Thanks. So we'll keep going here. We're gonna get into the world of seeds and crop chems. So next up is a fireside chat with Corteva, who is, of course, a leading ag chem producer, very strong seed and trait portfolio, and a very large crop protection producer in the pipeline as well. So please welcome the company CFO, Dave Anderson , and the CTO, Sam Eathington. So just so you know, again, like, submit questions on the app, and or you can raise your hand. Maybe halfway through the fireside, I'll ask for questions in the room. Why don't we start off, why don't you guys give a brief overview of what's going on at Corteva on the outlook?
Sure. So first of all, Joel Jackson, thanks for hosting this. Obviously, for Sam Eathington and I, this is a repeat. We had a great forum last year, a great turnout, so we appreciate the opportunity to be part of the conference again this year. So the themes for Corteva, I think, are pretty well known. I mean, first of all, and thus the importance of Sam Eathington being with us, obviously, for the program, is technology, 'cause at our roots, we're a technology company. So just to demonstrate that, in 2024, we'll be introducing over 300 new seed hybrids and varieties, and that's a continuation of, again, a legacy, a track record that we've developed, and that's really enabling us in terms of strength in the marketplace.
And something we'll talk about a little bit is this price for value strategy that really is driving a lot of the financial engine, if you will, of Corteva. Also, on the crop protection side, I think it's Sam Eathington, over the last two years, 320-
Yep
... new products and formulations, approximately 150 this year in 2024, being introduced into the marketplace. That's making a difference as well. The other thing about Corteva, of course, is speaking of financial performance, is what we've been building in terms of a performance track record. If you go back to when we became a public company, 2019, and just go from that point to 2023, EBITDA margins are up over 500 basis points. We had 14.4% EBITDA margin in 2019, again, our quote, "birth year." By the way, a fifth-year anniversary for Corteva this year as a public company.
What metal is that? Is that wood or is it-
Exactly.
Magnesium or something?
Exactly. 19.6% in 2023, so that's, that's impressive in terms of what we've been able to deliver. Looking at 2024, and this is the themes of the things we talked about on May 2nd at our Q1 earnings release and communication, is, first of all, the ag fundamentals remain overall, I'd say, Joel Jackson, constructive. You know, what we've, what we've seen is continued strong demand for seed, for fuel, for grains, all, all the things that are really underpinning in terms of the strength of the marketplace and our performance. We have seen continued imbalance, we've talked about that, in the crop protection business. There's some residual destocking, some weather-related issues also that are impacting, impacting that business, and that was reflected in our Q1 results. We reaffirmed our full year guide.
You'll recall that guide is for EBITDA to be in the range of $3.5 billion-$3.7 billion, $3.6 billion at the midpoint. And again, related to that, we talked about, and we can get more into that, Joel Jackson, the distribution of our earnings H1 to H2, and importantly said, this is gonna be a little different year for a variety of reasons, but it's gonna be more like 80% EBITDA in the H1, 20% in the H2. 80% applied to the midpoint of our EBITDA guide would imply mathematically an EBITDA performance for the H1 that would be slightly below 2023's actual. Cash flow, very good performance in the Q1.
Our cash was a little better than our internal plan, but $700 million better than prior-year, and it reinforces the confidence we have in our full-year free cash flow guide, which would be... We guided $1.5 billion-$2 billion, call it $1.75 billion at the midpoint, which is a 50% conversion if you use EBITDA as the denominator, and it's about a 90% conversion if you use operating earnings as the denominator. So quick overview from the CFO. Sam Eathington, you want to give some perspectives?
Yeah, maybe just a few comments building off of what you did there, Dave Anderson. Thanks, Joel Jackson, for the opportunity to be here again. So on the germplasm seed side, right, we're probably seeing the strongest performance in our corn and soybean line-up that Pioneer has seen in probably two decades, to be honest with you. So that continual strength in those 300 products we launch every year gives us that price to value, that pricing opportunity, and we continue to see that momentum growing. We know our royalty reduction strategy, which we've talked about being essentially kind of neutral in royalty payments by the end of the decade, so what we pay and what we bring in as income sort of balance out, is driven by how we're deploying our own biotech traits.
So Enlist in soybeans, we think that'll probably hit 60% or so of the market this year in the U.S. PowerCore in corn, giving us above-ground insect control. And then one we don't talk a lot about, but our Optimum GLY canola product in Canada we've launched, which gives us a different herbicide opportunity there. So that strategy is working, and those combinations of germplasm and traits gives us a lot of opportunities as we think about expanding into the market, licensing opportunities, into the marketplace. So really continue to see strength there. And a couple of exciting things, which I'm sure we can talk about more. We see our reduced stature corn continuing to progress nicely. This is a year of more testing and more evaluations we're doing.
Our biofuels collaboration with winter canola is off to a great start. We went and had a chance to look at some of that, and the, the product looks good out in the field. Farmers are happy. And our gene editing strategy looks to be progressing in line with regulatory approval. So feel really good about how the seed, short, mid, long-term is playing out in, in the innovation space. And in CP, just real quick, we continue to focus on creating differentiated products that really matter to, to customers. We're trying to drive that percentage to about 60% of our portfolio. We've got new launches with Adavelt. Reklemel is example that we're expanding around the world, and the biologicals integration and strategy is off to a great start, and we've got some neat things we can talk about there.
So turn it back.
That's a good, high-level view. Let's talk about... Let's maybe drill down on some of the specifics. Remember, you can submit your questions on the app. So let's just stay closer. 2024, it seems like a mostly volume growth year when you drill it down to, like, the major drivers here, and then very back-end loaded. Maybe talk about that?
Sure. So, the volume growth really is-
Relatively back-end loaded-
Exactly.
Is what I meant to say. Excuse me.
Sure, sure. And let's chat about that. In the volume growth that Joel Jackson mentioned and that H2 performance outlook, that really go hand in hand. Just explain a little bit about that. So first of all, just to kind of recap again and repeat for the group here, this 80%-20% phenomena, 80% of our EBITDA in the H1, 20% in the H2, would compare to historically, if you looked at the average of 2021, 2022, and 2023, it'd be more like 88%-12%. So it's, you know, these are important numbers when you get into the $3.5 billion kind of range. It's really attributable to a couple things.
Number one, you recall that the Q1 of the year, we were lapping a much stronger Q1 of 2023 for the crop protection business. So, as I mentioned, the issue of the call it residual destocking, some of the imbalance that still exists in the marketplace, some of the weather-related impacts, et cetera, those are influencing significantly the H1 for that business. Seed, on the other hand, very strong start to the year and for the variety of reasons in terms of North America, in terms of the planting, the new hybrids, the success that we've had in the marketplace, our price for value, all of those things. And by the way, we had in the Q1, and you'll recall from the, from the release, we had 6% increase in global seed pricing.
That's gonna reduce a little bit, but still be positive in the Q2 for the H1. Turning to the H2, there's a couple factors that are gonna influence that performance. Number one, we're gonna see some recovery, some improvement in Latin America, specifically in both seed as well as crop protection. In seed, what we're anticipating is recovery in the Safrinha planted area. You recall for the 2023-2024 season, and I notice CONAB just came out with, Joel Jackson, and you probably saw that, some updated numbers. They're saying something like in the 7% down-
Mm-hmm.
... the 2023-2024 season compared to the prior-year. Our number is more like 8%. You know, we'll see where that that shakes out. We're in the same zip code. Our anticipation is we're gonna see fairly significant recovery in that market, so for the 2024-2025 season, so could be up 8%, so approximately. That's our view. That's sort of our judgment in terms of farmer surveys and other work in that market. What that translates to is very attractive growth for our seed business for the H2 in terms of volume growth. There will be some pricing pressures in that marketplace on the seed business. In crop protection, there's really three things that are driving the volume improvement.
Number one, again, the anticipation of some recovery in improvement in the Brazil market, and that's really attributable to the fact that what we're seeing is, while inventory levels have come down from year-end 2023, so it's improved, there still is a ways to go. So we don't see the improvement really in that marketplace really occurring any meaningful way until the H2 of the year. Second, as Sam Eathington said, and we talked about, is the importance of new products, the number of new products we have in the marketplace, as well as the strength of our spinosyns franchise, and finally, biologicals, 'cause biologicals is really weighted to the H2. You recall the Stoller acquisition, Stoller and Symborg, but prominently the Stoller acquisition that we closed on in March of 2023. That business is doing quite well. It performed very well despite some of the-...
Headwinds and some of the challenges in the marketplace in 2023, we're gonna see continued growth in that business in the H2 of the year. It's very much Brazil-focused and very much H2-focused and weighted. So those three factors are really influencing the performance in the H2. The other thing, really, just as a quick reminder, if you look at the makeup of our costs, our productivity, we've got very good productivity delivery. That's gonna continue. We'll continue to see the strength of that and cost actions in the H2 of the year. But importantly, in the crop protection business, we'll also have the benefit of ingredient or input deflation. Majority of you recall our guidance was for about $100 million for the year for crop protection deflation. Again, input and ingredient cost period over period.
That's mostly occurring, in fact, exclusively occurring in the H2 of the year. About $150 million against $50 million of some residual inflation just associated with timing of inventory flow-through. So we'll pick up that $150 million-dollar benefit in the H2 as well. So that's what's really contributing to those numbers, that 80%-20% that I talked about.
Okay, amid that earnings view this year, you know, let me talk about grower sentiment, okay? So are you seeing any changes in practices, personal behaviors, products? We've seen destocking in chems, but, I mean, just in general, and maybe you can compare and contrast between the U.S. and Latin America.
Sure. And, and Sam Eathington, maybe I'll just say a few words, and then you can, you can add to this. I mean, first of all, I think what we're seeing is, at the farm gate, at the farm level, continued demand for top technology. There still is very much, obviously, the focus on production, productivity, both yield, yield enhancement and yield, yield protection. So that, that's, that's steady as she goes. There are some phenomena that are related to, obviously, market-specific factors, some weather-related factors, notably Europe, and I think that's a theme you've heard from others here at the conference and, and, and others over the course of the last few weeks. Europe has really been impacted, particularly in Northern Europe. That would include U.K. and Northern Europe.
That's influencing and impacting our, our crop protection business and some of that timing, that H1, H2 timing associated with that business. But in terms of, of just overall behaviors, I'd say more of a shift to just-in-time.
Yeah.
We're seeing that in North America. In other words, purchase decisions closer to actual application, actual need, in the same way in sort of the push out of some of those purchase decisions that we're seeing in Latin America and Brazil. Sam Eathington, anything you would add to that?
Yeah, I think you hit it well. The just-in-time is pretty clear. We're seeing that in the markets. And then look, in the U.S., we know there might be a little bit of shift that was already planned in corn and soybean acres. You know, if you look at the five-year trends, we're slightly behind on corn, but it's in the states we can make up a lot of corn plantings, like Illinois, Iowa, for example. So, still feel pretty confident about what's gonna happen there. And trait technology mix, we haven't seen any shifts going on there.
I asked this question earlier today of, I think, CF, but, you know, the 90 million acres of U.S. planted corn... I can't speak today. 90 million acres of U.S. planted corn, a forecast. No one seems to believe that number. Do you believe that number?
Oh, let's chat about it.
I don't know if Dave Anderson's the expert on that. I'm not sure. I'm-
Yeah, look, it's-
I have a view-
Yeah
... but he's got a more informed view.
I always wait till it's in the ground. Then you really know what happened.
Yeah.
You would say there's a lot of interest in those corn acres out there, and a lot of farmers went ahead and put in for corn, but we'll see. And like I said, we're a little bit behind the five-year planning right now on corn and soybeans, but we should be able to make that up pretty quick. It's been wet across part of the, you know, I live in Iowa. It's been wet in Iowa. It's a good thing. We were coming out of a drought, so it's actually not a bad thing. So we'll see.
Mm-hmm.
But I think our order books are quite strong, so if the acres bump a little bit, wouldn't surprise me, and if not, you know, again, our books look really good.
Yeah. Northern Plains probably is another thing to point out-
Yeah
... right, in terms of just weather, just the amount of cold and wet.
It's been cold and wet.
Yeah.
Yeah.
Yeah.
Not worried yet about a-
No
... late season shift in corn to soy?
I'm not.
Yeah.
No.
When do we get worried? Couple more weeks?
Couple more weeks, 'cause we still got to get through crop insurance dates in a lot of these areas.
I know, right.
Yeah, and no one likes prevent plant-
Yeah
... if you're a farmer. It's just not a good thing.
Sticking with seeds, so we've kind of had, like, low- single-digit price mix lift this year, low- mid or low. I mean, it's early, but we're getting into Brazil pricing, seed pricing season. We're not that far away from—you know, a few months away from North America. Do you think going forward... Look, we had many years of really, really tough seed price mix of, like, maybe 1% a year. We've obviously had better performance. We had better corn prices.
Do you think there's a reason why going forward we might be better than 1%, like, a little bit higher than that, or any reason to think or, you know, in a world of current corn prices, you know, sub-$5 corn, can we do better than 1% sort of going forward on a run rate basis?
Maybe I, maybe I'll just start with just a refresh of the numbers for 2024. I said this earlier, but maybe just elaborate a little bit, and Sam Eathington, maybe you could comment in terms of kind of that overall price for value and what, what you envision. So first of all, as I mentioned, 6% overall seed pricing for the Q1. Stronger than that on corn. Obviously, a more competitive situation in terms of, of soybean. So 6%, we're anticipating continued good pricing in the Q2, you know, finishing the half at probably somewhere in the neighborhood of 4%-5%. Joel Jackson, I think is realistic in terms of the H1. More pricing pressure in the H2, and again, that's Brazil-related. We've got a lower contribution margin business in Brazil in the H2. We've also got some flow-through, importantly-...
of inventory, and this is more on the COGS side or the contribution side. We've got some flow through of some higher cost inventory that's actually going to help position us for 2025. We're gonna have newer technology and better cost position going into 2025. So that's built into our guidance, and that, that's important. Sam Eathington, you wanna talk a little bit about kind of how you view the-
Yeah
... the path going forward?
Yeah, it's hard to predict. I mean, if you look around the world right now, like, Argentina is gonna have a lower crop than you know, if you look at what happened down there with corn stunt, so they've taken about 20% off their corn yield. So that, that's gonna play out in the marketplace at some point. We know genetic gain continues to deliver on our products, in the U.S. was a record corn yield. We hadn't seen that for a while, but we actually did hit a record there on bushels per acre production. And so historically, farmers have always been willing to share that increased value if we can deliver it and prove it, and we're continuing to see that in our genetics and our technology.
So yeah, we'll see what the numbers turn out to be, but I would say it's quite strong that we'll continue to be able to do decent pricing going forward.
Just wanna... We're halfway through our fireside. Any questions in the room, wanna raise your hand? Just wait for the microphone. Thank you.
Can you, can you provide some more information on what happened to the Argentinian crop? Like, what was the corn insect or whatever that has cut, like, yields down there?
In Argentina?
Yeah.
Yeah. So, there's a disease called corn stunt, and it's really a combination of a couple of viruses and spiroplasms. There's three different organisms that cause that part, and it's all transmitted by a leafhopper. And this is a problem we've dealt with in Brazil for a long time, and farmers know how to manage it. You spray insecticides to knock down the leafhoppers, and we have genetic resistance for the virus. Historically, it's not been a problem in Argentina because the pathogen, the leafhopper, cannot overwinter in Argentina. They had a very mild winter, and that pathogen actually did overwinter out of, you know, coming out of Brazil into the northern part of Argentina, and it was able to start spreading the virus as you go south in the country.
So the farmers weren't used to it. They didn't know how to see it and predict it. They didn't know how to manage it and take care of it. There was a number of insecticides that weren't approved. There's now been, I think, three different-
Mm
... insecticides get emergency use approval in Argentina, one of them being our Isoclast molecule. So that gives farmers tools, and then we're working on the genetic piece for the, for the virus. What to be determined is what will be their winter again. If they go back to a cold winter again, leafhoppers are gonna not overwinter, and it's probably not gonna be much of a problem. If the winters stay more mild, then this is a problem we have to solve for a farmer and their production in Argentina.
I think, Sam Eathington, it's maybe just to tag on a little bit, comment on this is, I think it's a little early for us to predict what the implications might be for the 2024-
Yeah
... crop.
I agree.
Too early.
Too early to tell.
In terms of being able to determine that, I think from our perspective, call it the seed production side, we're okay because of mostly the southern as opposed to the northern territory of the corn-growing areas of Argentina. So it's really to be determined. It's later in the year and really kind of to be determined in terms of what the impact is gonna be.
Yep. Yep.
Other questions in the room? Okay, staying on seeds and maybe talking about traits a bit, obviously, you've been reducing your royalty outflow the last couple of years. Maybe talk about the cadence of that. And, you know, you've stated a goal for many years to want to get to royalty neutrality, maybe by the end of the decade. What do you have to do to get there?
Maybe I could just again give some perspective. Sam Eathington can then talk about that, that forward view and the confidence that we have in that, all that he's got in both in the pipeline as well as actual production that's gonna deliver it. And by the way, some exciting news there, obviously, as we particularly as we get towards the end of the decade in terms of-
Mm-hmm
... royalty income-
Right
... and the generation, then, if you will, the out licensing opportunities that we have. So historically, one of the issues with the company and one of the things we were burdened with was the amount of in-licensing, the amount of the royalty expense, 'cause we were at the, you know, we were disadvantaged in that standpoint. We have really begun to turn the corner, as you know, Joel Jackson, and are on the path to what we call royalty neutrality by the year, end of the year. We're always gonna have some in-licensing. It's the nature of the industry, et cetera, but to significantly reduce our dependence on outside technology is the path that we're on. We had $200 million of EBITDA benefit in 2023 from those actions.
Majority of that was expense reduction or in-licensing reduction. In 2024, it'll be about $100 million to the bottom line in terms of the seed EBITDA, and it's starting to shift now. We're starting to get a pickup in the royalty income to complement the royalty expense reduction. We expect another up to $100 million in 2025. I think we're on path for that.
Yep.
Sam Eathington, maybe you could talk a little bit about just kind of that march, march forward, what you see.
Yeah. So, you can break it up into sections. Think about soybeans was the first wave, so our Enlist platform moved us off of the Xtend platform, and like you said, we'll probably hit about 60% of the market on Enlist this year. 90% of that is our own Pioneer germplasm, so, you know, royalties around traits and any germplasm we had in the past, we've really reduced that dramatically, and we'll continue that going forward. But those are also now becoming out-licensing opportunities and income for us at the end of the day. On the corn side, you know, again, you got to think about you need herbicide control, you need insect control above ground, you need insect control below ground.
So our PowerCore product that we just launched last year, ramping up now, gives us that above ground with herbicide in our own germplasm, and we can also start to outlicense that to other parties in the industry. The below ground piece we'll be able to deliver as we get towards the end of the decade with our own proprietary traits, and that'll be sort of the last piece we pull out, where that is now a Corteva product and Corteva traits. Let's us change what we in-license and what we pay in royalties, and then what we can outlicense also. I did mention canola is smaller, but we launched Optimum GLY canola, so that's another trait, our own product, that we no longer have to pay royalties on our herbicide product concept.
And we're on a similar march in Latin America, starting in soybeans Conkesta E3 soybeans, which we're just now launching. We'll flip that over to a second-gen insect herbicide product as we get towards the end of the decade. So corn, soybeans, across the Americas, we've got a plan very clear, and we've got the products already in the pipeline, working through regulatory approvals at this stage.
Okay, let's switch to crop protection. So, I mean, it looks like crop chem destocking is abating. How does it look by geography?
So it's abating, but we're not out of the woods. There's still, as I mentioned, some residual destocking. We see evidence of that, particularly to some degree, in Europe, and that's been exacerbated by the weather, Joel Jackson, that I mentioned and is known. And then in Latin America, Brazil specifically, there's been improvement in the, call it, inventory-to-sales relationship in the channel. We're not all the way back to historic levels and where we would say is the full, healthy operating cadence for that business, but it's on path. So I think there's a ways to go in a couple key geographies.
We would anticipate that for the year, for the crop protection industry, I'm now talking total, that the sell-out, so from the channel, you know, to the farm gate, that we'll see a slight to light low- single- digit down full year for the industry. That's really driven by this phenomena, the residual destocking, but also pricing pressure that's still there in the marketplace. We would expect for 2025, a more return to normal. We think this phenomena is now really gonna fully abate over the course of 2024. I think that's consistent with what a number of our peers are saying and they're seeing as well.
So that would be in a low- single-digit growth than in terms of historic levels, and again, I'm talking about the industry overall.
I mean, just following up on that, I mean, across the chemical supply chain, there's concerns that we do go back to restocking, but it's gonna be at a more muted demand growth rates than maybe what we saw historically. Do you worry about that?
I mean, probably, you know, as CFO, you sort of worry about everything, right? So just to be fair, I would say that's not at the top of the list. I think we're gonna be recovering, but recovering off of a lower base. For us, the key is gonna be the continued development and successful commercialization of new products and differentiated products to include, again, under the heading of differentiation, our spinosyns franchise, which is nearly $1 billion in revenue, will be nearly $1 billion in revenue this year. And the other key thing for us, as I mentioned, is our biologicals business. We'll see double-digit growth in that franchise this year and very significant EBITDA contribution as well.
I think for us, our position, we feel well positioned against the backdrop of an anticipated recovery, but a recovery off of a lower base.
One thing that was, you know, after the shock pulling of the dicamba herbicide registrations earlier this year, maybe Corteva might benefit. Doesn't seem like you're modeling or expecting any change of status quo. I mean, Bayer is looking for some new approvals out of the EPA that maybe will resolve all this by next year. But are you just planning for status quo and... There you go.
Sam Eathington, I think it's fair to say-
Yeah
... it's, it's not significant for us in terms of expectations for 2024.
Yeah, there, there-
2025.
2024, there wouldn't be any expectation.
Yeah.
Look, we have volume of both seed and Enlist chemistry in 2025, if farmers would like to make some choices.
Yeah.
Okay. I mean, what I was wondering was if you would start to see value, like in the Enlist traits, get a little more value pull and maybe a little bit of lower value out of the Xtend, XtendFlex programs, just concerns that if the dicamba registration, if dicamba was gonna be like this never-ending, saying it right, but never-ending risk, you know? You don't-
Yeah
That's not in your-
We haven't put it in our model. We'll wait and see what the EPA does on the label. And again, we, we've got production plans for seed in 2025, and we've got the ability on the Enlist chemistry in 2025. If farmers would like to make a switch, then we've got options for them to do that.
Let's talk about an early look at 2025. Just as we think about trying to hit, you know, some of your targets, I think it's $4.15 billion is, is, is your, is your multi-year target for 2025. Now, it's been changed, $4.15 billion EBITDA. What might the bridge look like, the big buckets to get, to bridge you from $3.7 billion to $4.15 billion for next year?
Sure. So let's talk about, first of all, that updated range. So you'll recall our update is the $3.9 billion-$4.4 billion in terms of the range. So, as Joel Jackson said, $4.150 billion at the midpoint. So if we use the midpoint of the $3.6 billion guide for 2024 as a starting point, a couple key building blocks, and these are consistent, I think with, again, sort of the themes around Corteva. Number one, again, is the strength of our seed franchise. We anticipate continued pricing gains in that business for 2025. Round numbers, let's call it $100 million.
Second thing is, I mentioned earlier, is I think we're gonna see growth in the crop protection industry, call it more normalized, low single digit off a lower base. We're gonna benefit from that. We're gonna benefit that, from that in terms of, again, the new products we have in the marketplace, what we're doing in terms of our biologicals franchise, et cetera. That's, that's, we think, reasonably another $200 million of EBITDA contribution. Again, coming off a lower base, but, but we think attractive setup for 2025. The other thing, as Sam Eathington mentioned earlier, and as we talked about, up to $100 million of royalty reduction.
We've got our cost actions, our productivity programs, and by the way, not only continued deflation in the crop protection business, but also some benefit now in terms of commodity costs, deflation reduction in on the seed business. So crop protection deflation continuing into 2025, and then seed deflation as well being, being added to for that. Now, we're gonna have some increase in R&D spend that's programmed in. We've also got some SG&A on a year-over-year basis. That's just sort of normal inflation that you would anticipate with that, some headwind associated with that. When you do all of that math, that's what bridges you from the, from the $3.6 billion midpoint of 2024 up to the $4.15 billion-$4.50 billion for 2025.
I had a question from the app. It's a long question. Okay, the question is: you've absorbed $1 billion or more of seeds COGS inflation in the last few years. Should you get this back from growers? I guess that's the question.
Well, the $1 billion includes commodity costs and coming off a much lower-
Right
... average in terms of, of corn, soybean commodity costs, input costs, if you will, for the seed business. So we kind of have to make some assumptions in terms of what the starting point is, in terms of the, the, the seed commodity cost. But using more like where we are today in terms of a benchmark, there is a meaningful portion of that, that we think we can get back. Portion of that's gonna come from what we talked about in terms of seed commodity cost deflation, and a portion of that's gonna come about through just our own operational levers. Put a little plug in for our November Investor Day that we're gonna have here in New York City, and Kim Booth, November 19th, is that right?
November 19th.
Okay, thank you. So, we'll be updating. Very good question, Joel Jackson, because we're gonna be updating the cost profile for both businesses at that time. But clearly, that's some tailwind that we see that's gonna be very important, that'll contribute to our continued margin expansion.
The other part of his question was, so a billion dollars of seed COGS inflation. He says, "Even just $300 million back in 2025, it gets you to $3.9 billion next year.
Yeah, that's, that's correct math.
That's math. So another question on the app. Could you please expand on the renewed optimism around seed volume growth in Brazil for next year?
Yeah, well, you know, as I talked about, for the latter half of this year, I won't speculate necessarily on the 2025-2026 season, if you will, the second season, safrinha season for Brazil. But for 2024-2025, we fully anticipate that we're gonna see planted area increase. In other words, that recovery off that approximately 78% reduction for the 2023-2024 season, and we're obviously very well positioned.
Yep.
I mean, the same, the Pioneer franchise there, the strength of what we're offering in terms of products, Conkesta E3 soybeans, which is at a very early stages. Maybe you want to talk a little bit about that in terms of-
Yeah, just say, look, our hybrid portfolio and products line-up down there is quite strong. The Pioneer brand and what we do there is very, very good. So as acres come back, we would expect to capture our share of those acres. And then soy again, we're very, very small as a company, Conkesta E3 soybeans is really our first foray into rebuilding a soybean franchise down there, and it's off to a decent start, and we continue to ramp up the varieties on it.
Mm-hmm. What's Conkesta E3 soybeans like? It's even since your five-year anniversary. I just remember all the Investor Days that Corteva had in 2018, 2019. It seems Conkesta E3 soybeans just is something that's taken a lot longer to come to fruition. Maybe you could just talk about the challenges and now where you are.
Yeah, so there's a number of things that we had to work through. One was obligations on licenses we already had, that had to be dealt with. The time it takes to switch out, essentially, a germplasm pool from one set of traits to a different set of Conkesta E3 soybeans is a little unique and different in what we have to do to work with it. And then regulatory, which we actually got a little faster than we anticipated in Brazil, so the plans kind of shifted up from a regulatory point of view. So, look, we're, we're making the right progress. We're doing the right stuff. The performance is what we expect, is what we're seeing coming through the pipeline. It's just biology takes us a little longer than you'd like.
I think probably say, too, again, just tag on, Sam Eathington, is key for us, too, is introducing those additional varieties-
Yeah
... which is, we're on path to do.
We're on path to do that.
It's, it's-
And it's building the foundation as we think about our trait package down there. Next Gen LEP, we think about our next generation herbicides, we think about other insect and disease control traits we're bringing. So it is the foundation. We want to get it right, and we'll keep building on it.
Then, we've seen some relaxed rules on gene editing in Europe. I have a memory of Chuck Magro saying at an event I hosted in September, that in the Investor event you guys are gonna hold later this year, that we're gonna hear about gene editing. Maybe that's true. Talk about what the opportunity is for gene editing. Are we gonna hear more about that in November?
We will. So we'll roll that out quite a bit more in November. But real quick, look, Europe is continuing to move in a favorable direction. It's not there yet, but the parliament revoted again, reconfirmed their position on it. It's now up to really the council to do their work. The U.S. has finalized. All three agencies now have a position. You're actually seeing approvals in China start to pick up a little bit. So everywhere around the world, you're starting to see positive momentum. We've invested. We've accelerated our investment, and we've got both yield products and disease control products that look quite good in our pipeline, and we're excited to let them get out in the market.
Thanks very much. Appreciate it.
Great. Thank you.
Thank you very much, Joel Jackson. Appreciate it.
All right. Thank you.