Carving a niche in the consolidating world of seed
There is a legendary story about Harry Stine, president of Stine Seed Company. The tale involves four corporate negotiators waiting in a conference room to hash out some contractual details. Stine enters and makes note of the lopsided 4-to-1 odds. "Maybe you’d better go back to headquarters and get a few more guys," he suggests.
Independence is a badge the survivors of the corn and soybean seed wars wear proudly. Consolidation has thinned the stand of these privately held firms, but those that remain continue to wield clout in the marketplace.
For example, Stine and associated companies screen nearly 1 million unique soybean varieties each year as the world’s largest private soybean breeding program—holding nearly 800 seed, breeding and equipment patents.
"Approximately 70% of the soybean genetics being grown today originated in our breeding program," Stine claims. "There isn’t a LibertyLink soybean planted in the United States that didn’t come from here."
The company—headquartered on the same Adel, Iowa, farm where Stine was reared—also sells retail hybrid corn, soybean and soft red winter wheat seed through a network of dealers and sales agents in 19 states.
Who is left? Greg Ruehle, CEO of the Independent Professional Seed Association, estimates there are about 150 independent seed companies in existence today. That’s down from slightly more than 300 companies 14 years ago.
In recent years, large seed stakeholders have purchased independents as a way to gain market share. Rather than absorb these companies under the corporate banner, the recent trend is to retain customer loyalty by leaving the brand (and sometimes the leadership) intact. Growers are often surprised to learn that they are doing business with a local firm that is now an arm of a larger company.
Why does it matter? "Those who are truly independent make their own decisions," Ruehle says. "They have the advantage of being able to choose among a variety of technology suppliers and are beholden to none."
AgReliant Genetics is the largest independent that is not owned by an agrochemical company. Beck’s Hybrids, Atlanta, Ind.; Burrus Hybrids, Arenzville, Ill.; Latham Hi-Tech Seeds, Alexander, Iowa; and Wyffels Hybrids, Geneseo, Ill., are examples of some of the larger family-owned, independent regional companies.
"We’re a lot like farmers—in fact, most of us are farmers," says Tom Burrus, president of Burrus Hybrids, a 76-year-old firm that markets in five Midwestern states and offers touches like 100% free replant.
"We have deep family roots and a new generation waiting in the wings that keeps the fire under us. We’re excited to still be in the race and think the future is great for those willing to stay innovative," he adds.
In 2009, Burrus and six other regional seed businesses signed Pioneer Hi-Bred PROaccess distribution agreements. "In our case, DuPont/Pioneer owns the Power Plus brand and we are the distributor. We also market our own private brands," Burrus explains. Over the past two years, DuPont/Pioneer has acquired five of the companies that had operated under PROaccess agreements—leaving Burrus and Beck’s as independent holdouts.
Syngenta Seeds recently assumed full ownership of GreenLeaf Genetics LLC. The transaction dissolves an outlicensing joint venture between Syngenta Seeds and DuPont that has been operating since 2006.
In June, Beck’s Hybrids announced it will distribute Phoenix brand corn hybrids from Syngenta in its area in the 2012 growing season.
What’s next? Stine sees continued evolution in the industry. "You need genetics, traits and marketing—without one of those, you are vulnerable.
"However, I look out the window at the farmland that surrounds me and that’s my overhead. There’s no one else in this business that can put traits and genetics into farmers’ hands as economically as we can," he says.