For the first time in the history of the seed corn industry, two companies control 71% of sales.
"A few acquisitions by DuPont this spring puts them neck and neck with Monsanto with regard to market share," says Kent Schulze, an associate with Cornland Consulting, which specializes in advising the U.S. seed industry. "While the combined 71% market share of these two seed giants is unprecedented, it is the gain from a combined share of 50% in 2002 that is remarkable."
It’s no news flash that the seed trade has been consolidating and that technology is driving the change. The number of seed corn companies peaked in 1996 at 305 active companies, according to Schulze’s tally. That same year ushered in Roundup Ready soybeans and the following year Bt insect-resistant corn. Today, 186 seed companies remain—and that may change by the time you read this.
Countdown to consolidation. Those who study the industry call the seed houses that have emerged "the big four." In 2009, Dow AgroSciences, DuPont, Monsanto Company and Syngenta Seeds accounted for more than 80% of the national corn market share, Schulze says. He projects that the almost 40 brands those companies collectively control will account for 83% of the market in 2010 (see chart, page 15). The players are similar for soybeans, with the four companies accounting for an estimated 71% of 2010 sales.
"Since 1997, there has also been a dash to control distribution," notes Irv Parker, owner of Cornland Consulting, based in Farmington, Minn. "Growers who take a close look at the current seed family tree might be surprised to see that who they are doing business with is actually part of a larger company."
Market share numbers are sensitive, closely guarded secrets and they will differ, depending on source and calculations. Dean Cavey, a consultant with Verdant Partners, a Champaign, Ill., firm that also charts the fortunes of seed companies, says his market share figures are similar, give or take a point. He notes that Monsanto’s hold is greater than pure market share if you consider that traits have been broadly licensed and are now found in some 93% of soybean seed and approaching 80% of hybrid corn seed.
Continued purchases of regional seed companies will come as the seed giants further penetrate a region or increase market share. DuPont added NuTech Seed, Hoegemeyer Hybrids and AgVenture to its roster in June.
Beyond consolidation, cross-pollination of business relationships and strategic alliances are emerging. For example, Monsanto and Dow teamed up to bring SmartStax to market, which includes Bayer CropScience’s LibertyLink trait as well. Pioneer Hi-Bred and Syngenta are working together through their GreenLeaf Genetics partnership to incorporate the new non-Cry protein called Viptera. Monsanto and BASF Plant Science are collaborating on yield-and-stress tolerance.
In the wings sit "the big two," Bayer and BASF. Jonathan Bryant, vice president, BASF Plant Science, says the company’s business model is clear. "We are content to continue looking inside the plant and to work collaboratively to bring traits to seed company partners," he says.
Lee Rivenbark, Bayer CropScience global head, cotton seeds and traits, believes the company will fit on the seed family tree. "Our strategy today is to be a trait provider, but as we look out over the next decade, we plan on being a player in grain crops," he says. The company has already added a soybean breeder and a wheat breeder.
"Seed is not quite the same as the airline industry," Schulze says. "Seed is the first link in the food chain. It’s important to make sure it never becomes vulnerable to market maneuvers."