Nov. 6, 2018
Editor's note: Seed is one of the most basic and important agricultural inputs and it forms the third largest inputs market after agrochemicals and farm machinery, globally. Europe seed market is one of the most important part. If we see the market size of Europe, it is not the biggest, ranks only in third place, behind Asia and North America. However, once we look at the international seed trade, we could see a completely different picture. Europe ranks No.1 in seed export and No. 2 in seed import. Especially in seed export, it is almost triple the amount of the No. 2, North America.
According to Market Data Forecast, Europe Seed Market was worth $16.77 billion in 2018 and estimated to be growing at a CAGR of 8.90%, to reach $25.68 billion by 2023. The growth of the market is mainly due to the growing demand for grains, oil and vegetables, rising demand for animal feed, less market concentration and increasing usage of biofuels. However, this market faces certain regulation constraints such as European Court of Justice (ECJ)'s recent ruling on gene editing technology. Here, AgroPages invited Syngenta and KWS to introduce their performance in Europe and also share their ideas on Europe seed market. Besides, we also invited European Seed Association to discuss its opinion on ECJ's ruling.
“Syngenta was the first company to launch hybrid barley, and we are actively working on developing hybrid wheat with a planned launch date early in the next decade.”
- Alexander Tokarz, Head of Global Marketing Seeds at Syngenta
Could you please introduce Syngenta's performance in Europe seed market?
Syngenta is the #2 seeds company in Europe (including non-EU countries such as Ukraine and Russia). Our main crops are corn, sunflower, cereals, oilseed rape, and vegetables. Our European seeds business makes up almost a third of our global seeds business.
We have leadership positions in sunflower and cereals, as well as many vegetables species like blocky pepper, brassica or sweet corn. For instance, eight out of ten Brussels sprouts consumed in Europe are most likely grown from a Syngenta variety.
Syngenta was also the first company to launch hybrid barley, and we are actively working on developing hybrid wheat with a planned launch date early in the next decade.
What is the special need in seed trait for EU farmers?
It’s difficult to generalize as the needs are quite different across geographies in Europe.
Western Europe agriculture is typically small scale but high tech and highly specialized. By contrast, in Eastern Europe, agriculture tends to be large scale and often more extensive, but is intensifying fast.
Across Europe, wheat is a very important and high value crop and it’s mostly used in bread production for a wide range of high quality bread varieties that people in different parts of Europe enjoy. Consequently, wheat production is high productivity combined with high quality, with a strong focus on weed and disease control. Syngenta invests heavily in the improvement of wheat seeds and particularly the development of hybrid wheat, which will allow more options for trait development and conversion, for instance to deal with winter hardiness or disease resistance. Our experience with hybrid barley over the past decade is proving to be invaluable for the much larger challenge of bringing hybrid wheat to the commercial market.
In addition to commodity wheat, we also grow durum wheat (hard wheat) for the production of pasta particularly in Italy, and in this case protein content is a very important trait characteristic of the seed varieties. Syngenta has a strong durum wheat program and works in close collaboration with pasta manufacturers to develop better varieties and growing protocols.
Barley is primarily grown for feed use, but there is also an important market for malting barley for the use in beer or whiskey – our respective seeds and traits target the best outcome for maltsters and brewers and we regularly lead the recommendation listings.
Other important field crops include corn and oilseeds. Corn is widely grown for both silage as well as grain use, and in Germany also for biofuel production. With a few exceptions, GM traits are not deregulated and seeds characteristics are determined by native traits. This market is still relatively fragmented compared to other regions in the world with many breeders competing for share. In oilseeds like sunflower or oilseed rape, we observe a growing interest in specialty oils such as high oleic Sunflower, which are more healthy alternatives to palm oil for frying or cooking applications. Syngenta’s sunflower program is leading in many countries of Europe for both conventional but also high oleic varieties.
Vegetables and particularly tomatoes, peppers and cucumbers are often grown all year round in glass houses (eg in the Netherlands or Poland) or plastic houses (eg in Spain, Italy, or Turkey). Typical traits in these species address biotic stresses such as diseases or pests, as well as abiotic stresses such as cold or heat tolerance. Our European Vegetables breeding is amongst the most advanced programs in the world due to the high quality standards of European consumers and super markets. A lot of our breeding and traits development is heavily driven by computer-aided technologies such as molecular markers.
In Eastern European countries, convenience from a crop management perspective is important due to the vast field size. It’s not uncommon to see fields with several 100’000 ha in countries like Russia or Ukraine. So sunflower for example is increasingly grown from seeds traited with native herbicide tolerance enabling easier weed control. Several of these herbicides also deal with parasitic species such as orobanche (also called “broomrape”), which is a major threat to sunflower in many countries in Eastern and Southern Europe. Syngenta is a leader provide of sunflower seeds with traits for herbicide tolerance as well as orobanche resistance. In addition, breeding targets in many crops include options to lower the cost of seeds production – eg through three-way crosses – offsetting the typically lower seed prices compared to Western Europe.
ECJ just ruled mutagenesis-based gene-editing methods as GMOs, what do you think of the future of plant breeding innovation in EU?
The European Court of Justice ruling insofar the latest plant breeding methods is disappointing and reflects a missed opportunity for agricultural innovation in the EU. We will of course examine the decision in order to fully understand its impact on the future of the plant breeding technology.
The Court’s decision makes most plants developed with these methods the subject of the EU’s regular GMO legislation, with its prohibitive costs and political uncertainty over final market approval.
Much of the potential of these innovative methods will be lost for Europe – with significant negative economic and environmental consequences.
The latest breeding innovations are widely seen as critical tools for breeders and farmers to do more with less inputs: less water, less fertilizers, less pesticides. While other parts of the world are moving ahead with these innovations, Europe’s breeders and farmers will once again miss out on the opportunities, potential and benefits of these plant breeding innovations.
“The commercial release of any new variety obtained by advanced mutagenesis breeding methods now requires the regular EU GMO risk assessment clearance.”
- Petra Jorasch, Manager Plant Breeding and Innovation Advocacy at European Seed Association
Regarding the ECJ ruling, I would like to comment as follows:
The commercial release of any new variety obtained by advanced mutagenesis breeding methods now requires the regular EU GMO risk assessment clearance which constructs an immense financial hurdle that effectively rules out applications for any smaller market or species. But even for maize or oilseed rape, today, no applications for cultivation of GMOs are pending in the EU. Not only is the authorisation procedure notoriously cumbersome and slow; it also is completely politicised with Member States now having the right to ban the cultivation of GMOs on their own territory even following an EU level approval. 19 out of the current 28 (in the future 27) Member States have introduced such blanket cultivation bans in their national laws.
Before this background, a wider introduction of new varieties developed with latest breeding methods is both financially as well as practically impossible. With that, public research into Plant Breeding Innovation applications will also largely come to an end as crucial industry co-funding will dry out and publicprivate partnerships lack the necessary economic basis.
With that Europe will start to lag behind. The only question is at what point in time this will become fully evident. Companies will quite quickly concentrate related R&I activities outside of Europe. It is likely that this will go hand-in-hand with a re-focussing of overall elite germplasm and variety development to those regions that are already embracing the new breeding methods and are gearing their respective regulatory frameworks to support this.
And we should not underestimate what the ruling does to the human resource base of Europe’s plant breeding. We will see short- to medium-term relocation of R&I personnel of both companies and institutes to third countries, similar to what we observed with the ‘classical’ GM-related research and product development.
But what is worse is the fundamental message the ruling sends to anybody considering a career in plant sciences in Europe: you’re not welcome here! That may prove the most devastating effect in the longer term.
“For over 160 years, the name KWS has been synonymous with tradition and successful plant breeding as well as global openness and international growth.”
- Gyula Szelle, head of East-SE Asia Corn and Oilcrops at KWS
KWS ranks No.6 in the global seed industry in 2017, could you please share us some info about your company?
For over 160 years, the name KWS has been synonymous with tradition and successful plant breeding as well as global openness and international growth.
The company, with its tradition of family ownership, was founded about 140 kilometers east of its present headquarters in Einbeck. In 1856 in Klein Wanzleben on the Magdeburg Borde plain, the farmer Matthias Christian Rabbethge (1804-1902) laid the cornerstone of an organization closely connected to the world of agriculture-then as now.
Everything started with sugarbeet and participation in the sugar factory in Klein Wanzleben. By the beginning of the 20th century, KWS had gained worldwide leadership in the production and sale of sugarbeet seed. World War II and the division of Germany were a turning point for KWS, and in 1945 the founding families started over in Einbeck. Ever since, KWS has grown continuously but with a sense of proportion.
Today we are an international breeding company for food and non-food crops and are represented in over 70 countries, with a network of more than 30 breeding stations, 130 testing stations and around 60 subsidiaries. Our core markets are Europe, North and South America and China.
KWS is well known for its sugar beet seed and corn seed, could you please introduce us these two seed market in Europe, and also KWS's performance?
The European market is very important for us. As an international field seeds company, we generate 64 % of our sales in Europe. In our portfolio the corn and sugar beet businesses are very established positions in Europe.
With a size of 15,5 mn. ha and a value of 1,7 bn. $, the corn seeds market is the most relevant field seeds market in Europe. We obtain a leading position in dent x flint corn with early maturity and cold tolerant varieties. Regarding sugar beet, we are global market leader. The European sugar beet seeds market is the most important market in this segment with 40 % of the global acreage and approx. 55 % of sales.
KWS is willing to acquire Bayer's vegetable seed business, however it is acquired by BASF finally. Why would KWS like to enter the vegetable seed market, any future plans in this market?
Demand for vegetables will increase. The population is growing and more and more people want to eat a healthy diet. Vegetables are important in that and will remain so in the future. What should not be forgotten: Vegetables have a very positive image among large sections of society. Backed by our great expertise in breeding crops, we can also breed vegetables successfully so as to offer farmers specializing in them new and innovative varieties.
Moreover, good margins can be achieved in the vegetable seed business. That's interesting for us economically, of course. We would tap new growth opportunities and further strengthen our independence. Taking all of that together, breeding vegetable seed would clearly be a sensible move in enhancing KWS' position.
Nunhems is by no means the only breeder of vegetable seed. Perhaps other options will open up for us moving ahead. In the past, KWS has seized opportunities to take over other companies that fit in well with us. We will analyze attractive opportunities in the future as they arise. In view of the structural changes and concentration in the seed industry, we believe acquisitions are – along with our organic growth – a further key means of strengthening our company and developing it successfully. That has always been part of our strategy and is not a new approach.
Why does KWS not offer agricultural chemicals?
KWS has operated independently for more than 160 years. It focuses only on plant breeding and the production and sale of seed for corn, sugarbeet, cereals, rapeseed and sunflowers. KWS uses leading-edge plant breeding methods to continuously improve yield and resistance to diseases, pests and abiotic stress. To that end, the company invested €190 million last fiscal year in research and development, 17 percent of its net sales.
As a seed specialist KWS sees the improvement of plant properties through breeding as a good way to reduce the use of chemical pesticides. Plant breeding thus makes an important contribution for a sustainable agriculture.
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