Brazilian sugarcane research center CTC and chemical company BASF (BASFY) are developing genetically modified, drought-resistant sugarcane.

"This could be commercially available in 10 years or even eight years if the development goes well," Walter Dissinger, BASF vice president for crop protection in Latin America, said Wednesday.

CTC and BASF signed a partnership this week to develop genetically modified sugarcane in Brazil. The companies declined to disclose the investment.

Under the agreement, the BASF will supply genes and the CTC will test four to five varieties of sugarcane to develop modified cane for the Brazilian market.

The aim is to develop cane that is tolerant to dry weather and offers yields that are 25% higher than those in existence, Dissinger said.

The cane should enable average productivity of 100 metric tons a hectare from the current 80 tons a hectare, he said.

Nilson Zaramella Boeta, director of the CTC, said multinational companies such as Monsanto Co. (MON) and Syngenta AG (SYT) also are developing genetically modified sugarcane products.

Brazil, however, doesn't yet have any modified cane authorized for sale.

The first modified cane is expected to be commercially available in about four or five years, Boeta said.

Boeta said the main challenge is to produce cane that brings value to users.

For instance, regular cane yields are increasing by a few percent each year, so a genetically modified product needs to offer a big jump in yields, he said.

Boeta said around 50% of Brazilian cane-growing areas, such as those west of Sao Paulo or in Goias and Mato Grosso states, face water-stress issues.

As a result, the CTC and the BASF think new or existing cane growers can benefit from its genetically modified product, he said.

Brazil is the world's No. 1 sugar producer.

-By Tony Danby, Dow Jones Newswires; 55-11-2847-4523; Anthony.Danby@dowjones.com