Consolidation in Floriculture Breeding

As an example, some figures from The Netherlands:

 

Verdant Conclusion: Although these figures are limited to The Netherlands, it illustrates that in this important floriculture market, succession issues are to be expected at a significant scale and, as a consequence, the trend towards fewer and bigger companies will continue. Consolidation will make a substantial contribution to this trend. It is crucial that small, family-owned and/or managed businesses approaching generation change with no clear succession plan, proactively consider transition, partnership, or divestment opportunities in their overall strategy.

 

The Need to Access New Breeding Technologies
 

Due to decreasing costs and broader applicability of molecular marker-assisted breeding technologies, adoption is within reach of more and more companies. A business’s competitive position can be improved by the application of new technologies, which make the breeding process for desired traits more efficient in terms of cost and time. Ornamental value (e.g. color, shape, fragrance) comes first for every floriculture company, but other traits such as yield, shelf life, vase life and disease resistance are important as well. The prohibition on the use of certain plant protection products has considerably increased the importance of the introduction of disease resistance. Molecular breeding may accelerate that process.

 

Gene editing, used in a way that yields an end-product identical to the result of traditional breeding, would be another useful molecular tool for the development of desired traits. Especially because the technology allows efficient modification of traits in polyploid crops, of which there are several in floriculture. The recent decision by the European Union judicial ruling that classifies gene-edited crops as Genetically Modified Organisms (GMOs) will delay development of gene-edited floriculture and other gene-edited crops in the EU (but not necessarily elsewhere). Novel EU legislation will be necessary for gene-edited crops that allows a low-cost, short regulatory approval process and the commercial use of such crops in the EU. Such legislation is not to be expected in the near future.

 

Larger companies in floriculture are developing and implementing molecular breeding technologies, either in-house or with a service provider. Meanwhile, small and medium-sized companies cannot afford to develop such technologies. The same is true for companies with a diverse portfolio of crops. Although the need is present, the complexity and the considerable investment are inhibiting factors for investing in these technologies. As a result, the development of innovative varieties in these companies is not accelerated at the same pace as in bigger companies, and the competitive position of these companies is weakened.

 

Consolidation and collaboration are important for meeting the need to access molecular technologies. Some breeding companies have tied up to a service provider (e.g. Dümmen Orange with Genetwister). Collaboration can offer a solution if the investments are too high for individual companies. A number of companies have joined forces to jointly invest in research, development and implementation of advanced breeding technologies. Examples are Breeding Accel (KP Holland, Interplant Roses, Schoneveld Breeding and Sion Young Plants) and GenNovation (Florensis, Gebr. Vletter & Den Haan, Anthura and Dekker Chrysanten). A complicating factor for establishing the most optimal collaboration (i.e. focus on the same species) is the fierce competition between floriculture companies. Therefore, collaboration between companies active in the same crop species is often seen as impossible as demonstrated by Breeding Accel and GenNovation, where each partner is active in different crop species. Collaboration between companies active in different crops is still useful and reduces costs, but substantial investments will still be required for species-specific research and development.

Verdant Conclusion: Broad implementation of marker-assisted breeding methods in floriculture will be slow due to limited market size, huge diversity and genetic complexity of floriculture species. Consolidation, and to a lesser extent collaboration, will allow access to novel breeding technologies and give increased competitive strength. Therefore, companies facing the dilemma of restricted capital to enable the adoption of competitive breeding technologies should consider partnership and/or consolidation opportunities to stay competitive.