Who grows your seed and what’s in their pipeline?
Agricultural seed is big business. U.S. seed sales for the top four companies are estimated to have topped $11 billion in 2010.
While industry consolidation slowed slightly in the past year, DuPont and Monsanto Company brand products continued to control an estimated 69% of corn seed sales and 58% of soybean seed sales. Add the market shares of AgReliant, Dow AgroSciences and Syngenta brands to the equation and it is clear the seed industry is now concentrated into a very few hands.
Market players. Kent Schulze, an associate with Cornland Consulting of Minneapolis, Minn., keeps tabs on the competitive fortunes of the seed industry. He says the late planting season makes market share a moving target for 2011. "There may be minor changes, but we expect market shares to be comparable to 2010," Schulze says.
"Through June 2011, there have been five announced acquisitions, but the low-hanging fruit has mostly been consumed," he notes. "The majority of the remaining regional companies are holding their own or growing. They’re finding ways to stay competitive and generally don’t seem interested in being acquired."
The 2012 season could be a different story. Schulze thinks refuge-in-a-bag could be a big hit. "It has a similar convenience factor for farmers as Roundup Ready technology," he says.
SmartStax hybrids (Dow AgroSciences and Monsanto) had some integrated product available this past spring; a full launch occurs in 2012. Regional companies licensing SmartStax technology will have access too. Pioneer Hi-Bred and Syngenta await single-bag refuge regulatory approvals with plans to have similar products in 2012.
Large investments in improved genetics and trait development to boost yields and productivity at the farm gate aren’t new, nor are the consequences. Seed consolidation began soon after the introduction of biotechnology-derived traits in the mid-1990s.
During that time, the focus was mainly on acquisition of germplasm and channels through which genetic and trait packages could be delivered to the marketplace via established, high-profile brands, notes Dean Cavey, managing partner of Verdant Partners, a Champaign, Ill., consulting firm.
"Much of the consolidation in the past 15 years focused on hybrid seed corn, but attention recently has turned to soybeans and wheat," Cavey says.
The big news this past spring was the Bayer CropScience purchase of Arkansas-based Hornbeck Seed Company. Bayer has been a trusted trait developer in the corn and soybean sectors and has already shown what it can do on the seed side of the ledger. The company introduced FiberMax cotton in 1998 and has since built it into the No. 1 brand in the U.S.
Trait tools. New technology is flowing from the product pipelines in the form of novel traits for above- and belowground pest protection. The multiple-mode-of-action trait stacks that are emerging are the core of the science behind refuge reduction.
Beyond in-the-bag refuge products, the coming year will bring additional in-the-seed herbicide trait tools. Drought-prone regions will have access to more hybrids that make do with less water. The first biotech soybeans with consumer benefit will also find their way to the shelf.
The race to commercialize can be a double-edged sword. Companies want to get there first but know all too well the penalty for rushing if the traits don’t perform as promised.
"Farmers have long memories when it comes to value received or lost. That’s what builds or erodes brand equity. Market share gains and losses are the measuring stick," Schulze adds.