My name: James Thomas
Worldwide Soytechnologies LLC
Subsidiary of Hornbeck Agricultural
Group at DeWitt, Arkansas
Recent Changes & Alliances
within the Seed industry
An overview: past, present & future
of the American Seed Industry
Where have we come from?
•
EQUIPMENT AND FARM PRACTICES
• Early in the 20th century agricultural productivity
growth came primarily from innovations in
mechanical inputs that replaced farm labor (6).
These have continued until today.
• Increases in land productivity driven by highyielding crop varieties in association with
fertilizers and chemical pesticides, fungicides
have all played a row to get to the yields we have
today ( 6 ).
20th century gains
• Corn yields rose from 31.7 bu. /ac in 1906 to 145
in 2000 for the national average while wheat,
soybeans and cotton yields increased 2 to 4 times
( 6 ).
• This unprecedented growth in US agricultural
productivity owes much to a series of biological
innovations embodied in major crop seeds- in
particular corn, cotton, soybeans, and wheat ( 6 ).
Other crops as well have followed over the years.
R&D
• Earlier crop variety R & D was conducted by
Public breeding programs and a handful of
private programs.
• In the last 30 years this has shifted from
predominately public to predominately private.
• Earlier soybean breeding was largely confined to
SAES or to the USDA ARS.
• Corn breeding was the first crop to command the
private sector to get involved when Hybrids were
1st entered into the market in the late 20’s or
early 30’s.
CAUSE FOR CHANGE
• The passage of the PVP act in 1970 allowed for
the intellectual protection of crop varieties, which
in turn prompted considerable private industry
investment in primarily soybean breeding (20).
• In 1980 the US Supreme Court ruled that living
matter could be patented (20).
• The PVP Act was later modified to conform to the
European cultivar protection laws(UPOV). These
events stimulated private industry to invest
heavily in soybean breeding (Sleper & Shannon
2003).
• Private sector firms have evolved from small
operations to very large vertical integrated
enterprises capable of variety development
and seed production, conditioning and
marketing.
• Table 1. Science person years devoted to basic
plant breeding research (PBR), germplasm
enhancement (GE) and cultivar development
(CD) by soybean breeders in 1994.
Organization
PBR
GE
CD
Total Companies Total Projects
Private Industry
8.6
10.9
81.85
101.35
38
USDA ARS
2.3
3.75
3.55
9.6
7
SAES
14.7 11.7
18.6
45.0
25
Note: from Frey 1996 (via Sleper & Shannon 2003)
Corn commanded the first gains
• Pioneer was founded in 1926 and given the name Hi-Bred
Corn Company by Henry A. Wallace, his brother Jim, and
several partners.
• It was the first business established for the specific purpose
of developing and marketing hybrid seed corn. They report
that they released the first corn hybrid in 1928 from a 40
acre production field (Answers.com)
• By the 1960’s farmer numbers had shrunk from 25% of the
population to only 5% and the U.S. hybrid seed corn market
was saturated and had little unit growth, forcing a higher
level of competition. DeKalb AgResearch Inc., a rival since
the 1930s, pulled ahead of Pioneer in terms of market
share (Answers.com)
• The rival company introduced a revolutionary hybrid
that gave it a slender lead in the industry by the end of
the decade. But by 1972, each of the seed corn
producers held 22 percent of the hybrid seed corn
market.
• By the mid 1970’s, new competition from chemical and
pharmaceutical companies like Ciba-Geigy, Sandoz,
Union Carbide, Upjohn, and Pfizer, who all applied
their research expertise to the development of new
hybrids came into the arena.
• By the end of the decade, Pioneer had regained the top
share of the seed corn market, with 34 percent, and
DeKalb's share had diminished to 14 percent.
• By 1995 Pioneer would command 45 percent of the
country's seed corn market (Answers.com).
• As the greater claims of biotechnology came
closer to realization, however, Pioneer and the
seed industry in general would undergo some
fundamental changes. It became imperative that
companies reach consumers first with the latest
genetically engineered seed. Because Pioneer
was a year behind the competition in introducing
corn that was immune to corn borer, and tardy in
bringing to market a variety of seed to grow highoil corn that would lower the cost of feeding
livestock, the company saw its share of the U.S.
seed corn market fall two straight years, dipping
from 45 percent to 42 percent.
Three of the big Four or Five
Companies history of acquisitions
•
Northrup King Co. Acquisitions from 1930-1997
Date
LOCATION
NAME OF COMPANY
1930
Bombuger Seed Co.
Los Angeles, Calif.
Early 1940’S
G.A. Klein Seed Co.
Los Angeles, Calif.
1958
Central States Seed Co.
Lima, Ohio
1959
Andrews Seed Co.
Harrah, Wash.
1962
Whitman Seed Co.
Yuma, Ariz.
1964
Navada Alfalfa Seed Co.
Orovada, Nev.
1965
Pride Seed Co.
Madison, Wis.
1967
R. S. Rice Seed Co., Inc.
Roseau, Minn.
1969
Woodside Seed Growers Co.
Rocky Ford, Colo.
1972
Sawan Division( name sold 85)
Columbus, Miss.
1972
Rudy Patrick Co. Plants
Sunnyside, Wash.
•
Northrup King Co. cont.’
Date
LOCATION
NAME OF COMPANY
1974 Missouri Hybrid Corn Co.
Fulton, Mo
1974 Kentucky Seed Co.
Louisville, Ky.
1979 Pieters Wheeler Plant
Gilroy, Calif.
1979 McNair Seed Co.
Louisville, Ky
1985 Vegetable bus. Of Goldsmith Seeds, Inc
Gilroy, Calif,
1986 Sluis & Groot of California, Inc.
Salinas, Calif.
1987 Stauffer Seeds
Westport, Conn.
1988 Fredonia
Fedonia, N.Y.
1988 Coker’s Pedigreed Seed Co.
Hartsville, S.C.
1997 Sandoz(owner of NK)merged withCibaGeigy
Formed Norvartis
Seeds
2000 Norvartis Agbuis. Merger Zeneca
AgChem
Syngenta was formed
2004 Purchased North American corn and
soya Advanta, Garst and Golden Harvest
DuPont / Pioneer Hi-Bred International
• 1926 Hi-Bred Corn Company founded by Henry A. Wallace to
develop and market hybrid seed corn
• 1946 Expands operations into Canada
• 1949 Sales of seed corn passes 1 million units
• 1952 “Long Look” business philosophy is written
• 1962 Sorghum seed operation begins
• 1964 Establishes first research station outside U.S. in Jamaica
• 1970 Establishes an international seed department and changes
name to Pioneer Hi-Bred International, Inc.
• 1971 Expands operations into Western Europe, Central America and
South America
• 1973 Soybean seed operation begins
• 1976 Establishes markets in Central Europe and Asia
• 1979 Sunflower research begins
• 1981 Growth in sales leads to number 1 seed corn market
share in North America
• 1982 Annual worldwide sales surpass 10 million units
• 1986 Sunflower commercial sales begin in the United States
• 1988 Begins hybrid rice breeding in India
• 1989 Organizes its first biotechnology team; begins canola
seed operation
• 1991 Growth in sales leads to number 1 soybean seed
market share in North America
• 1995 Enters into collaboration with Mycogen (now Dow
AgroSciences LLC) to develop Herculex® insect protection 1
• 1996 Becomes the first company to start a corn genomics
effort
• 1997 Introduces its first biotech corn product and its first
biotech soybean product
• 1999 Pioneer merges with DuPont
• 2002 Enters into a joint venture to market seed corn in
China
• 2003 Announces DuPont Bunge Biotech Alliance to drive
growth of protein and functional ingredients
businesses
• 2004 Introduces Herculex® I insect protection
• 2004 Acquires Verdia and gene shuffling technology
• 2005 Introduces Herculex® RW insect protection
• 2006 Announces GreenLeaf Genetics joint venture and
licensing agreement with Syngenta to out-license
select genetics and biotechnology traits
• 2008 DuPont Unveils New Strategy to Expand its Seed
Business “ The PROaccessSM business strategy is to
bring its seed genetics to more acres around the world
through a network of partnerships and new brands
Monsanto
• Monsanto was founded in St. Louis, Missouri, in 1901, by John
Francis Queeny, He funded the start-up with his own money and
capital from a soft drink distributor, and gave the company his
wife's maiden name. The first product was the artificial sweetener
saccharin, which it sold to the Coca-Cola Company. It also
introduced caffeine and vanillin to Coca-Cola, and became one of
that company's main suppliers.[citation needed]
• In 1919, Monsanto established its presence in Europe by entering
into a partnership with Graesser's Chemical Works at Cefn Mawr in
Ruabon, Wales to produce vanillin, salicylic acid, aspirin and later
rubber.
• In its third decade, the 1920s, Monsanto expanded into basic
industrial chemicals like sulfuric acid, and the decade ended with
Queeny's son Edgar Monsanto Queeny taking over the company in
1928.
• The 1940s saw Monsanto become a leading manufacturer of
plastics, including polystyrene, and synthetic fibers. Since then, it
has remained one of the top 10 US chemical companies. Other
major products have included the herbicides 2,4,5-T, DDT, and
Agent Orange used primarily during the Vietnam War as a
defoliant agent (later proven to be highly carcinogenic to any
who come into contact with the solution), the excitotoxin[dubious –
discuss] aspartame (NutraSweet), bovine somatotropin (bovine
growth hormone (BST)), and PCBs[3]. Also in this decade,
Monsanto operated the Dayton Project, and later Mound
Laboratories in Miamisburg, Ohio, for the Manhattan Project,
the development of the first nuclear weapons and, after 1947,
the Atomic Energy Commission.
• In 1954, Monsanto partnered with German chemical giant Bayer
to form Mobay and market polyurethanes in the US.
• In 1968, Monsanto became the first organization to massproduce visible LEDs, using gallium arsenide phosphide to
produce red LEDs suitable for indicators.[5]
• In the 1960s and 1970s, Monsanto became one of 1036 producers of Agent Orange for US Military
operations in Vietnam[6][7]
• In 1980, Monsanto established the Edgar Monsanto
Queeny safety award[citation needed] in honor of its former
CEO (1928–1960), to encourage accident prevention.
• Monsanto scientists became the first to genetically
modify a plant cell in 1982.[8] Five years later,
Monsanto conducted the first field tests of genetically
engineered crops.
• Through a process of mergers and spin-offs between
1997 and 2002, Monsanto made a transition from
chemical giant to biotech giant. Part of this process
involved the 1999 sale by Monsanto of their
phenylalanine facilities to Great Lakes Chemical
Corporation (GLC) for $125 million.
• Through a series of transactions, the Monsanto that existed
from 1901–2000 and the current Monsanto are legally two
distinct corporations. Although they share the same name
and corporate headquarters, many of the same executives
and other employees, and responsibility for liabilities
arising out of activities in the industrial chemical business,
the agricultural chemicals business is the only segment
carried forward from the pre-1997 Monsanto Company to
the current Monsanto Company. This was accomplished
beginning in the 1980s:
• 1985: Monsanto purchases G. D. Searle & Company. In this
merger, Searle's aspartame business becomes a separate
Monsanto subsidiary, the NutraSweet Company. CEO of
NutraSweet, Robert B. Shapiro, goes on to become CEO of
Monsanto from 1995 to 2000.
• 1996: Acquires 49.9% of Calgene in April and another ~5%
in November.
• 1997: Monsanto spins off its industrial chemical and fiber divisions into
Solutia Inc.
• In January, Monsanto announces the purchase of Holden's
Foundations Seeds, a privately-held seed business owned by the
Holden family, along with its sister sales organization, Corn States
Hybrid Service, of Williamsburg and Des Moines, Iowa, respectively.
Also, in April, Monsanto purchases the remaining shares of Calgene.
• 1999: Monsanto sells NutraSweet Co. and two other companies.
• 2000: Monsanto merges with Pharmacia and Upjohn, and ceases to
exist.
• Later in the year, Pharmacia forms a new subsidiary, also named
Monsanto, for the agricultural divisions, and retains the medical
research divisions, which includes products such as Celebrex.
• 2002: Pharmacia spins off its Monsanto subsidiary into a new
company, the "new Monsanto." As part of the deal, Monsanto agrees
to indemnify Pharmacia against any liabilities that might be incurred
from judgments against Solutia.
Monsanto’s Mergers and Acquitions
• Monsanto has spent billions of dollars to secure its place at
the top of the seed industry, a critical position due to the
fact that it is the first link in the food chain. Some of their
most expensive acquisitions represented in Figure 3 have
included Delta & Pine Land ($1.5B), Cargill‘s International
Seed Division ($1.4B), Seminis ($1.4B), and Holden‘s
Foundation Seeds ($1.02B). In addition, DeKalb Genetics
Corporation was acquired for $2.5 billion in 1995, just
before the beginning of the study period. Monsanto
licenses its seed traits to approximately 200 independent
seed companies in the US that sell corn or soybeans. The
company expects seeds and licensed traits will provide 85%
of gross profits by 2012 [57]( Sustainability (2009 by Phil
Howard)
Consolidation in the Agricultural
Input Industry
• Mergers, acquisitions, and strategic alliances in the
agricultural input industry have risen greatly in the
last 20 years.
• There were 167 mergers, acquisitions, and other
strategic alliances in the agricultural biotechnology
industry between 1981 and 1985
(Shoemaker,..Hoffman)
• This number climbed to 801 during 1991-96. (90% of
these between larger, more established firms and
technology startup companies(Kalaitzandonakes and
Bjornson).
Protection of Innovations
has spurred R & D
• Behind the growth in private R & D on crop
varieties has been the legal protection of
intellectual property rights in seed innovations.
• PVP and Patents( these provide more control)
• Ag biotech patents, mostly dealing with some
aspect of plant breeding, have outpaced the
general upward trend in patenting throughout
the U.S. economy. From 1996 -2000 period, 75%
of over 4,200 new Ag biotech patents went to
private industry(Ag Biotech Patents:Who’s doing
What?)(6.)
• ERS analysis indicates that patent protection
in particular increased private research during
the 1990s on soybeans. However, patent
protection seems to have been used less for
hybrid corn and cotton, likely because firms
perceive less need to protect their
investments in the crops. Hybrid corn
produces high yields with the first crop, but
yields on homegrown seed decline quickly,
discouraging the use of crop output for seed.
• In case of cotton, seeds are removed from the
cotton lint at a mill and are not generally
returned to farmers. (6).
What does this all mean to us today?
• If you are Monsanto, DuPont/Pioneer, Dow Ag
Sciences, Syngenta Seeds, BASF, Bayer Crop
Sciences, and maybe Stine Seeds, YOU
continue to poster, merge, acquire, and/or
work strategic alliances with the other larger
companies and biotech companies to assure
your continued success and achieve greater
market share and maintain public consumer
approval without stirring up antitrust
concerns.
Has this been good for R & D?
• Modern biotechnology has introduced new and
improved products to agriculture, utilizing genetic
transformation techniques to confer beneficial
agronomic characteristics to some crops (6).
• Seeking to capitalize on the opportunities
afforded by new biotechnology techniques, firms
have accelerated their R & D programs,
commercialized their discoveries, and developed
new business models to profit from the results.
• Biotechnology has proven neither easy or
cheap, and firms have sought strategic
alliances to better manage R & D and
marketing cost. In addition large companies
with diversified agricultural operations have
acquired research firms and seed companies
to expand their ability both to develop and
distribute genetically modified seed.
• A consequence of these mergers and
acquisition activity is consolidation and
increase of industry concentration.
• In most cases I am sure it has been good for
the company able to merge or acquire a
company that is doing what you are not, to
complete your overall R & D desires and needs
for future growth.
• Strategic alliances have allowed a company to
stack traits they would not have been able to
do so at the present time, if not for someone
else’s trait.
Other strategic alliances
• In the last four years we have seen other strategic alliances that
have come about in marketing and are providing another avenue
for smaller more regional companies and larger to gain access to
genetics and biotech traits.
• GreenLeaf Genetics LLC. - is a joint venture formed by Syngenta and
Pioneer Hi-Bred International, Inc., a subsidiary of DuPont, and
offers licenses for a broad range of corn and soybean genetics. The
company also coordinates the licensing of biotech traits from its
parent companies, including Syngenta Agrisure® traits for herbicide
tolerance and insect resistance and the Optimum® GAT® herbicide
tolerant trait developed by Pioneer. GreenLeaf Genetics is currently
helping more than 200 seed companies to access genetics and traits
from Syngenta and Pioneer (source: Dupont July 3, 2006).
• As a result Smaller Independent companies have access to traits
genetics they might not otherwise have.
• Chicago, IL (Vocus/PRWEB ) December 11, 2008 -DuPont business Pioneer Hi-Bred unveiled a new
business strategy to bring its seed genetics to
more acres around the world through a network
of partnerships and new brands
• The strategy, called PROaccess℠ business
strategy, announced during the American Seed
Trade Association’s annual conference, will
increase Pioneer global seed market reach
through co-brands, second brands and
investments. In the United States alone, this
strategy will allow Pioneer to have access to
distribution systems that cover an additional 5
percent of corn acres.
In the United States, Pioneer has distribution
agreements with several companies, including:
• AgVenture, Kentland, Ind., distributors of VPMaxx™ brand corn
hybrids and soybean varieties.
• Doebler's Pennsylvania Hybrids, Inc., Jersey Shore, Pa., distributors
of RPM™ brand corn hybrids.
• Hoegemeyer Hybrids, Hooper, Neb., distributor of HPT™ corn
hybrids and soybean varieties.
• NuTech Seed, Ames, Iowa, distributor of G2™ Genetics brand corn
hybrids and soybean varieties.
• Seed Consultants, Inc., Washington Court House, Ohio, distributor
of Supreme EX™ brand corn hybrids and soybean varieties
• Pioneer Hi-Bred and Burrus Hybrids have entered into a new corn
and soybean distribution agreement. July 31, 2009
•
•
•
•
•
BioGeneTM Headquarters: Brazil(Pioneer
headquarters) Pioneer’s second-brand BioGene
seed corn hybrids
Agricol – South Africa Co-Brand IMPAK corn hybrids
Ducor Headquarters: Mexico Distributor of Ducor®
Brand corn and sorghum hybrids.
Curry Seed Company – Elk Point, South Dakota, Pioneer- owned Corn and
soybean seed company: Curry brand in 2008 and has expanded Curry’s
product offering to include a complete soybean seed lineup.
Beck’s Hybrids, Atlanta, Indiana June 17, 2009 and Pioneer Hi-Bred, a
DuPont business, and Beck’s Hybrids today announced they have entered
into research and distribution agreements to bring additional corn and
soybean products to growers in the marketplace. Under these
agreements, Pioneer and Beck’s will collaborate in research efforts and in
the distribution of corn and soybean seed under the XLTM brand
• DES MOINES, Iowa, and LAKE PROVIDENCE, La., July 9, 2009
— Pioneer Hi-Bred, a DuPont business, and Terral Seed
today announced they have entered into a research and
distribution agreement to bring additional corn and
soybean products to the market, targeted to the needs of
farmers across the southern United States. Under this
agreement, Pioneer and Terral will distribute corn and
soybean seed under the REV™ brand beginning in 2010.
• “This agreement gives Terral Seed access to one of the
world’s most diverse sources of corn and soybean
genetics,” said Thomas Terral, president and CEO of Terral
Seed. “We’re extremely excited about the potential this will
bring to our product lineup and our customers’
productivity. REV brand products will build on Terral’s
strong, existing lineup – expanding our offering to growers
with a more diverse line of genetics with valuable traits.”
•
• As part of the PROaccessSM business strategy,
Pioneer has developed customized business
agreements with independent seed
companies to address their specific needs. The
seed, marketed and distributed by companies
such as Terral, will be unique and will not be
available from Pioneer sales representatives.
In turn, Pioneer® brand products only are
available from Pioneer sales representatives
(9).
Future of the Seed Industry
• ? Each Company, Person, Farmer, Extension
personnel, State Agricultural Experiment
Station breeder or whoever will have control
and ability to change the future through
strategic alliances they pursue. Most likely
we will have to deal with one or more of the
larger more vertically integrated companies.
• Our success will depend on greater alliances
to be made than most have at the present.
• Thank you for this opportunity to share quotes
from others and a few of my own.
• Thanks to SCC-133 and UCTA crop variety
Testing groups.
• THANK YOU!
References
• 1.
• 2.
• 3.
• 4.
• 5.
• 6.
PROaccessSM Business Strategy Bringing Pioneer seed genetics
to more acres around the world( 2008).
The American Antitrust Institute article: Transgenic Seed
Platforms: Competition Between a Rock and a Hard Place? By
Diana Moss October 23, 2009
Ag Census: Pub. 23 Feb 2009 The Illinois Department of
Agriculture NASS
Economic Issues in Agricultural Biotechnology /AIB-762
Economic Research Service/USDA
Visualizing Consolidation in the Global Seed Industry: 19962008, by Phil Howard. From the Journal Sustainability (2009:
volume 1, issue 4, pages 1266- 1287)
Have Seed Industry Changes Affected Research Effort? By
Jorze Cornejo and David Schimmelpfenniq: AmberWaves Feb.
2004
• 7.
• 8.
• 9.
• 10.
• 11.
• 12.
• 13.
Mergers and Acquisitions: Boon or Bane? By Gary E.
Mullins, Ph.D. University of Wisconsin-Stevens Point 2001
Pioneer, Burrus sign distribution agreement July 31, 2009 by
Ken Anderson Filled under E
Vents/Organizations, News
Pioneer Hi-Bred and Terral Seed Expand Choices for Southern
Farmers July 9, 2009
The deals: Monsanto Co. buys Delta and Pine Land Co., and
Monsanto's American Seeds Inc. subsidiary buys nine
businesses St. Louis Business Journal - by Julia M.Johnson
2004
Agricultural Biotechnology And Industry Structure by:
Murray Fulton and Konstantinos Giannakas volume 12 2009
Stocks, mergers & acquisitions; Global Markets by Carey Gillam
Mergers and Acquisitions in the US Food and Agribusiness
Industry by RB Halaby, AgriCapital Corporation Sept. 30, 2002.
• 14. STATEMENT OF DOUGLAS ROSS SPECIAL COUNSEL FOR
AGRICULTURE ANTITRUST DIVISION DEPARTMENT OF JUSTICE 5/8/08
• 15. Justic Department initiates Monsanto inquiry; Oct. 9, 2009 by Ken
Anderson, Filed under Events/Organizations, News,
USDA/Government
• 16. Local seed suppliers linking with the big boys; AgWeb.com 2009.
• 17. Monsanto Announces Record 11 Project Advancements in Annual
Research and
Development Pipeline Update, By PR Newswire,
JANUARY 6, 2010
• 18. Schillinger Seed focused on non-gmo soybeans July 1, 2009 by Ken
Anderson, Filed under Featured Programs, Inovations
• 19. Important Changes in the Agricultural Input Industry; by Shoemaker,
Harwood, Rubenstein, Dunnahay, Heisey, and Hoffman Economic
Research Service/USDA AIB-762
• 20. Role of Public and Private Soybean Breeding Programs in the
Development of Soybean Varieties Using Biotechnology; D.A. Sleper
and J. G. Shannon, University of Missouri-Columbia, The Journal of
Agrobiotechnology Management & Economics June 2008