War II. In 1945 6,300 acres of cotton were cultivated by 612 sharecropper families, involving 1,547 workers, averaging ten acres per family plus seasonal workers. Use of Deltapine cotton varieties spread across the southern cotton states from Texas to North Carolina. Experimental stations in South America allowed D & PL to test its seeds during the winter in the northern hemisphere, speeding the process of developing and testing new varieties from parent lines.

As clothing manufacturers changed to synthetic fibers, cotton began to lose some of its share of the fiber market, creating a cotton surplus in the late 1950s. The change was gradual, from a 88.3 percent share of the fiber market in 1920, cotton declined to a 80.6 percent share in 1940, and to 65 percent in 1956. Private and government efforts aimed to strengthen cotton's share of the fiber market by strengthening the quality of cotton fiber. With Charles R. Sayer as president, D & PL increased its research budget by 50 percent between 1951 and 1957. A new, smooth leaf variety developed by D & PL at this time improved the quality of cotton and reduced waste. At 1957 prices, a $150 bale of cotton would be valued $7 to $10 more per bale. Negative effects of the cotton surplus on D & PL were offset by federal farm supports, which gave D & PL nearly $1.2 million in 1957 and expansion of the cattle herd.

Product Development: 1960s-1980s

After several years of supplying cotton seed to western farmers, D & PL began to expand operations into the southwest and west. The company opened its Western Division Office in Brawley, California, providing a sales office and quality control station to the Imperial Valley, and also located a sales representative in Chandler, Arizona. D & PL eventually attained 98 percent of the seed market in the Imperial Valley and 95 percent of the market in Arizona. The Western Division added a complete research facility in Casa Grande, Arizona. In 1961 D & PL began to develop Deltapine cotton varieties for the dry conditions of Texas, New Mexico, and parts of Oklahoma. The research station in Lubbock, Texas, added a full-time plant breeder in 1966. After ten years of research, the Southwestern Research Program released two new varieties of Deltapine cotton in 1971, while another two varieties, introduced two years later, were bred for cotton farmers in Arizona.

In 1978 Courtaulds plc, which had absorbed FSA, sold D & PL to Southwide, Inc., a holding company based in Memphis. Southwide sold a majority of D & PL's acreage to Prudential Life Insurance, approximately 25,000 acres of crop land, 4,000 to 5,000 acres of woodlands, and the rest cattle grazing areas. Southwide kept 90 acres for research and office facilities and leased 8,000 acres from Prudential for cultivation. Assets included two cotton gins, a delinting plant, a cottonseed processing plant, rice processing and storage plant, and a soybean and small grains plant. Roger Malkin became chairman and CEO of D & PL.

In the early 1980s D & PL introduced several new cotton and soybean varieties which remained in use for several years. After ten years of research on soybeans D & PL began to market soybean seed in 1980. New cotton varieties included the high yield Deltapine Acala 90 which produced a premium quality fiber and proved adaptable to different geographic regions. D & PL introduced two Acala varieties of cotton specifically for the San Juaquin Valley; Deltapine 50 and Deltapine 20 provided good fiber quality, strong yield potential, and a short maturity rate. Short maturity reduced costs as farmers used less water and agricultural chemicals, while early harvest lowered risk due to potential poor weather in the fall. By 1985 D & PL was marketing ten varieties of cotton seed and six varieties of soybeans; approximately 20 percent of 11 million acres of cotton crops in the United States were planted with some variety of Deltapine. Deltapine 50 remained one of the company's most popular varieties, used in 12.3 percent of upland picker cotton crops in the United States in 1993.

D & PL focused operations on the cotton seed market as the company sold its corn and sorghum business to Mycogen Plant Science. The sale involved the exchange of a sorghum processing plant for a cotton seed delinting facility in Lubbock. Development of cotton varieties continued with Deltapine 51 which yielded a higher quantity of cotton lint per cotton boll. New varieties designed for specific cotton growing regions included two new varieties applied to the mid-south and semi-arid desert valleys, while another variety, launched in 1994, was designed for the high plains of Texas. D & PL also released five new soybean varieties in 1994.

International and Technological Growth in the 1990s

D & PL's international division was formed in 1988 with two employees; by 1996 it would employ a workforce of 45. Sales in 1988 realized $350,000 and reached $2.3 million in 1990. The company's first breakthrough in the international market came after poor weather conditions in Paraguay increased that country's need for cotton seed. D & PL exported $6 million worth of cottonseed to Paraguay in 1992 and $2.1 million in cottonseed the following year. Satisfaction with Deltapine varieties prompted a joint venture to breed and process cottonseed in Paraguay.

D & PL became a public company in 1993 raising $34 million for international business activities and development of genetically engineered seeds. D & PL entered into a joint venture with government agencies in Singapore, the Cotton Research Institute and the Chinese Academy of Agricultural Sciences, to research and market cotton varieties in China. China, the largest consumer and producer of cotton worldwide, was still importing some cotton. New cotton varieties developed there would by marketed within China by the venture, D & PL China, and outside China by D & PL.

By 1994 D & PL sold cottonseed in 13 countries, primarily in South America, through export and to local markets through its subsidiaries. D & PL captured an 80 percent share of the market for cottonseed in Mexico as well as large market shares in Greece and Spain. The company added cotton seed breeding facilities and processing plants in Australia and South Africa, while Deltapine cottons were tested for use in Bulgaria, Brazil, Ecuador, and several southern African countries. Turkey's Ministry of Agriculture approached D & PL to develop a program to privatize the government operated seed industry there.

A collaborative research agreement with chemicals giant Monsanto Company came to fruition in November 1995 when the Environmental Protection Agency (EPA) approved Monsanto's Bollgard (Bt) gene for use with certain cotton varieties for pest control. Bt was derived from Bacillus thuringiensis, a soil bacteria which produced a protein fatal to the bollworm and the tobacco budworm (but not to animal or human life), when ingested via the cotton. D & PL spliced the Bollgard gene into some of its Deltapine varieties. In anticipation that the technology would be approved, the EPA permitted D & PL to plant 28,000 acres of NuCOTN for seed inventory in 1995. D & PL and Monsanto also formed a new joint venture with Chinese agencies in late 1995 to produce and market the genetically altered cotton seeds.

D & PL introduced NuCOTN to farmers in 1996 and expected savings on the cost of insecticides to range from $30 to $80 per acre. Farmers in eastern Texas using D & PL's NuCOTN reported insect damage to cotton crops in July as the unusually hot summer swelled the bollworm population. Unwilling to risk crop loss, farmers sprayed insecticides on an estimated 450,000 acres of NuCOTN. Of the 1.8 million acres planted with the Bollgard cotton varieties, pest damage to the Texas crops resulted in an extremely poor cotton yield on 18,000 acres. Monsanto paid damages to 25 Texas farmers seeking remuneration for low crop yield. Though conflicting research emerged after the first harvest of NuCOTN, D & PL's own study showed an average increase yield of 8.6 percent. For the year ending August 30, 1996, D & PL revenues increased to $153.2 million, a 54.8 percent increase due to the sale and licensing of NuCOTN varieties.

D & PL expanded its market share for cottonseed in the United States in anticipation of combining biologically engineered properties with existing varieties of cotton. In 1994 D & PL acquired Paymaster Cottonseed from Cargill, Inc. for $14 million, obtaining the Paymaster and Lankart tradenames and trademarks as well as seed inventory and breeding stock. In 1996 the company acquired the Hartz Cotton from Monsanto for $6 million. Through a $70 million stock transaction D & PL merged with Sure-Grow Seed, Inc., a deal that included the acquisition of Ellis Brothers Seed, Inc. of Alabama; Mississippi Seed, Inc.; and Arizona Processing, Inc. D & PL planned to cross breed the Sure Grow brand of cotton with Monsanto's Bollgard and Roundup Ready technologies, the latter a gene resistant to a Monsanto's Roundup herbicide used to kill weeds.

D & PL and Monsanto formed international joint ventures as well to produce, condition, and market Bollgard and Roundup Ready cotton seed. In 1997 Hebei Ji Da Cotton Seed Technology Company Ltd. began construction on a cotton seed conditioning and storage facility in China's Hebei Province. The new joint venture constructed an acid delinting facility with the capacity to condition seed for up to two million acres. The delinting process removed lint left on cotton seeds after ginning by soaking seeds in a solution of ten percent sulfuric acid and 90 percent water, then heating. The conditioned seeds produced a better harvest because they were less vulnerable to disease. After three years of testing of D & PL's Bollgard varieties with excellent results, the venture produced and conditioned enough of the seed for 500,000 acres for the spring 1998 planting but sold enough for 200,000 acres in the Hebei province. Similar joint ventures were established in the Anhui province of China, in Argentina, and in Brazil.

D & PL introduced cotton and soybean seeds engineered with the Roundup Ready gene for the 1998 spring planting season. Of the 812,000 acres sown with Roundup Ready cotton seed, 30,000 acres of cotton crops experienced heavy losses when sprayed with the Roundup herbicide. D & PL blamed the losses on atypical weather conditions in the five counties of Mississippi where they occurred, but critics blamed insufficient testing. Roundup Ready soybeans also generated controversy due to concerns about contaminating the gene pool of the world's food supply.

The controversy over bioengineering did not stop cotton and soybean growers, however. D & PL's transgenic seed was sown in approximately 6.7 million acres in 1999, compared to 3.8 million acres in 1998. Transgenic seed varieties accounted for 80 percent of D & PL's total unit sales. With increased sales in Australia and China, revenue for the year ending August 30, 1999 reached $260.5 million, an increase of 35.5 percent from $192.3 million for 1998.

In March 1998 D & PL received approval of a patent for Control of Plant Gene Expression; this generated even greater controversy than had the Roundup Ready Soybeans. Jointly held with the U.S. Department of Agriculture, the patented gene was designed to protect proprietary rights to bioengineered seed varieties, as D & PL had been concerned about protecting intellectual property rights of its seed varieties abroad. Labeled the 'terminator,' the gene would kill the seed of its own plant after the crop matured, thus preventing farmers from saving and planting successive generations of seeds. Critics argued that the gene made farmers dependent on large companies for seed stock and potentially polluted the seed of conventional plants. Moreover, if the wind carried pollen with the terminator gene to a nearby farm, any contaminated seeds would not germinate. The American Corn Growers Association met with Department of Agriculture Secretary Dan Glickman to encourage him to abandon the technology.

Monsanto's disavowal of the terminator technology did not interfere with an agreement to merge with D & PL, announced in May 1998. Monsanto eventually dissolved the agreement, however, and withdrew its filing for approval from the Department of Justice (DOJ) in December 1999. Delays, caused by a DOJ antitrust investigation into whether Monsanto would unfairly dominate the bioengineered cotton seed market, prompted Monsanto to terminate the merger agreement late in 1999. Having bailed out of the agreement, Monsanto ended up having to pay D & PL an $81 million termination fee, according to their original contract, and dissatisfied D & PL shareholders sought to bring a suit for punitive damages. Despite these legal entanglements and the failed merger with Monsanto, D & PL remained a highly competitive force in its industry. While some analysts speculated that the company remained ripe for acquisition, company representatives maintained that D & PL was well positioned to remain an independent company.

Principal Subsidiaries: Arizona Processing Inc.; Greenfield Seed Co.; D & M International LLC (50%); D & M Partners (50%); D & PL Argentina, Inc.; D & PL China PTE, Inc.(40%); D & PL Mexico, Inc.; Deltapine Paraguay, Inc. (40%); D & PL South Africa, Inc.; D & PL International Technology Corp.; Delta Pine De Mexico, S.A.; DeltaPine Australia PTY, Limited; Hebei Ji Dai Cotton Seed Technology Company, Inc.(China; 40%); Paymaster Technology Corp.; Delta and Pine Land International, Ltd.; Turk DeltaPine, Inc.

Principal Competitors: Dow Chemical Company; Pioneer Hi-Bred International, Inc.; DeKalb Genetics Corporation.





Further Reading:


Blake, Ed, 'Delta Seed Plantation Has Colorful History,' Pontotoc Progress, May 8, 1986, p. 8.
Brandfon, Robert L., Cotton Kingdom of the New South: A History of the Yazoo Mississippi Delta from Reconstruction to the Twentieth Century, Cambridge, Mass.: Harvard University Press, 1967.
Byrne, Harlan S., 'Seeds of Success,' Barron's, September 12, 1994, p. 24.
Cantrell, Wanda, 'Delta and Pine Land Getting into Corn Seeds,' Clarion/Jackson Daily News, January 19, 1986, p. H5.
Cohen, Judith Radler, 'Monsanto Maintains Delta is on Track,' Mergers and Acquisitions Report, July 19, 1999.
Connor, Charles, 'Cotton Seed Company Stock Soars on Patent News,' Commercial Appeal, March 12, 1999.
------, 'Mississippi Timber and Land Firm to Consolidate Operations, Cut Jobs,' Commercial Appeal, October 16, 1997.
'Delta & Pine Land Begins NYSE Trading After Stock Split,' PR Newswire, December 18, 1995.
'Delta & Pine Land Company Files Lawsuit Against Monsanto,' PR Newswire, January 18, 2000, p. 3,651.
'Delta & Pine Land Tackles Performance Issues,' Agri Marketing, February 1998, p. 62.
'The Delta Blues?,' Agri Marketing, November 1996, p. 22.
Dixon, Mary, 'Seeds Spell Success for Delta Pine,' Clarion/Jackson Daily News, October 20, 1985, p. I3.
Galarza, Pablo, 'Delta & Pine Land Co. Scott, Miss. Cotton-Picking Problems Benefit Seed Producer,' Investor's Business Daily, May 26, 1994, p. 1.
Hansen, Bruce, 'Delta Pine Joins Fortune-Seekers in China,' Memphis Business Journal, January 17, 1994, p. 1.
'Monsanto Pays Out $81 Million Break-Up Fee,' Marketletter, January 3, 2000.
Myerson, Allen, R., 'Breeding Seeds of Discontent; Cotton Growers Say Strain Cuts Yields,' New York Times, November 19, 1997, p. 1D.
Myerson, Allen, R. 'Monsanto Paying Delta Farmers to Settle Genetic Seed Complaints,' New York Times, February 24, 1998, p. 9D.
Sewell, Tim, 'Delta and Pine Land to Foster New Growth through Reorganization into Divisions,' Memphis Business Journal, April 7, 1997, p. 8.
Stannard, Fred Jr., 'Cotton Campaign: Growers, Government Push Drive to Regain Sales, Eliminate Glut,' Wall Street Journal, April 1, 1957, p. 1.
'State Firm Gets Million,' Jackson Daily News, February 24, 1959.
Steyer, Robert, 'Cotton Firm Eying China; Monsanto a Part of One Venture,' St. Louis Post-Dispatch, June 2, 1996, p. 1E.
Steyer, Robert, 'Monsanto Makes Bid to Buy World's Largest Cotton-Seed Company,' St. Louis Post-Dispatch, October 8, 1999.
------, 'Monsanto Rumor Could Endanger Delta & Pine Deal; Merger Speculation Causes Cotton Seed Company's Stock to Fall,' St. Louis Post-Dispatch, November 11, 1999, p. C1.
------, 'Monsanto Sells Cotton Seed Unit to Mississippi's Delta and Pine Land Co,' St. Louis Post-Dispatch, February 6, 1996.
Tansey, Geoff, 'Bitter Battle of Terminator Seeds,' Financial Times, June 17, 1999, p. 28.
Williams, Wirt A., ed., History of Bolivar County, Mississippi, Jackson, Miss.: Hederman Brothers, 1948.

Source: International Directory of Company Histories, Vol. 33. St. James Press, 2000.




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