Recent Changes & Alliances within the Seed industry

Recent Changes & Alliances within the Seed industry

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 20s or early 30s. 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 1960s 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 1970s, 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 1940S 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 1974 1974 1979 1979

1985 1986 1987 1988 1988 1997 LOCATION Missouri Hybrid Corn Co. Kentucky Seed Co. Pieters Wheeler Plant McNair Seed Co. Vegetable bus. Of Goldsmith Seeds, Inc Sluis & Groot of California, Inc.

Stauffer Seeds Fredonia Cokers Pedigreed Seed Co. Sandoz(owner of NK)merged withCibaGeigy 2000 Norvartis Agbuis. Merger Zeneca AgChem 2004 Purchased North American corn and soya Advanta, Garst and Golden Harvest NAME OF COMPANY Fulton, Mo Louisville, Ky. Gilroy, Calif. Louisville, Ky

Gilroy, Calif, Salinas, Calif. Westport, Conn. Fedonia, N.Y. Hartsville, S.C. Formed Norvartis Seeds Syngenta was formed 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 mass-produce visible LEDs, using gallium arsenide phosphide to produce red LEDs suitable for indicators.[5] In the 1960s and 1970s, Monsanto became one of 10-36 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 (19281960), 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 19012000 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. Monsantos 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), Cargills International Seed Division ($1.4B), Seminis

($1.4B), and Holdens 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:Whos 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 elses 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 Associations 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) Pioneers 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 Currys product offering to include a complete soybean seed lineup. Becks Hybrids, Atlanta, Indiana June 17, 2009 and Pioneer Hi-Bred, a DuPont business, and Becks 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 Becks will collaborate in research efforts and in the distribution of corn and soybean seed under the XL TM 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 worlds most diverse sources of corn and soybean genetics, said Thomas Terral, president and CEO of Terral Seed. Were extremely excited about the potential this will bring to our product lineup and our customers productivity. REV brand products will build on Terrals 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. PROaccessSM Business Strategy Bringing Pioneer seed genetics to more acres around the world( 2008). 2. The American Antitrust Institute article: Transgenic Seed Platforms: Competition Between a Rock and a Hard Place? By Diana Moss October 23, 2009 3. Ag Census: Pub. 23 Feb 2009 The Illinois Department of Agriculture NASS 4. Economic Issues in Agricultural Biotechnology /AIB-762 Economic Research Service/USDA 5. Visualizing Consolidation in the Global Seed Industry: 1996- 2008, by Phil Howard. From the Journal Sustainability (2009: volume 1, issue

4, pages 1266- 1287) 6. Have Seed Industry Changes Affected Research Effort? By Jorze Cornejo and David Schimmelpfenniq: AmberWaves Feb. 2004 7. Mergers and Acquisitions: Boon or Bane? By Gary E. Mullins, Ph.D. University of Wisconsin-Stevens Point 2001 8. Pioneer, Burrus sign distribution agreement July 31, 2009 by Ken Anderson Filled under E Vents/Organizations, News 9. Pioneer Hi-Bred and Terral Seed Expand Choices for Southern Farmers July 9, 2009 10. 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 11. Agricultural Biotechnology And Industry Structure by: Murray Fulton

and Konstantinos Giannakas volume 12 2009 12. Stocks, mergers & acquisitions; Global Markets by Carey Gillam 13. 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

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