Seed firms’ changes bring uncertainty, promises
Nov. 14, 2017
With the purchase of Syngenta by ChemChina, the creation of DowDuPont, and the soon-to-be completed merger of Bayer AG and Monsanto Co., it’s a good time to ask what happens now. The months ahead will reveal what these altered players will look like and how they’ll work with dealers and growers. They’ll also show where companies are focusing efforts in trait development and crop systems.
Todd Claussen, Director of Agronomy and Strategic Marketing with Landus Cooperative, Ames, IA, has concerns about what Bayer/Monsanto and DowDuPont will do with their distribution systems. “We represent products from both of these organizations and both of them have multiple brands under their umbrella,” he says. “What will their retail channel brand be or will it change?”
Landus Cooperative went to a two-brand strategy five years ago — down from nine — and that narrowed focus has been “very valuable” to the company and its customers.
In fact, the co-op has built one of those brands from zero, Claussen says. “It takes time, it takes relationships, comfort, confidence, and understanding.” In particular, he points to the work it takes to learn hybrids’/varieties’ pedigrees and where to place their characteristics with growers. Landus’ territory encompasses a large geography and a wide range of relative maturities. The prospect of having to start over with a new brand and build it is not encouraging.
Claussen said support from Bayer/Monsanto and DowDuPont has been solid at the field level, and company representation hadn’t changed. But he would like a little more transparency, to know what the new organizations will look like so Landus can start preparing its company and staff.
These manufacturers’ products are supplied via dealers, so growers have felt very little effects so far. “The face of those brands is our face, we own those relationships to a really, really hefty degree, so that’s why we’re interested in the transparency. We want to know what the structure will be so we can represent it,” he adds.
After just experiencing a merger himself over the last 18 months, Claussen realizes the process takes time, effort, and “a little bit of agony. It can be heart-wrenching, the decisions that have to be made,” he says. “I don’t think they’ve landed on their feet, who’s going to be in what roles. I think we’re anticipating some changes, but nothing that keeps our organization awake at night.”
Claussen and his team are excited to see where rebate programs might go under the new mega-manufacturers’ broadened portfolios. Even today, rebates can add up to some significant money — totaling 10% to even 20% including discounts, he says. If programs cross over multiple brands, will those benefits grow?
Also exciting to see will be what new products the big companies will be offering, what their R&D monies and efforts will be, now that they’re collaborating, Claussen says. He expects a wider corn and soybean pedigree offering.
Landus is actually one of the few retail organizations that has a soybean license for the Monsanto RR2Y and RR2Xtend traits, and Claussen says his company’s seed brand will be impacted as traits change in the market.
For instance, RR2Y traits are now going to be multiple-stacked, and the offer of new genetics with RR2Y by itself no longer exists, Claussen explains “So to get new germplasm from our suppliers, we’re going to have to change to multi-stacked traits,” he says.
Landus’ seed was launched in the mid-90s and rebranded with its merger in 2016. Now called AcreEdge, the line accounts for 60%-65% of the company’s total soybean sales. The AcreEdge soybean portfolio is focused, as it only requires a fairly narrow maturity range for the territory the co-op services.
Disease is a major focus of pipeline products. Breeding research is focusing on curbing the effects of disease in both row crops and vegetables — for example, with the DEKALB Disease Shield corn hybrids platform and development of downy mildew-resistant lettuce.
Through a collaboration with Bayer, advances in Acceleron seed applied products will be aimed at better managing disease infections during key stages of the growing season.
Monsanto is investing in next-generation products as well as new offerings. Work is underway on fourth-generation herbicide-tolerant corn and next-generation dicamba formulations. “Herbicide-tolerant technologies help enable greater flexibility in weed management, including allowing farmers the ability to adopt and maintain conservation tillage practices,” Neu says.
Monsanto is also continuing to develop next-generation insect control, working on its Bollgard 3 XtendFlex Cotton.
Bayer is going full steam ahead with seed research, as evidenced by the opening of its new Soybean Breeding and Trait Development Center at its Midwest Field Technology Station in Champaign, IL, this past spring. The new station will house research and development to identify, develop and test new varieties, using modern breeding methods. The goal: Pushing the limits of yield potential for growers in the Midwest.
This facility is one of three soybean research stations Bayer is opening in 2017 and part of a three-year, $1 billion commitment from the company to invest in new research facilities, expansions, and renovations around the country. The soybean breeding program at the center will develop maturity group two and three Credenz seed, covering production areas in the Eastern Corn Belt.
Adrian Percy, Head of Research & Development with Bayer CropScience, was asked at this year’s AgVocacy Forum what the biggest test is in general for the industry going forward. “I think one of the biggest challenges is technology acceptance,” he says. “We’ve got 5,000 researchers and scientists working on new inventions for agriculture. But if we can’t get them accepted by consumers then all that work is really for nothing.”
He added that these kinds of forums are a place “where we’re working to be very transparent and open and have great discussions about what technology brings and what benefits consumers will see from it.”
In its months-long merger process, Bayer was required to divest some of its ag industry assets. BASF has historically stayed out the seed business, instead focusing on crop protection chemicals, but in a late June news conference in Germany, Chief Executive Martin Brudermueller told reporters, “There are assets that will come to market for antitrust reasons and they might come at prices that are different from those that we have seen in the past. That’s why we will look into it and see whether it makes sense for us.”
BASF recently announced it had signed an agreement to acquire significant parts of Bayer’s seed and non-selective herbicide businesses. The assets include Bayer’s global glufosinate-ammonium non-selective herbicide business — commercialized under the Liberty, Basta, and Finale brands — as well as its seed businesses for key row crops in select markets: Canola hybrids in North America under the InVigor brand using the LibertyLink trait technology, oilseed rape mainly in European markets, cotton in the Americas and Europe, as well as soybean in the Americas.
The transaction also includes Bayer’s trait research and breeding capabilities for these crops and the LibertyLink trait and trademark.
The transaction is subject to the closing of Bayer’s acquisition of Monsanto and approval by relevant authorities. It is expected to finalize in the first quarter of 2018.
“With this investment, we are seizing the opportunity to acquire highly attractive assets in key row crops and markets. It will be a strategic complement to BASF’s well-established and successful crop protection business as well as to our own activities in biotechnology,” said Dr. Kurt Bock, Chairman of the Board of Executive Directors of BASF SE. “The acquisition will further enhance our agricultural solutions offer, which is a core pillar of BASF’s portfolio.”
The acquisition complements BASF’s crop protection business, strengthening the company’s herbicide portfolio and marking its entry into the seed business with proprietary assets in key agricultural markets.
More than 1,800 commercial, R&D, breeding and production personnel will transfer from Bayer to BASF. And, BASF will acquire the manufacturing sites for glufosinate-ammonium production and formulation in Germany, the U.S., and Canada, seed breeding facilities in the Americas and Europe as well as trait research facilities in the U.S. and Europe.
There are other indications the company is seeking to gain a larger presence in ag through seeds. In July, BASF announced a collaboration with Kaiima Bio-Agritech, an Israel-based genetics and breeding technology firm. The companies will work together in “discovery of novel herbicide resistance traits to develop new weed control systems.”
The multi-year project will use Kaiima’s proprietary EP technology platform, a non-GMO breeding tool that enhances plant performance by making modifications within the genome using the plant’s own DNA.
David Hollinrake, President of Syngenta Seeds and North America Region Director, believes today’s seed industry is all about leading technology and choices — and growers will still have plenty of them in the future. ”The average grower plants about 2.6 brands on their farm. We’re really looking to utilize this need for choice in how we go to market,” he says.
|Syngenta NK corn seed with Agrisure trait is added to a planter.|
In fact, Syngenta is making significant investments in its NK line, part of a $400 million incremental investment in its U.S. seed business over the next five years. Part of the focus will be on improving plant breeding, and the company intends to have about one-third more new products coming out of its pipeline than released in the recent past. For the 2018 season, NK is offering 31 new NK corn hybrids.
“We’re adding account management to help us better understand retailers’ goals and how to help them achieve those goals,” says Hollinrake. “We’re tripling our NK sales force to be a better partner to retail. That’s largely what we’ve heard from retail — we need to help them position our brands better.”
Syngenta is also adding agronomists to help with the task, to train retailers for product placement in their markets.
Now available is also Agrisure Duracade 5222 E-Z Refuge, which adds aboveground insect control via the Agrisure Viptera trait — and contains the Agrisure RW, Agrisure CB/LL, Herculex I, and Agrisure GT (for glyphosate tolerance) traits.
“I think there’s an overarching headline here that matters,” says Hollinrake. “Retailers are in a unique position to help farmers in that they have the complete portfolio of solutions, from fertility to genetics to traits to crop protection to seed treatments. They really have the ability, as well as digital tools, to provide a comprehensive solution.
“Our role needs to be about helping them really reach their full potential with this full portfolio.”
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