RB Halaby, the founder of AgriCapital, has over thirty-five years of investment banking, investment management and engineering experience. He holds S.B. and S.M. degrees in engineering from the Massachusetts Institute of Technology and an M.B.A. from Stanford University.

May 2002

What does the seed industry look like today from your vantage point?

After a decade of being buffeted around by external factors, including technology streaming in at lightning speed and ill-conceived roll-ups, the seed industry appears to have entered into a state of "equilibrium."

Having said that, I don't think seedsmen should let their guard down. Periods of equilibrium are typically ended by unforeseen developments.

Give us a big picture on consolidations within the industry during the last decade. What is the next ten-year cycle is likely to look like, and what will drive it?

There were two main drivers of the merger mania of the 80’s and 90’s. Technology companies were looking to be totally integrated along the value chain, and financially driven companies were looking to roll-up certain sectors of the seed industry to benefit from economies of scale.

Looking forward, I am hopeful that future M&A activities will be driven more by rational financial and strategic considerations than many in the past. I also see more creative forms of alliances than simply outright acquisitions.

Despite consolidations, our industry is still fragmented into large, medium and small companies. How are companies in each these three major categories faring these days?

The seed industry will never consolidate into one big monolith. In my opinion there are two reasons for this:

Among American agronomic seed companies, a rough generalization is that the smaller to middle sized are doing well. The leaders are doing well. In between, there is an "awkward" level of companies that appear more challenged than others.

Apart from biotech, what other technologies do you see having significant impact on the seed industry, and what changes are they bringing about?

When people think of technologies affecting the seed business, they tend to think of technologies that are directly related to seed such as genetically engineering an input trait, etc. I think one should also take into account technologies affecting other parts of the food chain that might impact the seed business. For instance, what technological changes are taking place in animal nutrition that might impact the type of corn or soybeans needed? This is one reason we have invited David Bossman, the President of the American Feed Industry Association to address the ASTA Convention in Boston.

In the long run, such technological developments will probably have as big an impact on the seed business as technologies within the industry.

What is more important these days for a seed company CEO: to be a good manager? Or to have the vision to guide the company into an uncertain, technology-laden future?

The ideal seed company CEO will have one eye on the wheel and one eye on the stars.

You work closely with seed company managers in many countries. What's on their minds these days, what are their worries and hopes?

With the cooling of the merger mania and with many companies feeling secure with their sourcing of technology and genetics, many companies are becoming much more focused on micro issues (what’s our marketing campaign for the year) than broad-brush macro ones.

I think this is a healthy respite.

Do you find that Asian or European seed industry managers operate differently from their North American counterparts?

There are two types of people in the World: Seedsmen and Non-Seedsmen. And there is so much more that unites Seedsmen, of whatever nationality, than divides them. For instance, with few exceptions, Seedsmen operate at the highest level of integrity. They have to: What’s more important to the farmer than the seed?

I had a great friend, the late Arthur Davis, an attorney and former Mayor of Des Moines. He made a reference once that Seedsmen, like Farmers, are born of the same mother.

Where do you see the seed industry heading in the next 5 to 10 years?

It is hard to tell, but I think the Seed Industry will have an easier time coping with change and whatever unforeseen shocks it will be subjected to if it views itself as a key part of an integrated food system, rather than just a small stand-alone sector of agribusiness.

What important lessons have you learned during your years in the seed industry?

My advice to my colleagues at AgriCapital is "Don’t tell me what you know, tell me what you have learned." With all the change that takes place every day, knowledge, defined as static information in a data bank, is a fast depreciating commodity.

I find the typical Seedsman to be intellectually generous. Ask nicely, be open with your agenda, and try not to bluff the party you are speaking to, and he or she will generally be most forthcoming. There are no dumb questions if asked honestly.

Could you please tell us about an individual in the seed industry whom you have found particularly inspirational?

Over the years I have been blessed with many friends and mentors in the seed business who have contributed so much to whatever success AgriCapital has been able to achieve in the past twenty years.

One person in particular who has been very helpful to me is Don Funk of Channel Bio. He probably has as good a feel for what makes a farmer buy a kernel of seed as anyone I have ever met. I have known him some 17 years and have seen him operate in good times and bad. He has an uncanny ability, like Kipling advises in the poem "If" to "Meet with both triumph and disaster" and to "treat both imposters just the same."

RB Halaby can be reached at halaby@agricapital.com

<< back to Forum section