For months, the Wilmington, Del.-based chemicals company watched from the wings as Monsanto Co., Dow Chemical Co. and others acquired the seed and technology companies they need to market bioengineered crops, prompting analysts to doubt DuPont's commitment to the emerging industry.

Now, with its back-to-back purchases last month - for a combined $3.2 billion - of a stake in Pioneer Hi-Bred International Inc., the world's largest seed company, and Ralston Purina Co.'s soy protein unit, DuPont must be reckoned with, analysts said.

"DuPont has captured some of Monsanto's wind," said James Wilbur, a Smith Barney analyst. "Now it's Monsanto's turn to do something."

Monsanto was the first to stake out a position in the market for bioengineered crops with last year's introduction of insect-resistant cotton and herbicide- tolerant corn. These and products in Monsanto's pipeline reduce the cost of growing crops for farmers.

DuPont, by contrast, has focused on developing grains with enhanced nutritional or other characteristics, such as higher levels of oil or starch. Profits from such products will come later than those from problem-resistant crops but could be higher in the long run, analysts say.

In acquiring a 20 percent stake in Pioneer, DuPont has gained a crucial distribution network for its new products.

And in acquiring Ralston's Protein Technologies International, including a 250-employee Memphis plant, DuPont has established a bridgehead to the consumer market, which increasingly will dictate what new products are developed.

"The customer is pulling these traits out of the research laboratory," said John Hemingway, marketing manager for DeKalb, Ill.-based Dekalb Genetics Corp., the second-largest U.S. seed company.

But specialty grains must be stored, transported and processed separately so customers know what they're getting. That's forcing grain handlers such as Continental Grain Co. and food processors such as Archer Daniels Midland Co. to re-examine their infrastructure.

"If seed companies are producing high-oil corn, we need to have our factories in balance with that application," said Allen Andreas, ADM's chief executive.

That could be an expensive proposition and not one that ADM or its competitors would eagerly undertake unless they get a share of the profit on higher-priced grains. The biotech companies have little choice but to give it to them, since they don't have the grain-handling infrastructure themselves.

"We don't want to get into the crushing arena," said Mike Ricciuto, a DuPont spokesman. "We want to do that through establishing partnerships and alliances."

So DuPont's acquisition of Protein Technologies is likely to be the first in a wave of new partnerships between biotechnology companies on the one hand and grain handlers, food processors and food refiners on the other.

"On the input side, we have already put together the framework we need," said Nicholas Filippello, a spokesman for Monsanto. "On the output side, clearly that does require some relationships downstream between ourselves and the ultimate consumer."

Analysts say an obvious alliance would be between Monsanto and Decatur, Ill.- based ADM. "It's not a question of if but when," said Christine McCracken, an analyst at BioScience Securities Inc. "It makes sense for them to make an alliance, and if I was guessing, I'd say it would be some kind of equity stake."

ADM's Andreas said a merger between his company and Monsanto would be unlikely but that the two could form an alliance to develop specific products.

"Right now we have no formal ties with Monsanto, and I have no current knowledge that we have arrived at a state where we have identified a specific product line," he said. "But that doesn't mean we aren't working with them."

Analysts said the two companies could use a DuPont and Pioneer joint venture, Optimum Quality Grains, as a model. That venture, which produces high-oil corn that enhances the energy content of animal feed, began as a research agreement. DuPont also has an informal relationship with Continental Grain under which the two contract with farmers to produce high-oil corn in the United States for export.

Meanwhile, Monsanto has been turning up at conferences with representatives from closely held Cargill Inc., the big Minneapolis agribusiness company, prompting speculation the two could be hatching a plan of their own.

"Cargill's expertise is in moving big quantities of grain around the world, which is what Monsanto needs," said KayAnn Miller, a spokesman for the National Corn Growers Association.

10/7/97