Advanta Seeds: Major Player in Minor Crops

Advanta Seeds is a sustainable agriculture company providing innovative solutions and technology to farmers around the world. The company is part of the UPL Group, with global operations in 25 countries and generates sales in 60 countries with Dubai as a strategic location for its head office. Bhupen, Chief Executive Officer of Advanta Seeds and recently shared his viewpoints on Advanta's performance in the global seed market, new breeding technology, as well as future development under worldwide mergers and acquisitions in the interview with AgroPages.

As per some market reports, cereal seeds dominated almost half of the market share in 2014, followed by oil seeds and fruit and vegetables. Do you see any market change during the past year, in terms of the structure and growth rate? What do you think are the main reasons for the change? Could you briefly introduce the seed products of Advanta of different categories and their industry advantage?

As per our assessment there are trends which are indicative of the fact that cereals have lost some ground mainly in value terms to plant oil seeds, fruits, and vegetables, but volume will remain static. The main reasons are:
-Huge global food grain inventories;
-Increasing gap between technology fees and perceived value of seeds by farmers;
-Lower farm gate prices and reducing profitability.

Advanta has a focused strategy on the following key crops:
● In grain sorghum we have an advantage in genetics by having drought tolerant hybrids which is essential due to the effects of global warming.
● In forages we have developed solutions for different markets. We have a strong presence in India which is one of the fastest growing economies in the world.
● Our solutions are great for cattle feed and silage which increases milk production and brings profitability to farmers. 
● We are market leaders in canola in Australia. Our advantage is hybrid canola and we have the best genetics and traits which provide high reliable yields.
● We are the market leader in corn in Thailand, and our corn is unique in delivering high nutritional values as poultry feed. In Asia we deliver the highest performance products to Asian farmers and we are expanding in that location.

Where are the main markets for Advanta's products at the moment? Is there any different market performance? How do you see the growth potential of different markets comparing traditional markets to emerging markets in the future? And is there any adjustment of market strategy for Advanta in the future?

Advanta operates globally having its HQ in Dubai, UAE. We have operations in over 25 counties and trade in over 60 countries. Emerging markets like Latin America, Asia and Africa are growing faster than the US or Europe primarily because of base effect as well as longer time to market. Emerging markets will continue to clock double digit growth in the coming years due to an increase in population and disposable income. 

Advanta is positioned for growth and I sometimes describe it as “Advanta is the MAJOR player in MINOR crop strategy”. We Advanta believe we are poised for the “GROWTH PHASE” ahead, albeit it will require a lot of teamwork and relentless execution of the strategy.

In the past, traditional breeding and transgenic breeding were the main technology used in seed research and development, however, there are some new technologies that have come out recently. For example, a kind of advanced non-transgenic breeding technology Rapid Trait Development System (RTDS™). What do you think of the new trend of the breeding technology? As some negative voices rise for GMOs, will the new technology lead the future seed research and development trend?

Yes, you are right, there are many technologies like Genome-wide selection (GWS) or market assisted selection which are taking an important role as nontransgenic breeding technologies. 

RTDS has not yet been accepted as non-transgenic technology by the European Union Regulatory Authorities. 

GM technologies have slowed down mainly due to costly and complicated regulations also due to complexity of the trades in order to consistently deliver trades like high yield, Nitragen efficiency and raw tolerance.

A lot of mergers and acquisitions happened in the seed and agrochemical industry recently, i.e., ChemChina has acquired Syngenta and Bayer is planning to acquire Monsanto. How do you see the possible effect of this round of acquisitions to the seed industry? Do you think these will bring more new comers/new players from outside the industry and what will be the new competition or challenge accordingly?

The mergers and acquisitions frenzy is a result of organizations need to survive. If organic growth is slowing down, the only option is the inorganic path as per MGI (MacKinsey Global Institute). 70% of M&A fail to deliver on set objectives. Yes, newcomers will come from the developing markets, and these organizations will have appropriate technology and the right corporate organization design to address needs of small farm holdings which is a totally different ball game then in developed economies. Digital technology is silently impacting reach and the spread of information which in turn is empowering small farm holders with timely information. The future of the seed industry is very good, however the ability to deal with “uncertainty” will decide tomorrow’s winners and losers.

What's the growth plan for Advanta over the next 5 years? How will Advanta achieve growth? We noted that Advanta has a plan of mergers and acquisitions in the future, could you please introduce which region (Latin America, Africa or Asia etc.) and product (cereal seed, oil seed, vegetable seed or grass seed) are your direction of acquisition?

Advanta is best positioned today for profitable and sustainable growth. The following factors are playing-out in favor of Advanta:

Internal factors:
● Highly dedicated team of driven and experienced professionals.
● Choice of crop platforms which are unique in the industry.
● Proven skill sets and competences to operate in developed as well as in developing economies.
● Part of highly successful and global UPL Group now post amalgamation giving access to more resources and reach as well as stronger and bigger balance sheet.

External factors:
● Environment of M&A will attract the market space under-serviced (like crops, geographies) which will be available for Advanta to expand.
● Advanta and UPL believe in growth through organic and inorganic routes. The current situation is very favorable to our approach.
● Small to mid-tier companies are looking for growth through collaborations and alliances to complement each other through product portfolio as well as organizational reach which is in full alignment with Advanta’s philosophy.