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There’s “mounting evidence” that Monsanto Co. corn that’s genetically modified to control insects is losing its effectiveness in the Midwest, the U.S. Environmental Protection Agency said.

The EPA commented in response to questions about a scientific study last month that found western corn rootworms on two Illinois farms had developed resistance to insecticide produced by Monsanto’s corn. Rootworms affect corn’s ability to draw water and nutrients from the soil and were responsible for about $1 billion a year in damages and pesticide bills until seeds with built-in insecticide were developed a decade ago.

The agency’s latest statement on rootworm resistance comes a year after the problem was first documented and just as U.S. corn yields are forecast to be the lowest in 17 years amid drought in the Corn Belt. Corn is St. Louis-based Monsanto’s biggest business line, accounting for $4.81 billion of sales, or 41 percent of total revenue, in its 2011 fiscal year.

“There is mounting evidence raising concerns that insect resistance is developing in parts of the corn belt,” the EPA said Aug. 31 in an e-mail.

The studies of rootworms in Illinois and Iowa don’t confirm resistance in the field, Kelly J. Clauss, a spokeswoman for St. Louis-based Monsanto, said in an e-mail. More data is needed to prove resistance and the company is working with the EPA to investigate and respond to fields where rootworms cause “greater-than-expected damage,” Clauss said.

YieldGard Corn

The hottest, driest summer since 1936 in the Midwest has damaged crops and helped send corn prices to a record. Corn production may total 10.779 billion bushels, 13 percent smaller than last year, even after farmers planted the most acres since 1937, the U.S. Department of Agriculture said Aug. 10.

Corn acreage is estimated by the USDA to rise 5 percent to

96.4 million acres this year. Monsanto’s rootworm-killing corn was planted on more than 37 million acres last year, according to the company.

Corn futures for delivery in December dropped 1.1 percent to $7.96 a bushel as of 8:55 a.m. local time on the Chicago Board of Trade. They have gained 57 percent in the past three months and traded at a record $8.49 on Aug. 10.

The EPA’s focus is Monsanto’s YieldGard corn, which is engineered to produce the Cry3Bb1 protein from Bacillus thuringiensis, or Bt, a natural insecticide.

EPA Review

The EPA expects to get data on the performance of YieldGard from Monsanto within two months and complete its analysis by year-end, the agency said in its statement, which was e-mailed by Stacy Kika, an EPA spokeswoman. The evaluation will include a review of scientific studies, it said.

“EPA is concerned about the reported resistance to Cry3bB1 in corn rootworm populations in some parts of the country, as are others in the agricultural community,” the agency said.

The agency may implement “strategies” to reduce the threat of resistance to Cry3Bb1, it said. Kika said she couldn’t comment on what those strategies may include.

The EPA may ban sales of the seed in affected counties as part of a remedial action plan if resistance is confirmed, the agency said in its 2010 registration of YieldGard.

‘Superweeds’ Problem

Monsanto, the world’s largest seed company, introduced its rootworm-killing corn technology in 2003. The corn-seed and traits unit’s gross profit rose 16 percent to $2.86 billion in the year ended Aug. 31, 2011.

Shares of Monsanto rose 1.1 percent to $87.55 at the close in New York. They have climbed 25 percent this year. Syngenta AG, the world’s largest producer of agrochemicals, has increased 19 percent in the period.

Monsanto’s worst resistance problem is with crops engineered to tolerate its Roundup herbicide. “Superweeds” that Roundup no longer kills have invaded as many as 20 million acres (8.1 million hectares) of corn and soybeans, according to a Dow study. As many as 28 million acres of cotton, soybean and corn may host Roundup-resistant weeds by 2015, according to Basel, Switzerland-based Syngenta.

The EPA requires farmers of Bt corn to plant a so-called refuge, an area of non-modified corn that grows near the modified crop. The agency reasons that bugs not exposed to the toxin will then mate with any resistant rootworms, creating a new generation of insects that is once again susceptible to the insecticide.

November Memo

Corn fields in four states -- Iowa, Illinois, Minnesota and Nebraska -- were overrun by rootworm last year, prompting the EPA to say in a November memo that Monsanto’s bug-killing corn may be losing its effectiveness.

The agency also said at the time that Monsanto’s program for monitoring suspected cases of resistance was “inadequate.” Monsanto said in December in response to the EPA’s comments that it believed there was no scientific confirmation of resistance and that it was increasing efforts to teach farmers about how to respond to unexpected crop damage.

The Illinois and Iowa studies into insect resistance were conducted by Aaron Gassmann, an entomologist at Iowa State University. The Illinois study looked at the progeny of rootworms collected last year at farms in Whiteside and Henry counties, where the bugs had devoured the roots of corn plants, said Michael Gray, an agricultural entomologist at the University of Illinois in Urbana, who collected the bugs in their adult beetle phase.

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