GIANT VIEWS OF THE INDUSTRY
Our feet are firmly planted in the new decade, and changes in the seed industry are happening faster than ever. Technology is booming and the world is shrinking. Various experts from this year’s Giant Views of the Industry discuss the trends and insights affecting your business today, and provide advice on how to survive the next 25 years.
Plant breeding and biotechnology have changed the speed of the industry. The capacity to produce new varieties is greater than ever, but the life span of varieties isn’t the primary determinant of speed in the industry anymore. Many rapidly evolving factors will shape the business, such as new traits, biofuels, food quality issues, globalization and a shift in the end user (farmers aren’t the only customers anymore).
In order to keep up with the seed industry today, companies need to anticipate and welcome change. Be adaptable. And, in today’s world of advanced technology and globalization, companies must be willing to work together. The seed industry is becoming more globalized every day. As the world shrinks due to technology, working together is more important now than ever.
Canada, the United States, Mexico, Chile, Peru, Uruguay and Brazil have recently come together and formed the Seed Association of the Americas for this very reason, and it’s been very successful during the past year.
“You’ve got a block of countries from North America, Central America and South America that produce more than 85 percent of the biotech products in the world,” says Andy LaVigne, president and chief executive officer of the American Seed Trade Association. “We do a lot of counter seasonal production of seed, grow outs and multiplications, and research down in the region, and it is important that we have strong relationships with all of those countries.”
Lavigne says the SAA was established to make sure “movement of seed within the western hemisphere is expedited and that there are a limited number of delays in the process.”
And as these strategic alliances—whether between groups of countries or companies—grow and prosper, they become a cornerstone to a company’s marketing plan. “Strategic alliances and partnerships can be very good distributers in certain regions where we are not active ourselves, but the key is to educate the partners on how to sell grass seed,” says Stefan van der Heijden of Barenbrug. “Not only do we get them to sell our product, but we tell them how to manage our product, which is one of the most important aspects of how we are marketing our products.”
The Decade of Biotech
Advanced technology is the biggest driver in today’s evolving industry. There has been talk of the next generation of traits, such as drought tolerance and nitrogen use efficiency, for many years now but, for the most part, these traits haven’t come to market yet. In part, this is due to an overburdened regulatory system, and many feel this decade will finally see the commercialization of many exciting new traits.
“I’ve spent the last 10 years working internationally with seed and biotechnology and there has been a huge increase in adoption of biotechnology over the last year driven by acceleration in South America—specifically Brazil and Argentina,” says Brett Begemann, executive vice president of seeds and traits for Monsanto. “Mexico now is moving their process forward and allowing trials. China has moved forward with the approval of two biotech products—one for corn and one for rice. India is moving faster. So as you step back and look at the world, I think we’re seeing acceleration.”
Janice Tranberg of CropLife Canada agrees. “The last 10-12 years we’ve had around 33 traits developed and commercialized,” she says. “We’re expecting within the next 5-10 years an additional 90 traits and if you add combinations of those traits, that number could even get higher. Around the world we now have 25 countries that are growing biotech crops and we have even more that are researching and bringing traits forward. So, as this trend continues, acceptance is going to happen no matter what and it is increasing because people are seeing the benefits.”
Tranberg says those benefits will affect farmers in the form of increased drought tolerance or better nitrogen utilization, but consumers will also see benefits with increased levels of antioxidants and vitamins in food. “Golden Rice, for example, is in field trials right now and those products are going to bring increased vitamin A to a lot of the people in developing countries and that’s important for sight,” says Tranberg.
The growth of biotechnology is benefitting the industry but this also means companies have to adapt and react quickly to change. “We started out with a few traits years ago, but they’ve grown fourfold since we’ve started,” says Dana Eaton, head of product development for GreenLeaf Genetics. “More traits and more product. Now, what we’ve been able to do is license more lines, incorporate traits into a lot more lines—that builds a revenue stream, but also means we have to add more processes.”
Eaton says the company has added a component of testing within the company, and while it had one provider before, “now we have three providers, therefore, we have to keep our sales force up to date on all these rapid changes so they in turn can keep our clients up to date on those rapid changes.” He adds that the growth in traits and, therefore, sales means a better revenue stream, “but we have to do a better job of getting to our clients faster, in a very efficient manner.”
All About Access
The onslaught of new technology and traits is making age-old challenges in the seed industry new again. Profit margins are narrowing as it gets tougher to make sure companies can pull a profit each year from all the product offerings now available. As technology evolves quickly, products are moving from production to obsolescence almost overnight, therefore having a tremendous impact on profit margins.
Also, gaining access to the new technologies that are available continues to be a challenge. Independent seed companies spend a lot of time trying to maintain access to the broadest portfolio of products and delivering those to their farmer customers in the format they need.
“There are many independent seed companies who want access to genetics. The seed companies may be acquired, they may expand, new ones might pop up, but that percentage of the market has remained about the same and there is a demand for quality genetics,” says Eaton.
"We're going to earn the genetic business by putting good seeds in the bag."
—Brett Begemann, Monsanto
But, the relationship between input suppliers—the licensees—and seed companies is also evolving. Broad licensing has been the basis for the last dozen years for the growth and access of independent seed companies to traits and genetics. That’s beginning to change and some of the suppliers are looking at seed companies a little bit differently—by beginning to work on alliances and ways of business that might remove some of the choices for independent seed companies.
“That dynamic has been changing in the last few years,” says David Hingst, president of Hoegemeyer Hybrids. “Genetics and traits seem to go together and at this point we must look at both, as well as a number of other facets such as seed treatments. So we really need to go back and ask what does our customer want? Because our customer is, in the end, the customer of a genetic or trait supplier or seed treatment supplier.”
Hingst says the key is to fulfill the needs of the customer, and when it comes to the relationship with suppliers, “it really starts with the customer and builds back up to what is available for us and how we chose to answer the question of what does our customer need?”
Eaton says, as a licenser of traits, GreenLeaf can’t afford to alienate the independent sector. “We see that there will always be a strong independent sector and we can support that—we need to support that,” says Eaton. “There will be consolidation, or they will be bought out, or shut down, and as long as we can provide them with the latest technologies in the best genetics, then that will keep these people in the game.”
And while the dynamic is changing, Begemann maintains that as the next generation of traits hits the market, Monsanto plans to continue with its broad license strategy. “We’ve always said [broad licensing] is a cornerstone of our strategy and how we intend to go to market. As we bring new technologies such as drought tolerance to market, we’ve already been talking to many of our licensing customers and telling them our expectation is that we’re going to broadly license these technologies.”
Begemann says the challenge is as the products become more complicated, it becomes harder to ensure farmer success, seed company success and supplier success.
“As we add those together and the complexity comes in, we have to continue to be good about conversing with each other and planning for that,” he says. “We said we’re not going to force farmers to buy seed from Monsanto in its brands just because we have a trait, we’re going to let farmers pick what brand they want to buy by broadly licensing these technologies and we’re going to earn the genetic business by putting good seeds in the bag and there are some great companies out there that have been fabulous partners with us in bringing technology to farmers. I continue to believe that farmers are better served by all of us working together in that licensing relationship.”
Regulatory Issues Remain
While each country and region has its own regulatory challenges, perhaps the biggest regulatory issues right now are those affecting the global seed trade. Issues surrounding low level presence have been front and center this past year and everyone is hoping to see progress in this area soon. “I think the great variability in regulations is the biggest barrier to trade,” says van der Heijden. “There are so many differences between countries and we need to work on leveling the playing field.”
Many companies and associations around the world are working on solutions to make trade issues easier to manage. “At CropLife Canada, one of the things we’re working hard on is helping Canada develop a policy that is transparent and flexible around low level presence or LLP,” says Tranberg. “So, what I mean by this is products found in import shipments that have been commercialized and approved in one or more countries, but not the country of import, and are found at very low levels.” Tranberg believes policies need to be developed so countries can deal with LLP without stopping shipments at their borders due to trace amounts of genetically modified seeds with a full approval in other countries.
The combination of more traits and improved detection technologies means it’s going to be increasingly important to identify and look at solutions for LLP, continues Tranberg. “These policies need to be internationally recognized and they need to be something that we can work on across the globe,” says Tranberg, adding that countries need to start with domestic policy and then communicate this policy to the rest of the world.
Certainly, communication remains key to coming up with solutions and David Hansen from Canterra Seeds can’t stress that enough. “There’s always room for improvement to make sure the right parties are involved in the dialogues between countries and organizations involved in a trade dispute,” says Hansen. “In certain situations, more effective communication may have helped minimize the impact of certain disputes, or at least provided the industry with knowledge of the problems at an earlier date. Some of these issues are impossible to anticipate, but when they do come about, we need to talk about them earlier, as a group and as an industry, with government agencies as well as trade groups.”
Specialized Trait Developers
Traits are also beginning to flow from other companies—not only the big six. Many big companies are partnering with small biotech (or non-biotech) trait development companies to commercialize traits such as drought tolerance and nitrogen utilization. Big companies are frequently partnering with these specialized companies to advance their breeding programs.
“We are a trait development company that allows companies to put a particular trait into a plant, without the regulatory burden,” says David Voss, vice president of commercial development with Cibus. “Some products that are soon to be entering the market were developed by our technology and will be carried forward with some major companies. Some of the media like to put us against some of the major players in agriculture which really is unfair because, in reality, we’re really actually partners with many of these major companies.”
Some of Cibus’ partnerships include major companies like BASF and Mahkteshim, as well as smaller organizations such as the Flax Council of Canada. The company’s main target is Europe, due to the fact that its technology is not transgenic. “We’ve actually had several scientist groups in Europe look at our technology and they’ve also come to the same conclusion—that we are a mutagenesis technology,” says Voss. “And that is very key for Europe because Europe actually goes out of its way to exclude mutagenesis in its directive of GMOs annex.”
Recruitment Still Key
At the end of the day, no matter how bright the future looks, we need a solid foundation, which is why recruitment remains a top priority. “When we look at the evolution of this industry, it is happening very, very quickly. For us to continue to innovate and evolve, we need to have a solid base of students coming out of college with master’s degrees, PhDs in all the sciences, not just breeders, plant physiologists, agronomist breeders, and geneticists,” says LaVigne. “And we realize that that’s a challenge for us today. Universities around the world have budget issues that are impacting them on a regular basis so it is important that companies play a more active role in the education and training process.”
ASTA has developed a couple of programs, with help from its affiliated organizations like the National Council of Commercial Plant Breeders and the American Seed Research Foundation, within its new First the Seed Foundation.
"This is a technology-based industry and innovation is central to agriculture's success."
—Andy LaVigne, ASTA
“We’re pairing up students with seed industry mentors in our various meetings so they can shadow industry professionals,” explains LaVigne, “to talk to them about what’s out there and the opportunities. We really think there are a host of areas that students can come back to in agriculture and we want them to see the opportunities available to them—not only to meet the demands here in the United States, but to meet the demands globally to feed the world.”
The key is getting the message out there, and the seed industry needs to continue and expand its communication and education tactics, not only for recruitment but for overall survival.
“We’ve got to talk to people about the seed industry—this is a technology-based industry and innovation is central to agriculture’s success.· Innovation and technology are driving those opportunities to maximize what we’ve got—to preserve the environmental resources of the United States and to feed the world,” says LaVigne. “So, we’re excited about telling that story, we see it as a big challenge, but it’s something that we’re really looking forward to.”
Begemann agrees, saying in order to harvest the seed industry’s bright future, we need to work together to spread the right message. “We have to stand together and stand with our farmer customers to help people that are not directly involved in agriculture understand that what we do is actually good for our environment—not bad,” says Begemann. “I think there are a lot of things that as an agricultural community we could do better standing together on than we do today in dividing ourselves, and that would be my advice and encouragement to us as an industry—is stay together on the issues around agriculture, recognizing that we’ll have different opinions but that’s okay, stay together when it comes down to challenges that we face as an industry.” Julie McNabb