Few businesses impact farmers like that of the tiny seed
It all starts with the seed. No other input has as much impact on how you prosper. Just as seeds come in all shapes and sizes, so do seed companies. Those that remain after nearly two decades of intense industry consolidation are fiercely competitive.
Here’s a look at how some seed companies are positioning themselves in the marketplace to deliver new technology and breakthroughs that bring more bushels to the bin.
Bayer Makes Major Splash
The big news this past spring was Bayer CropScience’s purchase of Arkansas-based Hornbeck Seed Company. Bayer, a trusted corn and soybean trait developer, has already shown what it can do on the seed side of the ledger through its FiberMax cotton business.
"Within a 10- to 15-year time frame, we want to be a strong player in the soybean market," says Mathias Kremer, head of Bayer’s BioScience business group. Bayer is already a first-string seed player globally in canola, cotton and hybrid rice and plans to use a similar model to develop its soybean business. The company’s Nunhems vegetable seed business is a global player, and more veggies are in the business plan.
Wheat is also on the plate. In the past 12 months, the company has acquired germplasm from North America, Europe and the Black Sea region for use in its own breeding program. Additionally, Bayer is partnering with third parties such as Evogene and CSIRO to develop traits to improve wheat productivity. Varieties could be headed to the farm by 2015.
Pioneer Pumps Up
Getting to know its grower customers better is paying off for Pioneer Hi-Bred, a DuPont business. Judd O’Connor, vice president and U.S. regional director, says a restructuring into six regional business units is giving the company a more localized look.
O’Connor says the strategy has taken Pioneer’s business market share to 36% in corn and 36% in soybeans for 2011, marking multiple years of gain. Investment from DuPont into crop genetics is helping to enhance the company’s product lineup. More account managers and agronomists are part of the localized approach.
Pioneer’s agronomy trials manager system, announced in September, will put 40 agronomists in the field to evaluate agronomic practices during the next three years.
"In prior years, we had more of a North American focus when advancing new products into our lineup, but today we focus locally," O’Connor says. "By putting the local needs of growers first, we can respond more quickly in the marketplace."
While the company maintains national germplasm research, the results are brought into regional research facilities, O’Connor says. "A lot of research is conducted within each business unit. To make sure we have products that fit growers’ needs in their local environment, we have put the right number of people in place."
DuPont’s PROaccess business strategy enables Pioneer to offer its seed genetics to more growers through a network of distributors. In the past two years, DuPont has acquired five of the seven companies that have operated under PROaccess agreements.
Agrigold Grows in Market Share
AgReliant is the fourth largest seed corn company in the U.S. but is the largest seed company not owned by a company selling chemicals. AgReliant owns the AgriGold, Great Lakes Hybrids, LG Seeds, Pride, Producers Hybrids and Wensman brands.
In a fiercely competitive industry, AgReliant has watched market share blossom across all brands from 3% to nearly 7% in 2011. The company credits its consistent growth to multibranding. Each brand has its own strengths and identity but also has access to AgReliant’s research and development.
AgriGold has access to all the major traits available and offers choices to farmers, notes Phil McCutchan, AgriGold marketing manager. AgriGold features Giant genetics from AgReliant, which is a top five research company with multiple research stations across North America. High-performing proprietary genetics is its most unique feature, McCutchan adds, and is one of the benefits of being a part of AgReliant Genetics.
AgReliant was formed in 2000 as a joint venture of Groupe Limagrain of Chappes, France, and KWS SAAT AG of Einbeck, Germany. The two powerful parents gave access to premier genetics and new ways to improve hybrids through diversified germplasm, which has contributed to the growth of AgriGold and AgReliant.
The Monsanto Method
It’s hard to believe Monsanto began as a company focused on producing saccharine. Severed from its chemical company roots a decade ago, Monsanto emerged 100% focused on agriculture, says Mike Stern, Monsanto vice president, U.S. row crops.
Today, the St. Louis-based firm competes for top of the heap market-share honors through national brands such as DeKalb, Asgrow, Channel, Deltapine and 12 regional brands.
At this time, Monsanto has no plans to acquire any additional seed companies. "Our last acquisition was in 2007," Stern says. "I’m comfortable with where our business is. We have great brands and fantastic people. We continue to invest in productivity for the farmer."
Looking ahead, Monsanto cannot remain placid, he adds. "That’s why we are absolutely committed to innovation, and our investment in R&D reflects that."
Stern says 90% of Monsanto’s $1.40 billion to $1.45 billion research and development budget is pumped into seed and genomics research. "We’ve seen significant share growth since 2003," he says. "This has been accomplished because of the company’s leadership position in investing in biotech traits and advanced breeding technology and the acquisition of new companies."
Acquisitions by Dow AgroSciences
Dow AgroSciences has been one of the more active companies on the seed acquisition front. Of its 10 brands, six have been acquired in the past two years. The flagship brand, Mycogen Seeds, has been joined by Brodbeck Seeds, Dairyland Seed, Grand Valley Hybrids, Hyland Seeds, Pfister Seeds, PhytoGen, Prairie Brand, Renze Seeds and Triumph Seed.
"Dow AgroSciences is growing by adding companies and global breeding stations and making significant investments in R&D," says Chris Garvey, general manager of Mycogen Seeds. "Additionally, we have increased our sales team by more than 25% in the past three years."
Mycogen’s competitive advantage is technology, Garvey believes. Looking toward the future, that advantage gives a world view of the triad of seed, ag chemicals and traits, all of which are important pieces of the puzzle in solving upcoming grower challenges, he says.
The next big thing coming from Dow’s pipeline is the Enlist Weed Control System, a new herbicide-tolerant trait technology that will help in the fight against glyphosate-resistant and hard-to-control weeds, Garvey says. Enlist will provide tolerance to new 2,4-D choline and will be stacked with the glyphos-ate trait in corn, soybeans and cotton. Additionally, Enlist will provide tolerance to glufosinate in soybeans and cotton and the fop chemistries in corn, he says.
Dow plans to commercialize an initial herbicide offering with the system. Dubbed Enlist Duo, the herbicide is a proprietary blend of glyphosate and 2,4-D choline. Pending regulatory approval, the Enlist system will be available for corn in the 2013 crop year, soybeans in the 2015 crop year and cotton in 2016.
Syngenta is currently the No. 3 player in the seed business, but North American region director Vern Hawkins wants that to change. "I see big opportunities for growth. We have aspirations to double our market share over the next five years," he says.
In a bold move, Syngenta announced a plan this year to integrate its seed and crop protection businesses. Hawkins says the restructuring will allow the company to invest for better value and allocate more dollars to research and development. The goal is to leverage the broad strength of Syngenta—in seeds, crop protection and seed care—to create valuable solutions for growers in addition to high-quality individual products.
Part of the plan reduces duplication and improves efficiencies by making all salespeople responsible for all products. At the research and development level, Hawkins hopes, the integration will allow researchers to look for traits that have applications in more than one crop, as well as offer complete crop solutions that competitors can’t match.
The company predicts the integrated strategy will allow sales to increase from the present $11.6 billion level to more than $17 billion beyond 2015. Research and development is forecast to increase to approximately 10% of sales per year.
In 2010, Syngenta assumed full ownership of GreenLeaf Genetics LLC, an outlicensing joint venture with DuPont business Pioneer Hi-Bred. Syngenta had already outlicensed Agrisure corn traits to 150 independent companies, but this opened up its soybean portfolio to independents. In 2011, the company created a brand called Phoenix that could be marketed by independent companies under their own label. Beck’s Hybrids, for example, sells Phoenix, which is a Syngenta product.
Wyffels Looks Beyond Seed to People
Consolidation has thinned the ranks of privately held firms, but the few holdouts are holding on aggres-sively to their regional markets.
Bill Wyffels, president of Wyffels Hybrids of Geneseo, Ill., will tell you his three-generation family firm is more independent than Switzerland. Consider its current marketing slogan: "Lean, hungry and obsessed is no way to go through life, unless you compete with seed companies 10 times your size."
"Farmers need more beyond product and price," Wyffels says.
During the past three years, Wyffels’ work force has increased from 85 to 100. "We are investing in people and growing our trade area," he says. "We have a 10-year plan to grow 10% per year."
Being a regional company offers advantages, he adds. "We can do unique things, but we have to be nimble. Our job is to build relationships and knock on a lot of doors."
Wyffels believes that large companies are good for him and vice versa. "Sometimes when you get beat up, you get better," he says.
- December 2011