Agribusiness giant Corteva Inc.’s plan to separate crop protection products from its 99-year-old seed empire is shining a light on the crossroads facing a $1.5 trillion U.S. farm and food industry.
Just days after Agriculture Secretary Brooke Rollins announced last month her agency and DOJ would look into what's behind a surge in farm input prices, Indianapolis-based Corteva confirmed speculation that it will split the company's chemical and seed businesses into two separately traded entities.
While the move isn't seen as directly related to the Trump administration's scrutiny of higher costs for farmers, the back-to-back announcements are a sign of the times.
As agriculture companies like Corteva have struggled to figure out the most profitable formula for selling pesticides and seeds to growers, a Make America Healthy Again push by the administration has drawn increased attention to litigation over some farm chemicals that companies like Bayer say are baseless.
Meanwhile, income for growers of row crops like corn is forecast to fall for a third straight year in 2025, prompting concern about a potential farm economy crisis that some say could be the worst since the harrowing days of the 1980s. Meanwhile, global ag powerhouse China hasn't purchased U.S. soybeans since May, and a government shutdown is clouding the outlook for federal aid.
As for Corteva, it's one of several big crop science companies that for several years have touted the wisdom of having chemical-based crop protection products – and more recently biological-based ones – under one roof with cutting-edge seed technology. Now, with Corteva's planned split and companies possibly following similar paths, some industry watchers are worried about the future of ag innovation.
"The development pathway becomes more complex, and I don’t think farmers need more complexity," Jason Miner, head of agriculture for Bloomberg Intelligence, said in an interview.
Corteva CEO Chuck Magro, when asked by an analyst last week about moving away from the "gold standard" of developing integrated crop science products in-house, said the shift should increase opportunities to team with others within a rapidly changing market.
“We're going to need to have more collaborations and partnerships, more than we've ever had before, and these systems are going to become what I called open-source or multi-modes of action," Magro said on a call discussing the strategy.
Oppenheimer analyst Kristen Owen said in a note this week that after several discussions with Corteva investors, the merits of the split "may be debatable." Two big questions, she said, will be the value of the standalone seed business and whether the crop protection side is "uninvestable?"
Owen compares it to the razor-and-blades business model. “If you are now splitting your razors from your razor blades and your competitors are going to come out with shaving companies, how do you compete?”
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"We view crop protection cycles complementary to seed, with faster innovation times and R&D synergies providing farmers with full-acre solutions," she said.
Corteva's seed business also helps Corteva underwrite the company's investments in ag chemicals and, of increasing importance, biologicals, according to Owen.
“Can you continue to invest in novel active ingredients or biologicals if you don’t have that cash cow generation of the seed business?" Owen said in an interview.
The plan to create two new companies in 2026, just six years after Corteva became a standalone ag behemoth after being spun off from DowDuPont, could diminish incentive to take on risk in the R&D stage, potentially leading to fewer breakthroughs, Miner said.
"It’s hard to see that the development incentives to take a risk on complementary seeds and chemistries are still there," Miner said. "You can take a bet on the seeds but if you need a chemistry, whether it’s a Roundup herbicide or a dicamba that doesn’t drift, you need somebody on the chemistry side who's willing to take the leap with you.”
Todd Martin, CEO of the Independent Professional Seed Association, noted that for the last 10 to 15 years, "all we’ve heard about is how there needs to be synergy in between seeds and the crop protection chemicals market. Especially when you are looking at biotechnology, that seems to honestly be the case.”
But at the same time, selling crop protection products to farmers versus seeds requires a completely different sales approach.
The former often can be tweaked if the desired results don't materialize at first, whereas seed purchases are "much more emotional" in that a wrong decision usually has much longer term consequences, Martin said.
The Corteva revamp also hits as rivals like Bayer, through its 2018 purchase of Monsanto, are trying to navigate major liability issues, particularly in the charged "MAHA" political environment.
Bayer has said it is considering halting glyphosate production unless it receives legal protection from costly lawsuits. The company has repeatedly said the allegations have no merit and that there's a long history showing the product's safety. Corteva's Magro said last week that legacy liabilities will come under the crop protection side of the spinoff and that there is "nothing new" to report on that front.
As far as Corteva, shares have dropped 14% since a mid-September high through trading as of midday Tuesday.
Beyond known legacy liability issues around PFAS, any other risk out there is "mostly conjecture," Owen said.
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