Leading Bayer U.S. in a Time of Transition

Patrick Lockwood-Taylor is in a pivotal position as the global agricultural industry increasingly has accepted the notion that the climate is changing—and that this changes everything.

As president of Bayer AG’s operations in the United States, Lockwood-Taylor is presiding over everything that happens in one of the most important markets for the $18 billion German giant that supplies more seed and farm chemicals than any other company in the world.

At a time when industry players, governments, social activists, and rank-and-file consumers worldwide are beginning to reckon seriously with what growing food looks like on a planet with hotter climes and unpredictable weather, Lockwood-Taylor must steer a company that has been tied to traditional agricultural methods through a future in which many of those approaches will be tested as never before.

“We have adopted sustainability not as a price of entry, but we see it as an imperative for a better world,” says Lockwood-Taylor. “Even versus three years ago, there is universal acceptance that this is critical.”

Bayer already has been through something like the dynamics that are just now emerging around climate change. The 162-year-old German company is such a big presence in the agricultural business only because it purchased Monsanto in 2018 for $63 billion in an acquisition that many on Wall Street still believe was one of the worst-considered major deals in corporate history.

Monsanto was a world leader in seeds and high-tech crops, with iconic agricultural names such as DEKALB in its portfolio, an area that Bayer management at the time sorely wanted to expand into. But Monsanto also manufactured and sold Roundup, making it a long-time target for activists who disdained genetic modifications of seeds to grow through the weed killer as well as a target of lawsuits that sought tens of billions of dollars in damages for the health effects to farmers and others who used the world’s most popular herbicide.

Lockwood-Taylor might not seem a natural choice for leading Bayer’s U.S. agricultural operations through this period, in addition to the vast pharmaceutical and consumer health businesses in this country. He has spent more than 25 years in global leadership roles, including many years with Procter & Gamble, where he rose to vice president of personal health care North America and global digestive wellness.

After joining Bayer in 2018 as regional president of consumer health for North America—in charge of brands such as Bayer aspirin—Lockwood-Taylor was appointed president of U.S. operations in 2020 and serves in both roles. Now he oversees 32,000 employees at 136 locations in three of the most challenging industries of the modern era.

But even at a time of great foment in the U.S. pharmaceutical and health-care businesses where Bayer also is a major player, Lockwood-Taylor recognizes that perhaps his most important challenges are coming in the agricultural space, where the company is still getting accustomed to owning the old Monsanto business, and coping with new pressures such as cost inflation and supply chain challenges, while also girding for a future in which seemingly gyrating global climates make for unprecedented unpredictability.

Let’s start by talking about the major new business factors that are right in front of you, as they are in front of most company leaders these days.

We have seen disruption. Freight in raw and packaging materials all have been disrupted in our global supply chain, with different disruptions in different parts of the world at different times, as economies recover from COVID or go into another period of COVID. For example, throughput at ports was down significantly, related to labor issues, so we’ve had to deal with those. It’s significantly better now.

We see different recoveries for each one of those problems. The labor market remains quite free flowing. But we’re seeing improved access to raw and packaging materials, with the occasional spike. 

That, along with other things, has definitely compounded inflation. That problem has weakened somewhat with lower gasoline prices, which we pass through to our end users in nearly all industries. There are still significantly inflated prices versus a year ago, but we feel it has stabilized, and, if anything, is slightly reducing. And, if anything, inflation will start to come down in coming months.

This is after we went through COVID. We had three very simple principles. First, keep every employee safe. Second, keep our operations operating. And third, keep our enterprise competitive. I chaired 150 meetings to manage COVID.

And coming out of COVID, we are taking advantage of what we learned and the technologies we developed to get a lot of benefits without compromising productivity. We’re evolving into a hybrid work model, which we’re still experimenting with. We want to integrate our culture, but that can be challenging if you’re working remotely all the time.

Climate change concerns seem to have morphed from a far-off area to something more imminent these days. How are you reckoning with those at a company where these issues have a lot of importance?

We break it down into two areas: ecological and also human welfare, and the two are related.

First, as to ecology: Stepping back, Bayer has taken a very thoughtful approach to sustainability. Our mission is, “Health for all, hunger for none.” What does sustainability mean in the context of that very laudable mission? 

For instance, our board is compensated in part by their performance on sustainability. [Key performance indicators] do affect their remuneration. Our company goal is to be carbon neutral by 2030 and net zero across our entire value chain by 2050. That means investing in energy efficiency and energy sources and offsetting [emissions] in our own operations and doing that with suppliers and customers too.

And we’re openly saying what are the right things to do? We have started to invest in preserving rainforests, entering a coalition that is seeking legal changes to prevent deforestation. We’ve invested in research in lower-impact agriculture and a host of other things within coalitions. Those are good steps.

We’re also looking at developing alternatives to artificial fertilizers, through some science and by using more environmentally friendly packaging.

In our consumer health business, we’re investing more than $100 million to transform all of our packaging to be recyclable by 2030, working through that process now. Some of that packaging is standard, and some is unique to Bayer.

On the agricultural side, you’re also working with farmers.

Yes, in a couple of areas that are unique to Bayer. We’re developing new products and programs that will help farmers reduce their “fieldprint,” [which is] the amount of acreage they require for a given output. Obviously, that will reduce greenhouse gases.

The first one is a new program rolling out later this year for short-stature corn. (See below) We’ve also just launched ForGround, a platform that allows farmers to be much more precise about digital agriculture. It’s a digital-farming program with a significant database that allows us to provide research-based recommendations to help growers meet yields but cut emissions. 

We’re also working with other companies on incentive programs so that farmers can grow crops more profitably with ForGround. It will be, “If you use X methodology, this is an incentive you can have in terms of a price reduction [on Bayer products].” So if farmers follow best practices, we’ll give them a discount.

How has the driver of climate change evolved as a factor in Bayer’s business compared with five or even two years ago?

For one thing, there has been an acceptance that no one can do this by yourself. This requires a multi-industry, vertically integrated approach. And it requires the private sector; government can’t do it alone, and industry can’t do it alone.

Also, this is incredibly sophisticated work that requires long-range planning and innovation. Lastly, it also requires a regulatory environment that is standard and scientifically based and unified, because if we start to deal with multiple different regulations at the state level versus the federal level, that will significantly impact innovation and our progress on sustainable farming.

Where do water resources, perhaps the biggest factor for agriculture, come into the equation?

Yes, water is increasingly scarce. In the big picture, we’ll have a population of 10 billion people and 25% less land available for agriculture, and less water. So unless we significantly increase the intensification of agriculture through practice and product, and through crops that require less water, we are heading to a significant disaster.

Bayer and the legacy company, Monsanto, are famously associated with seed modification. There’s a lot of work going on today in genetic modification as well. What’s the potential that remains there?

I think what seed selection can lead to—not seed modification, but mass reproduction of seed that is selected—is fascinating for a number of reasons. It can significantly increase the nutritional content of a given seed, targeting for different disease states. It can require significantly lower amounts of water. It’s an area of prime development for us.

You said that “human welfare” also is an important concern for Bayer when it comes to climate change. In what ways?

We have an unusual configuration as a company: We’re the only one that really comes together as a health and nutrition company, a true life science company with a pharmaceutical division, agriculture, and a self-care and consumer division. I think that positions us to go against some of the biggest challenges to humankind and to a healthy, nourished global population.

Within that is our challenge of “Health for all, hunger for none.” Within that, we must solve for some of the most present disease states and alleviate or cure them, enable a lower cost of health care so more people can adopt health care, and nourish and feed a global population of 10 billion.

It becomes a question of equity and access. For instance, we have set for ourselves the following challenge: enable 100 million smallholder farmers around the world, most of them female, by the way, to become sustainable. Our second challenge is to allow 100 million more people access to everyday self-care so they can avoid disease and self-medicate health and wellness. And the third is to provide 100 million more women access to contraception.

We’re committed to those results, and we will be audited, and the board compensated, against those. We have a host of initiatives to support each one of those goals.

New Corn Strain Is Shorter, Stronger

About 150 American corn farmers are looking forward to planting in the spring for an extra reason this year: They’ll be the early-adopter growers able to deploy seed from Bayer’s Smart Corn System that features “short-stature” corn hybrids, which are supposed to yield more while leaving a much lighter environmental footprint than corn that’s come before.

The iconic American agronomist Norman Borlaug was one of the first to tap the potential of shorter crops more than a half-century ago. Corn proved more difficult to knock down to size scientifically, but Bayer scientists finally solved the genetic puzzle and began fielding short-stature corn varieties in a pilot project in Mexico in 2020.

“The main reason corn yields have increased over time is the ability of hybrids to withstand heavier densities,” says Christopher Souder, global R&D portfolio lead for Bayer Crop Science. “We believe short-stature corn and increasing densities are critical to feeding the world and controlling green-house gases.”

Typical corn grown on U.S. farms is nine- to 12-feet high, and annual yield losses due to stalk lodging—breakage of the stalk below the ear—range up to 25%, according to Purdue University. Short-stature corn grows only to around seven feet, so the stalks are inherently stronger and with the same number of leaves as traditional corn.

The benefits are many. The stalks have a lower center of gravity because the ear sits lower on the stalk, which, along with the lower height, greatly reduces potential for wind destruction of crops. Improved stalk stability allows farmers to plant more densely, boosting yields. Lower heights allow easier in-season access to stalks by farm equipment and can nearly eliminate the need for aerial spraying. The varieties are more tolerant of drought than corn strains that have previously been available. Part of what Bayer calls its digitally assisted Smart Corn System, the short-stature varieties are headed to commercial trials in 2023, with the commercial launch set for 2024.