Monsanto speaks: When is a price increase not a price increase?

08/19/2009 2:00 pm EST

Focus: STOCKS

Jim Jubak

Founder and Editor, JubakPicks.com

Monsanto (MON) has taken exception to the way that a lot of journalists--myself included--treated its announcement that its newest generation of seeds would cost up to 42% more than the last generation. (See my August 14 update on Monsanto http://jubakpicks.com/2009/08/14/update-monsanto-mon/)

What stuck in the company's craw was language that said that the new prices actually constituted a price increase.

Here's what the company wrote in an e-mail it sent me (and a lot of other journalists):

"Wanted to flag an error in your article on Monsanto.  Monsanto is not increasing its seed prices 42 percent.  I think this may be a misinterpretation of a news wire headline.
The news wire article covered a price differential – not a price increase – between our first- and second-generation Roundup Ready soybean seeds.  In fact, the 42 percent reflects the wide range of pricing for the product options we offer that will meet the needs of our farmer customers.  Prices are increasing marginally for the 2010 growing season.  Increases may vary depending on the channel, but the overall weighted price increase is zero to 7 percent. 
We are doing our best to clear this up for our customers and other media outlets, but want to make sure your information is accurate."

Now when GM introduces a new car model with more features we all still speak of a change in price as a "price increase." When a computer maker comes up with a new model we commonly talk about whether computer prices are going up or down. When a new Tide from Procter & Gamble costs more than the old Tide we talk of a price increase.

All the time we journalists know that the old and new products are not strictly comparable.

The stories I've seen on Monsanto's new prices, including my own, have very clearly stated that that we're talking about a new generation product and cited Monsanto's claims that the new seeds would increase yields.

Perhaps the main point of my story, for investors anyway, was the question of whether Monsanto was prepared for the negative reaction likely to greet its new prices. And whether Monsanto's management had a thick hide.

I think we've got preliminary answers. Yes, the company is prepared. And no, management doesn't have a thick hidfe.

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