Inside the Seed Industry

Companies make deals and integrate seed services

Not even the worst drought in recent history could dampen the vitality of the seed industry. Seed sales for the major companies in the corn and soybean sector remain at $13 billion, says Kent Schulze, an associate with Cornland Consulting of Minneapolis, Minn.

For the past several years, the big four—Monsanto Company, DuPont Pioneer, Dow AgroSciences and Syngenta—have owned 80% of the U.S. corn seed business and 70% of the soybean seed business. Next, AgReliant Genetics holds 7% of the corn business and 3% of the soybean business. Farm supply brands, regional and local company brands round out the remainder of the market share.

Since seed supplies were tight among all companies, Schulze says, shares were likely stable in 2012. "Not many companies had the opportunity to take market share this year."

Technology deals. While rivalries are still high among seed companies, they are learning to work together or cross-sell their technology. Schulze says many major trait cross-licensing agreements have been put in place recently:

• DuPont Pioneer will offer Genuity Roundup Ready 2 Yield and Genuity Roundup Ready 2 Xtend technology. This comes at a minimum price tag of $1.75 billion, which DuPont Pioneer will make via a series of royalty payments to Monsanto through 2023.

• Dow AgroSciences agreed to give Monsanto access to its new Enlist Weed Control System for corn in exchange for Monsanto’s next generation rootworm control, which is expected to be another mode of action to the current SmartStax platform.

• Bayer CropScience was granted use of Genuity Roundup Ready 2 Yield and Genuity Roundup Ready 2 Xtend technology in soybeans. Bayer CropScience will grant Monsanto licenses to evaluate enabling technologies for corn rootworm control and herbicide tolerance for Monsanto’s future development.

"This is significant because of the potential for these industry giants to further expand their dominant share of the corn and soybean seed markets," Schulze says.

Rod Osthus, president of the R.C. Thomas Company, a seed sales training firm in Olivia, Minn., says the high level of competition and technology sharing is beneficial for farmers.

"Every company has really great products," he says. "But farmers worry they are basically buying the same product from every company."

Because the average life cycle of a product is less than three years, which is half of what it used to be, farmers struggle to stay up-to-date on the constantly changing product portfolios.

Osthus says seed salesmen need to focus on helping farmers get the full potential of their products. "A farmer hasn’t been taught yet how to manage all of the new technologies," he says.

The Bundle Approach

As seed companies offer more products and services, they aim to be a one-stop shop for a farmer’s seed needs. Kent Schulze, an associate with Cornland Consulting, and Rod Osthus, president of the R.C. Thomas Company, highlight issues driving changes in the industry.

Precision farming. With Monsanto Company’s FieldScripts and DuPont Pioneer’s Field360, farmers can generate a recommendation for each of their fields that includes variable-rate seeding prescriptions by yield management zone and hybrid recommendations. The independent MyFarms system also offers product selection assistance specific to farmers’ fields on a basic, open architecture, web-based software platform.

Seed treatments. Farmers won’t put valuable seed in the ground without treating it. "Companies are getting licenses to the needed chemicals and then creating their own bundle," Schulze says. Biologicals, which are generated from natural sources, are gaining traction.

Weed resistance. Schulze says the next frontier in soybean technology will be traits that can fight weed resistance. "With weed resistance popping up, you have to get something like 2,4-D or dicamba lined up," he says. "Companies will continue to stack traits to have multiple herbicides that can be used to fight resistance."

Click here to see the maps, provided by the respective companies, that highlight the national and regional seed brands for the five leading seed firms.

You can e-mail Sara Schafer at sschafer@farmjournal.com.