Big Changes in the Seed Business

The world of corn seed marketing is undergoing a revolution rivaling that which occurred during the 1930s and 1940s when hybrid corn came to the forefront, and when farmers first became dependent on seed purchased every year as a means of securing superior genetics.

Granted, we’ve seen major change since the forties. The number of independent hybrid seed corn companies has plummeted. The relative importance of public corn breeding has diminished. The sophistication of private corn breeding has increased. Seed prices have jumped 10-fold, or more. And the yield, standability and grain quality of corn hybrids have increased dramatically.

However, change has occurred at an unprecedented pace since about 1995, as crop breeders embrace biotechnology, and as companies which have traditionally been dominant in the chemical and pharmaceutical businesses strive for dominance in agricultural genetics.

And this time, the revolution involves all major agricultural crops, not just corn.

The most high profile company has been Monsanto, which has purchased DeKalb, Holdens (the second biggest supplier of seed corn in the U.S.), Asgrow, and a large number of smaller companies. Indeed, Monsanto is now being purchased by an even larger company, American Home Products, the parent company of Cyanamid. Monsanto has signed a marketing agreement with Cargill. The goal is to expand the research and marketing base, to become the dominant supplier of crop genetics.

But there are other large players, too. DuPont has purchased 20 per cent control of Pioneer, and there is speculation that a purchase of Archer Daniels Midland is also in the works. Novartis was formed from a merger of Ciba Geigy and Northrup King. AgrEvo, owned by the German chemical giant, Hoechst, is another strong participant.

The recent sale of majority ownership of First Line Seeds to Monsanto is indicative of what is happening globally. Although First Line Seeds began as an attempt by several small Ontario seed growers to develop a crop breeding and marketing alternative to larger, multinational seed companies, it ultimately had little choice but to amalgamate if it wanted access to newer biotechnology-based products. This has rapidly become a game of few players, and of multi-billion-dollar investments in a global battle for market control.

The changes present a number of dilemmas for corn farmers, and for grower organizations such as the Ontario Corn Producers’ Association.

First there is the cost. The “technology use agreement” seed purchase fees average about $15/unit of seed for corn Bt technology, about $25/unit for Roundup Ready corn, and are projected to be $50/unit, and more, for some of the newer biotechnology genes nearing commercialization. Roundup Ready soybean seed costs an extra $0.35/kg.

Of course, as with hybrid seed corn, no farmer is obliged to buy it – the open-pollinated option still exists. But, just as with open-pollinated seed, this option becomes less meaningful with time as the new biotech products become progressively superior to their traditional counterparts. This is likely to come as crop biotechnology moves beyond its current fascination with herbicide tolerance, to other traits which will have more consumer market appeal such as disease and mycotoxin resistance, and improved nutritional composition.

The question of control is more obscure. Should we fear the increasing dominance of a few large players in the seed genetics business? Will it be like the ag-chemical business where several companies have dominated for years, or are we looking at “Microsoft-type” domination by only one or two giants? Will it be possible for small innovative individuals and companies to find a niche?

And how do we ensure corn growers in Ontario, and elsewhere in Canada, have access to state-of-the-art technology, and that some of the research is focused in areas which will give us competitive advantage?

There are two possible responses. One is to throw up our hands, as farmers, and say, “Que sera sera, What will be will be.” The other is to attempt to be a player, albeit very small, and to have an influence.

The $350,000-$400,000 which OCPA hopes to raise in grower contributions for research via seed corn sales is minute in a world of multi-billion-dollar investments. This amount, even with “multiplier dollars,” can have no effect on some of the big biotech research efforts in play internationally such as insect and herbicide resistance, high-oil content, and “functional foods” (genetically altered crops to produce specific drugs, etc.).

However, this amount of money can be large enough to influence our competitiveness (and this means, ultimately, the future scale of corn production in Ontario) in a few targeted research areas. These include reduced tillage, corn drying, better targeting of nitrogen applications, high-milling-quality corn, and one or two well-focused biotech projects in areas which will give corn farmers in cool climates a competitive edge.

Two examples of biotech research for which success should be possible from expenditures of several hundred thousand dollars per year (as compared to several hundred million), are Fusarium resistance and frost resistance. Both are on the OCPA “short list.” Ontario-based private corn breeding programs – even if they are owned internationally – must be key partners in these research and commercialization efforts.

For those in the seed genetics game – both producers and users – these are revolutionary times.