Merger of Australian Grain Technologies and SunPrime Seeds creates Australia’s largest grain breeding organisation, will provide better wheat varieties faster

The merger of Australian Grain Technologies (AGT) and SunPrime Seeds sees the formation of Australia’s largest grain breeding organisation.

According to the inaugural Chairman of the merged organisations, Murray Rogers, the merger is an important step in the rationalisation of Australia’s wheat breeding industry and, for growers, means better varieties faster.

Mr Rogers, a former Managing Director of AWB, said AGT and SunPrime Seeds bring a range of complementary assets, strengths and capabilities to the combined organisation.

AGT and SunPrime Seeds have developed different but complementary pools of wheat genetics.

AGT has a strong base of plant breeding technical expertise and delivery networks throughout southern and Western Australia.

SunPrime Seeds has a strong track record in wheat variety development in northern Australia and a successful seed commercialisation business. 

Their union creates a large, stable but technically advanced cereal breeding organisation that is already on track to produce better varieties faster, Mr Rogers said.

AGT and SunPrime will retain their identities in the grains industry but the new entity will have access to the combined germplasm resources plus an established seed marketing business.

The AGT-SunPrime genetic portfolio includes the former Roseworthy and Waite breeding programs in South Australia, the Victorian DPI program at Horsham, and now the well known “Sun” varieties from the Narrabri Plant Breeding Institute. 

“Our breeding footprint covers Australia, and we aim to have better varieties out to farmers faster,” Mr Rogers said.

“With the pressure on farmers to remain internationally competitive, we have to make their research dollar work harder. This merger takes us down that path.”

BACKGROUND
Australia's largest national wheat breeding program

Australian Grain Technologies (AGT)

AGT is a plant breeding company with a current focus on wheat and triticale.

It was formed in June 2002 as a joint venture company between Grains Research & Development Corporation (GRDC), SA Research and Development Institute (SARDI) and the University of Adelaide.

It was originally established to develop and commercialise varieties from the University of Adelaide’s Waite and Roseworthy wheat breeding programs but has since licensed germplasm from The Department of Primary Industries Victoria at Horsham.

It currently has breeding and operational nodes at:

•  Waite – Adelaide University campus

• Roseworthy – Adelaide University campus

• Horsham VIC – satellite operation

• Esperance WA – satellite operation

AGT employs equivalent to 18 full-time employees.

SunPrime Seeds Pty Ltd

SunPrime Seeds produces and markets wheat and field peas.

The company was formed in June 1995 as a joint venture between GrainCorp and the University of Sydney to commercialise seed varieties from the University of Sydney wheat-breeding program.

SunPrime Seeds bought Hybrid Wheat Australia (renamed to SunPrime Research and Development) in May 1999, a conventional and hybrid wheat breeding program based at Tamworth NSW. GRDC bought into the business in 2001.

SunPrime, which markets, among others, the well know “Sun” varieties and the very popular H45 wheat variety, has its commercialisation base at Dubbo, in NSW, and has breeding stations at Tamworth and Narrabri in northern NSW. 

The company employs equivalent to 11 full time staff, many of those in the seed production and commercialisation sector, and also has agreements with contractors to provide it with wheat-breeding services.

Markets

SunPrime Seeds and its predecessors’ traditional markets are New South Wales and Queensland.

SunPrime has almost 50% of the NSW market and is increasing its market share in Queensland, which accounts for around one third of all seed sales in Australia.

AGT and its predecessors’ traditional markets are South Australia and Victoria.

AGT and its predecessors have held a dominant position in South Australia and Victoria for more than 40 years and have held up to 40% market share in Western Australia in recent times.

Merger

AGT and SunPrime Seeds see many advantages from a merger given the high cost of breeding, the time required to bring new varieties to market and the relatively small size of the Australian market.

They believe the grain industry will undergo significant consolidation and rationalisation and a few major breeding, seed production and marketing chains will emerge.

Their merger is designed to ensure they survive to be one of those major industry entities.

The Australian seed industry is fragmented and breeding is characterised by a significant number of small programs mainly supported by public funds.

But the availability of public funds is expected to reduce, forcing breeding organisations to derive their funds from end-point royalties (EPR) on released varieties

AGT and SunPrime Seeds believe their union creates a truly national, commercially viable, plant breeding enterprise in line with GRDC and other shareholder vision for the future of plant breeding in Australia.

Genetic diversity

Regional wheat breeding programs targeting specific agro-ecological zones and/or quality types have narrowed the genetic diversity of the germplasm pool within those programs.

Such narrowing of genetic diversity can substantially increase risk from changes in pathotypes of current diseases, introduction of new diseases, changes in market or end-user demands, changes in the environment and changes in farming systems. 

This merger opens the way for enhanced genetic gain, and greater probability of commercial success, by ensuring the new entity access to highly defined genetic resources containing a wealth of diverse traits.

The new company intends to retain the discrete germplasm pools as valuable genetic resources but the merger opens the way for selective combination of different genetic material in new breeding initiatives.

Marketing Diversity

The new company will offer farmers a highly diverse range of wheat varieties.

SunPrime is focused on APH and AH bread wheats while AGT’s main focus is AH types.

AGT is also developing APW, biscuit, white salted noodle and durum varieties and has recently expanded into triticale.

This diversity of product range minimises risk associated with market place changes and maximises cash flow stability.

Environmental Diversity

Cereal production across Australia is highly variable from season to season and region to region, so a business producing products for a wide range of environments is less susceptible to seasonal variations in crop production than one focusing on only a few.

The geographic spread of AGT and SunPrime’s combined plant breeding resources may reduce the time needed to identify and develop a new variety by reducing risks associated with seed production and accelerating disease and yield screening through use of “out of season” production.

All these factors have the potential to accelerate the combined rate of genetic gain, which in turn reduces the risk associated with development of a new variety.

Strategic alliances

A larger, national program is a more attractive marketing vehicle for owners of intellectual property.

Expertise        

Combining the human and IP resources of AGT and SunPrime Seeds creates a critical mass of expertise that improves company performance and opportunities for staff.

Australia has a limited number of commercial cereal breeders, which presents breeding companies with key person risks. The merger of AGT and SunPrime Seeds establishes an enterprise large enough to provide career progression and development and succession planning that will reduce the key person risks.

Combining the human resources of the two companies also increases the diversity of expertise and input available to the production and marketing teams and opens the way for sharing of technical leadership, better succession planning, and improved training opportunities.

Application of AGT’s acknowledged expertise in genetic marker technology to SunPrime germplasm will also generate significant benefits for the new company.

All of which makes the new entity more attractive to funders and investors.

Increased productivity

The merger will improve the cost efficiency of the commercialisation and release of new varieties and integration of the AGT and SunPrime breeding programs is expected to enable early identification of superior lines with potential for release.

It will also increase efficiency and reduce costs by eliminating the duplication inherent in operating two competing entities, with opportunities for consolidation of many activities.