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(Bloomberg) -- In the battle to license the next generation of genetically modified soybeans, Dow Chemical Co. is losing out to Monsanto Co. before either company’s product is available to U.S. farmers.

Dow’s Enlist soybeans, slated to go on sale next year, are engineered to survive being sprayed with both 2,4-D and glyphosate herbicides, a sought-after feature as farmers battle weed resistance. The company is counting on Enlist to help add $1 billion of agricultural revenue in the next few years.

Despite operating in a fiercely competitive industry, it’s established practice for seed companies to license competitors’ genetics. Now, in a blow to Dow, DuPont Co. and Syngenta AG, two of its biggest rivals, say they don’t plan to sell Enlist seeds.

DuPont’s Pioneer unit, the largest soybean-seed supplier in the U.S., said Friday it ended its agreement with Dow to commercialize Enlist seeds. Monsanto, the second-biggest seller, and Switzerland’s Syngenta AG, the No. 3, also won’t add Enlist to their soybean-seed lines, company spokesmen said.

Without those licensing accords, Dow’s market opportunity shrinks to 25 percent of U.S. soy acres at best, according to Jeffrey Zekauskas, a JPMorgan Chase & Co. analyst.

“The prospects of the Dow Enlist soybean product are much diminished by this development,” New York-based Zekauskas said in a note Friday, revising his recommendation on Dow shares to hold from buy.

In contrast, Monsanto already has a licensing agreement in place for its Roundup Ready Xtend soybean seeds that will see DuPont sell them. St. Louis-based Monsanto is poised to get as much as 90 percent of U.S. acres with Xtend, Don Carson, an analyst at Susquehanna Financial Group LLLP, said in a Jan. 15 note.

Chinese Approval

Monsanto and Midland, Michigan-based Dow plan to begin selling their respective new seeds in 2016, pending Chinese import approval.

Dow wasn’t counting on DuPont to license Enlist when it laid out its plan in November to double agriculture earnings in five years, said Tim Hassinger, president of Dow AgroSciences.

“Our enthusiasm for Enlist remains high,” he said by phone Friday.

Two Iowa-based soybean-seed companies, Stine Seed Co. and Merschman Seeds Inc., have agreed to license the seeds, and Dow also plans to market Enlist in South America, Hassinger said.

Dow plans to begin selling Enlist corn and cotton that the company predicts will eventually generate $400 million in annual revenue, compared with $600 million for Enlist soybeans, Chief Commercial Officer Joe Harlan said in a November presentation.

‘Strategic’ Decision

Ending the Enlist accord with Dow was “strategic,” said Jane Slusark, a spokeswoman for Wilmington, Delaware-based DuPont’s Pioneer unit.

Pioneer doesn’t need Enlist because it can help farmers with hard-to-control weeds by adding traits developed by Monsanto and Bayer AG to its soybeans, Slusark said Friday. Pioneer also can use its own STS technology, she said.

Syngenta doesn’t plan to license Enlist soybeans, Paul Minehart, a U.S. spokesman for the Basel, Switzerland-based company, said in an e-mail. Monsanto has no plans to commercialize Enlist in soy and is focused on Xtend, said Danielle Stuart, a spokeswoman.

To contact the reporter on this story: Jack Kaskey in Houston at jkaskey@bloomberg.net To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net Steven Frank

Bloomberg