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International Paper Co., the world's largest pulp and paper maker, plans to remake commercial forests in the same way Monsanto Co. revolutionized farms with genetically modified crops.
International Paper's ArborGen joint venture with MeadWestvaco Corp. and New Zealand's Rubicon Ltd. is seeking permission from the U.S. Department of Agriculture to sell the first genetically engineered forest trees outside China. The Australian eucalyptus trees are designed to survive freezes in the U.S. South.
Plantations of engineered trees would give International Paper a competitive advantage by providing a reliable supply of lower cost wood at a time when timberlands are dwindling because of development, said David Liebetreu, the Memphis, Tennessee- based company's vice president of global sourcing. Opponents are concerned that alien genes may contaminate natural forests, echoing objections to modified crops that Monsanto still faces.
"There is a potential to explode once they get these trees approved," said David Knott, who manages $1.3 billion as chief executive officer of Dorset Management in Syosett, New York. He said he increased his stake in Rubicon to 70.5 million shares this year to bet on ArborGen because it has a customer base of large landowners and little competition. "This could take off faster than Monsanto."
Monsanto's genetics, which were first sold in herbicide- tolerant soybeans in 1996 and insect-resistant corn the following year, were used in 88 percent of the world's 309 million acres of biotech plantings last year. Monsanto's sales of seeds and genetics quadrupled since 2002 to $6.4 billion last year.
