Friday, August 01, 2014

Giant Views of the Industry

The face of the seed industry is evolving. Not only are farmers and their needs changing, but the increased use of new technologies is changing the business landscape of the seed industry. Six experts from this year’s Giant Views of the Industry discuss seed’s role in the face of these changes and how to navigate the waters during uncertain times.

One common idea echoed throughout the Giant Views of the Industry video interviews this year—the seed industry is evolving and companies need to differentiate themselves if they want to keep up.

“The seed industry is evolving in a lot of ways,” says Mike Gumina, vice president of Production and Safety, Health, Environment/Risk Management at Pioneer Hi-Bred. “We’re all thinking more globally now. We’re all thinking more about customized solutions rather than just simply creating commodities. The world today is more high-tech than it was when I entered the seed industry 30 some years ago.”

Gumina, who is also the chairman of the board of directors for the American Seed Trade Association, returns to the point that is coming up again and again these days: it’s important to develop customized solutions rather than simply creating commodities.

Specialization and Differentiation
Specialized seed companies are popping up everywhere—from high-tech labs supporting new plant breeding techniques, to computer software companies which help manage the massive amount of data in the seed industry. And with consolidation still so prevalent, the survivors will be those who strive to offer customers something unique or cutting-edge.

“[With regard to] seed company competition, the big challenge is that all seed companies, all breeders are becoming very good at what they do,” says Dave Armstrong, president and CEO of Sakata America Holding, Inc. “And through technology, they are also able to bring a lot of very interesting products to the market, fast. So it becomes increasingly challenging to compete in the market, whether it’s in flowers and vegetables, or cereals.”

Armstrong says that in the flower and vegetable market, this means finding ways to continue to improve people’s lives with products that other companies aren’t offering. “So in the case of vegetables, how do we get people to eat more? How do we get them to consume a healthier diet? And what can our role as a seed company, or the seed industry, be in [encouraging them to do so]? I think that’s a challenge, but also an opportunity, of course,” he says.

This rule of differentiation applies across the board to all seed companies. Tom Burrus, president of Burrus Hybrids, says that based on other industries in the United States, the seed industry is also going to continue to see consolidation.

“There are going to be fewer seed companies, or fewer brands within seed companies, and there are also going to be fewer growers for these seed companies to sell seed to,” Burrus explains. “So therein lays the challenge of competition as we move forward. I really believe the companies that are going to be successful are the ones that are going to be able to add value—that are going to be able to take precision farming techniques, agronomic features, and benefits and solutions to growers’ farms that maybe other companies are unable or unwilling to provide.”

Businesses Within the Business
This desire to add value has also resulted in massive growth of the global seed treatment and enhancement sector—and in fact, some feel certain aspects with that sector, such as seed coating, is becoming its own business.

“Seed coating technology is very complex and we think it’s a business within the seed industry on its own,” says JanWillem Breukink, president and CEO of INCOTEC Group BV. “I think seed companies are working strongly with genetics and breeding and [seed coating] technology is quite far away from a breeding company’s core business. As a result, we believe our company will grow substantially in coming years because the amount of this kind of technology will only increase.

“The expertise is so specialized—and it is becoming more and more specialized and we are going to fill that hole that you see in the industry. We think that we, as an independent global company, have a very special position within the seed industry,” he says.

Christoph Goppelsroeder, global head of Syngenta Seedcare, estimates the global market for seed treatment to be between $2.7 and $2.8 billion. And again, that growth is due to the creation of added value. He says Syngenta has seen success in a competitive market because it recognizes its key customer groups—seed companies, distributors and retailers, and growers—and creates specific portfolios and access points for its employees to interlink with them and understand their needs.

“We created sophisticated means of supporting application and use of seed treatment—we call these application and support centers Seedcare institutes,” he explains. Syngenta has six around the world right now, but will continue to invest in different regions of the world. “This after-sales service with growing technology, growing innovations will become more important over time,” says Goppelsroeder. “So you will see more investment in that by Syngenta going forward.”

However, Goppelsroeder points out that the seed treatment sector is still a relatively young business if you compare it with crop protection, and it’s also evolving. “As we move forward, these different technologies will merge more and more. And what I’m talking about is genetics on the one hand, and chemical traits which are in seed treatments [on the other],” he says. “These will merge more and we need to make sure we understand the linkages. And what I think we’ll see in the future is much more variety or genetically-specific seed treatment so it works well from a combination point of view. In this context, I think working together with seed companies in a more collaborative way, earlier in the development process, will be key to making sure these technologies work together from a farmer’s point of view.”

It’s an evolution that INCOTEC’s Breukink agrees with, but he also feels that seed enhancement products are starting to dive into trait territory. “We are very active in applying all kinds of material that stimulates or protects the plant—either biological or chemical actives that stimulate the roots of the plant,” he says. “Everybody is talking about genetics and these products are an example of what can be done around or with the seeds. So the question becomes, ‘With that seed space that you have created, how can you add more active to it that stimulates or protects plants, or how can you insert genes or trick the seeds to put up certain resistance?’ and that’s a completely new world we’re focusing on.”

The increase of technology has also seen an increase in law firms specializing in plant patents. Erich Veitenheimer is a partner within the Patent Counseling and Prosecution division of Cooley LLP. He says their client base within the seed industry has grown substantially in recent years and will only continue to expand as more technologies are discovered.

Veitenheimer, who had an extensive background in plant breeding before beginning his career in law, says his practice helps ag biotech companies protect their intellectual property, ensures companies aren’t infringing on another’s IP and defends companies against accusations that they have infringed on another’s IP.

“We take some of that burden away from plant breeders and biotech companies,” he says. “We help relieve them of some of the stress around IP and help them figure out what’s the best way for them to do what they need to do on that front.”

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