Crop giant Monsanto is teaming up with microbial and enzyme technology firm Novozymes to form a “BioAg Alliance” partnership that will target development of bioagricultural products that the companies say will be “sustainable.”

The deal includes a $300 million upfront payment to Novozymes, which operates its North American headquarters in Franklinton.

Monsanto (NYSE: MON), which is based in St. Louis, and Novozymes (Nasdaq: NZYM) disclosed the deal early Tuesday before the New York markets opened. The agreement is expected to close next year. 

Monsanto maintains facilities in RTP, at the North Carolina Research Campus in Kannapolis, and in Mt. Olive. 

The companies believe the combination of their respective technologies can lead to development of microbial products which can help farmers increase crop yields while also being more sustainable in terms of input and demands on the environment. They intend to target so-called broad-acre crops, fruit and vegetables.

“As the world population grows at tremendous pace over the next decades, we need to significantly increase the output from our land without increasing the pressure on the environment,” says Peder Holk Nielsen, CEO of Novozymes, in the announcement. “Today, we forge a game-changing alliance with the potential to transform global agriculture. The combined capabilities of Novozymes and Monsanto create an innovation powerhouse with a unique opportunity and approach to unleash the transformational opportunity in naturally derived microbial solutions in agriculture.”

The two firms say they will “co-manage” the alliance and also share funding costs for research and development.

Monsanto also will pay Novozymes $300 million for “ongoing business and microbial capabilities” and supply of products to the alliance.

“Monsanto, Novozymes and the farmer customers we serve share a need to meet growing demand in a sustainable way, and investing in the research and development of agricultural biological technologies like microbials is another step in that direction and a natural extension of our core business,” says Robb Fraley, chief technology officer at Monsanto. “Just as Monsanto has done with leadership investments in our precision agriculture platform, we see this collaboration as being the same type of catalyst for taking our biologicals work from a technology to a full-fledged platform that represents the next layer of opportunity for growers to drive yield and productivity while helping the preservation of finite natural resources in our precious planet.”

According to the companies, so-called agricultural biological products are now a $2.3 billion a year industry with double-digit growth over each of the past several years.

“Microbial-based solutions are derived from various naturally-occurring microorganisms such as bacteria and fungi,” they explained. “They can protect crops from pests and diseases and enhance plant productivity and fertility. With faster development cycles compared to other agricultural innovations, as well as broad geographic and crop applicability, microbial solutions offer tremendous potential to deliver sustainable, cost-effective solutions that can increase yield using less input.”

Novozymes, which also produces enzymes designed to help turn agricultural products into ethanol, has considerable expertise in microbial technologies, including discovery, product development and fermentation.

Monsanto launched its own agricultural biologicals technology platform earlier this year.

Each firm will maintain independent microbial efforts. 

Monsanto’s Triangle connection

GrassRoots Biotechnology, which has worked as a partner with Monsanto for several years, was acquired by Monsanto in June. 

Financial terms were not disclosed.

GrassRoots was spun out of Duke University in 2007. Founders included Philip Benfey and Doug Eisner.

The firm developed technology focused on gene expression and other research, It had worked with Monsanto on two projects.