|
 The
global seed industry has seen dramatic changes over the past 30
years and especially over the past decade. Technological
development has been the primary driver of these changes.
Technology has also fueled several business cycles in which seed
industry acquisition activity has waxed and waned. It appears
that we are now in the midst of a new cycle that promises to be
interesting and perhaps “strategy-changing” for many
participants in the global seed industry – especially those
involved in the major field crops where technology has had its
greatest impact.
Starting in
the 1970’s, research-driven multi-national companies saw the
potential impact of biotechnology on agriculture. The result
was a series of acquisitions by companies such as Sandoz,
British Petroleum, ICI, Upjohn, Dow Chemical and others. It
could be argued that these “pioneers” were just a bit ahead of
their time. They invested in research and in delivery systems
before the technology had been fully developed and
commercialized. Since that time, many of these early investors
have changed strategy and exited the industry from a technology
and seed perspective.
The
development and commercial introduction of important input
traits, such as insect resistance and herbicide tolerance, set
off another round of mergers and acquisitions in the mid to late
1990’s. This led to the current structure whereby the industry
is dominated, in terms of market share, by major international
entities such as Dupont, Syngenta, Monsanto, Groupe Limagrain,
KWS, Dow AgroSciences and others.
Syngenta AG’s
recent acquisition of GA 21, the Golden Harvest Group, and its
pending acquisition of Garst Seed Company and other elements of
Advanta BV, have fueled speculation that Syngenta, Monsanto and
DuPont/Pioneer will dominate technology and germplasm to such an
extent that it will lead to the demise of many of the
independent seed companies and change the industry structure as
we know it today. I disagree with this view.
Over the past
few years, many independent seed companies have enjoyed strong
sales growth. Companies like Agventure, Inc., Beck’s Superior
Hybrids, Channel Bio Corporation, the Golden Harvest Group, and
Wyffels Hybrids are thought to fall into this grouping.
AgReliant Genetics, LLC, although owned by international
companies, has also seen strong internal growth. The growth and
success enjoyed by the above-mentioned companies, to name a few,
is based on competitive products, judicious use of new traits
and seed treatments, timely and relevant information and strong
customer service. This has been the primary formula for success
in the seed industry for many years and there is little reason
to think it is going to change anytime soon.
In my view,
the recent acquisitions by Syngenta may ultimately position them
to offer interesting alternatives to the industry in terms of
traits/genetics/seed treatment packages. If this is the case,
then this will be a benefit to farmers and to those who are best
positioned to service the needs of those farmers. This allows
those seed companies, whether small or large, family or
corporate owned, domestic or international to better compete as
long as they continue to stick to the fundamentals of success as
mentioned above.
I
believe, however, that these latest industry developments have
set in motion another interesting cycle that will be
characterized by heightened interest in acquisitions by those
companies who see the opportunities and are bold enough to act
on them. This cycle could remind us of what the industry
experienced in the 1990’s as companies vie for market share and
market positioning to be able to take advantage of the next
generation of technology and the traits that emanate from that
technology. |
