Green Promises, Yellow Solutions: KWS Saat, MustGrow Biologics, and Corteva Under the Microscope

GREENWASHING AS A REFLECTION OF A DEBATE

Since the massive campaigns against Germany's largest fund management company, DWS Group, the term "greenwashing" has been on everyone's lips. The subsidiary of Deutsche Bank is accused of giving certain investment products a green veneer to sell them as sustainable, even though they allegedly are not. Now, one could argue at length about what is green and what is not; for example, defense stocks, long frowned upon, are now back in vogue. So far, the debate has not harmed the DWS Group's stock price.

If one takes this line of thinking further, one might conclude that so-called green biotechnology is also pure greenwashing. This refers to the use of molecular biological methods in agriculture to make crops more efficient, more resistant to pests, or more resilient to drought. Green biotechnology is controversial in the EU and particularly in Germany. While proponents emphasize sustainability through reduced pesticide use and higher yields, critics demand strict safety testing and mandatory labeling. The cultivation of genetically modified plants is therefore rarely practiced in this country.

KWS SAAT: GENOME EDITING AS A BET ON THE FUTURE

One of the few German companies that publicly advocates for genetic modifications in plants is KWS SAAT. The company, founded in 1856 and formerly known as Kleinwanzlebener Saatzucht, argues that biotechnological methods are now standard practice in modern plant research and breeding worldwide. Since China, in particular, is leading the way in "genome editing," as it is known in technical terms, the SDAX-listed company is cooperating closely with the industry there.

At least as far as its stock performance is concerned, KWS Saat appears to be on the right track. Despite stock market turbulence resulting from the war in the Middle East, the stock has jumped from EUR 63.00 to currently over EUR 75.00 since the end of February, even though the management team led by CEO Felix Büchting had lowered its forecast for the 2025/26 fiscal year shortly before. Instead of growing, revenue is now expected to remain at the previous year's level of just under EUR 1.68 billion, according to the new guidance. At least the margin target of 19 to 21% before interest, taxes, depreciation, and amortization (EBITDA) was confirmed. Since neither the figures for the winter half-year, a period traditionally marked by losses, nor the forecast gave cause for euphoria, investors' focus appears to remain firmly on the future. Scientists agree that there is no long-term alternative to more efficient crops, as the world's population continues to grow while arable land shrinks due to climate change. KWS Saat could play a key role in the fight against hunger, regardless of any German reservations.

As the company is consistently streamlining its portfolio to focus on more profitable activities, the outlook for the coming years is one of growth. Analysts expect revenue to rise to EUR 1.77 billion and earnings per share to reach EUR 6.01 by 2028. On this basis, the debt-free company is attractively valued with a price-to-earnings ratio (P/E) of around 12 and a current market capitalization of EUR 2.4 billion (with EUR 1.6 billion in equity). The research firm Warburg Research estimates the fair value of the stock at EUR 91.50.

MUSTGROW BIOLOGICS: THE CHEMICAL CLUB'S STRUGGLE

However, it remains to be seen whether the outlook for green genetic engineering is as rosy as the premature praise for KWS Saat and Co. suggests. After all, researchers worldwide are searching for alternatives.
A newcomer from the Canadian province of Saskatchewan could stand out in this regard: MustGrow Biologics relies on a natural method to increase the efficiency of farmland without interfering with the plants' genetic makeup. The Canadian company's patented technology harnesses the active compounds of the mustard plant to improve soil and combat pests. Since Bayer is also looking for new ways to bring environmentally and health-friendly crop protection products to market following the Monsanto debacle, the Leverkusen-based DAX-listed company is already collaborating with MustGrow, as is the Japanese chemical giant Sumitomo.

The idea is as simple as it is ingenious: Mustard oils have a powerful effect against bacteria, viruses, and fungi, which can be helpful for people with respiratory diseases or urinary tract infections. In agriculture, mustard plants have the advantage of forming deep roots, which loosen the soil. Their rapid growth prevents the spread of weeds and protects farmland from erosion. Mustard seeds also serve as a natural fertilizer because they release nutrients into the soil, which increases fertility. Pests such as nematodes are deterred, while the yellow flowers are an important food source for beneficial insects, especially honeybees.

TERRASANTE AND CO.: AN OVERVIEW OF THE PRODUCT PORTFOLIO

One could therefore also refer to this as "yellow biotechnology." MustGrow's main product is called TerraSante and is an organic soil conditioner based on mustard extracts. The proteins and carbohydrates it contains essentially serve as food for beneficial soil microbes, which in turn, without the use of synthetic fertilizers, make soil-bound nutrients such as phosphorus available to plants. Field trials on potato fields in the US state of Washington have already confirmed TerraSante's competitiveness.

Other products in the MustGrow portfolio include the biocontrol agent TerraMG, which is used against harmful soil organisms, as well as ecological plant protection products containing the active ingredient allyl isothiocyanate (AITC), also derived from the mustard plant, which are primarily used to suppress sprouting in stored vegetables. This extends shelf life; potatoes, in particular, stay fresh longer.

Through the acquisition of the biological agricultural assets of NexusBioAg, a division of Univar Solutions Canada, the company added a sales department and additional development capabilities in early 2025. This expanded the existing product lines with further innovative solutions, particularly biostimulants that promote plant growth and development. This increases yield potential while reducing the effects of heat, drought, cold, salt stress, and other environmental factors.

The Rootella mycorrhizAL inoculants developed by a Nexus subsidiary improve the root network through the formation of fungal mycelium, which increases plants' ability to absorb water and nutrients.
Fertility, resilience, and sustainability are enhanced by these highly effective inoculants, allowing for a significant reduction in the use of chemical fertilizers.

FOCUS ON THE HIGHEST-MARGIN BUSINESS

Somewhat surprisingly, the management team led by CEO Corey Giasson announced on March 31 that it would be closing the sales division of NexusBioAg, which was acquired as part of the deal, by mid-month and would focus entirely on the soil conditioner TerraSante for the time being. Among other things, the sales team also sold third-party products to farmers. This low-margin business is now being discontinued.

MustGrow has received little attention on the stock market so far. The share price is languishing near its five-year low at around CAD 0.50, equivalent to just over EUR 0.30. The market capitalization stands at a meager EUR 20 million. Yet the financial problems, which were also caused by the Nexus acquisition, have been resolved for now. A capital increase at the beginning of the year brought in USD 2.0 million, giving the company some financial breathing room. However, it remains to be seen when the company will turn a profit so that further capital measures may be necessary before a definitive breakthrough. So far, the company has relied primarily on licensing and milestone payments from its partners. Given its low market capitalization, however, a takeover would not come as a surprise, as the search for alternatives to synthetic pesticides, herbicides, and chemical fertilizers is in full swing worldwide.

CORTEVA: THE INDUSTRY GIANT WITH SPIN-OFF POTENTIAL

MustGrow could be a prime target for agrochemical giants like Corteva. The US company was formed between 2015 and 2017 following the merger of Dow Chemical and DuPont, which consolidated their agricultural operations into Corteva and took it public as an independent company in 2019. The focus is on seeds, crop protection, and digital solutions for agriculture. The stock price has performed splendidly since then and recently reached a new all-time high above EUR 70.00. With a market capitalization of EUR 48 billion, the group is in a different league than KWS Saat and MustGrow.

However, environmental organizations, as was once the case with Monsanto, are not holding back on criticism: pesticide production, groundwater contamination, market power, risks associated with new genetic engineering techniques, and above all, the patenting of seeds repeatedly make the US company a target of protests. In addition, there have already been class-action lawsuits over potential harm to farmers caused by discount programs that are alleged to have distorted competition. CEO Chuck Magro has long been taking countermeasures by pushing forward with the split of the company into two independent, publicly traded entities: New Corteva is to focus on crop protection, while the seed operations will be transferred to a company under the provisional name SpinCo.

Furthermore, management has made a clear commitment to greater sustainability, which is why two leading players in the rapidly growing market for biological inputs, Symborg and Stoller, have already been acquired. However, the Americans are still anything but angels when it comes to the use of genetic engineering and chemical pesticides. Nevertheless, the stock is interesting for more than just the spin-off speculation: according to analyst estimates, revenue and profits are expected to rise steadily over the next few years, and the current valuation, with a P/E ratio of just over 20, is reasonable by US standards.

CONCLUSION: THE RIGHT CHOICE FOR EVERY RISK APPETITE

"People will always eat," says an old stock market adage. To ensure that this remains the case, or that the global food situation even improves, the use of innovative technologies will be indispensable in the future. For investors, Corteva is, therefore, despite all the criticisms, a classic core investment with excellent growth prospects. KWS Saat is significantly smaller and more volatile, but more attractively valued and is also considered rock-solid. Those betting on the breakthrough of "yellow biotechnology" and who also value environmental and sustainability aspects will find MustGrow Biologics to be an investment with particularly interesting future prospects. However, it remains unclear when the company's innovative strength will pay off in hard cash. The dependence on milestone payments from cooperation partners is both a blessing and a curse: on the one hand, the concentration risk should not be underestimated; on the other hand, it adds a dash of takeover speculation to the mix.