Dow Chemical (DOW) has secured the registration of the Environmental Protection Agency ("EPA") for its Enlist Duo, a companion herbicide to the Enlist corn and soybean traits. This marks the final step in the regulatory process for the commercialization of the company’s Enlist weed control system in the U.S. and a major milestone in its strategic plans for long-term growth.
The EPA has approved the Enlist Duo in six U.S. states – Illinois, Indiana, Iowa, Ohio, South Dakota and Wisconsin. The agency will accept public comments until Nov 14, 2014, for registering the herbicide in ten additional states – Arkansas, Kansas, Louisiana, Minnesota, Missouri, Mississippi, Nebraska Oklahoma, Tennessee and North Dakota.
The approval came after thorough assessment of human health and ecological risks by the EPA scientists of the uses of 2,4-D (a widely used herbicide) in Enlist Duo by applying highly conservative and protective assumptions. The evaluation confirmed that the usage meet the safety standards for registration and is protective of public, agricultural workers and endangered species.
Dow, last month, received the much awaited approval of the U.S. Department of Agriculture (“USDA”) for the commercialization of its Enlist corn and soybean traits in the U.S. The USDA approval applies to Enlist corn, Enlist soybean and Enlist E3 soybean traits.
The Enlist traits are part of the Enlist weed control system that combines innovative traits and herbicides to meet challenging weed control issues. Farmers in the U.S. require new tools to address significant weed control problems.
The occurrence of resistant weeds has more than doubled since 2009 and infested roughly 70 million acres of farmland in the U.S., challenging farmers’ ability to produce healthy crops. The next-generation Enlist system is expected to provide them with novel and effective solutions to address these challenges and allow them to boost crop productivity to meet rising food supply demand and remain competitive.
Enlist Duo, a proprietary combination of a new choline salt of 2,4-D and glyphosate, is expected to control and help prevent further development of herbicide-resistant weeds. It has also been optimized for on-target application using Dow’s proprietary Colex-D Technology.
Dow expects the Enlist system to deliver blockbuster market opportunity. It expects to unveil commercialization plans for the system in the next few weeks.
However, the Enlist system has been heavily criticized by various groups including the Center for Food Safety for potentially causing adverse effects on health and environment. Critics have warned that planting of Enlist corn will lead to a significant rise in use of 2,4-D herbicide, thereby triggering health threats. According to the USDA, the approval of 2,4-D-resistant corn and soybeans will lead to a 2–7 fold rise in agricultural use of 2,4-D by 2020.
The Center for Food Safety condemned the EPA for approving the Enlist Duo yesterday and said that it will pursue all available legal options to stop the commercialization of Dow’s crop system.
The EPA said that it is imposing a new set of requirements (including extensive surveying and reporting to the EPA) on Enlist Duo to make sure that weeds do not become resistant to 2,4-D and continue increased use of herbicide. The EPA registration will expire in six years, enabling the agency to re-examine the issue of resistance.
Dow is a Zacks Rank #3 (Hold) stock.
Other stocks in the chemical space worth considering include Valhi, Inc. (VHI), LyondellBasell Industries N.V. (LYB) and Koppers Holdings Inc. (KOP). While Valhi holds a Zacks Rank #1 (Strong Buy), both LyondellBasell and Koppers carry a Zacks Rank #2 (Buy).
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