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Seeds are growth business for Bayer CropScienceqrcode

Nov. 15, 2012

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Nov. 15, 2012

Bayer CropScience’s vision for its campus here includes constructing a second high-tech greenhouse and a new research-and-development building for its rapidly expanding seeds business.

"It’s not yet firm, but it is in the planning stage,” Mathias Kremer, head of the company’s global seeds business, said in an interview Tuesday. “We are considering quite a lot of investment here, over the next five to 10 years especially.” The company isn’t discussing how these projects, if they come to fruition, might affect the company’s local workforce.

The potential RTP investments are a dividend of the company’s recently unveiled decision to relocate the global headquarters of its seed business from Lyon, France, to RTP, which already is the North American headquarters of Bayer CropScience. Bayer CropScience, a subsidiary of German conglomerate Bayer, produces insecticides and other crop-protection products as well as seeds.

The relocation of the seeds business, which was made public in September although the move actually was made in July 2011, has triggered the addition of about 75 workers to Bayer’s RTP workforce since the outset of 2011. Altogether, Bayer CropScience has 500 workers in RTP and another 140 in Morrisville and Clayton.

North Carolina is home to more than 70 agricultural technology companies, and the Triangle has evolved into an industry hub. This year BASF, the German chemical company, announced it was moving the headquarters of its plant science division from Germany. Switzerland-based agribusiness giant Syngenta, which employs more than 400 workers at its biotechnology research arm based in RTP, expects to finish construction of a $71 million greenhouse by the end of the year.

Bayer opened a $20 million, three-story, 60,000-square-foot state-of-the-art greenhouse in RTP in July that is being used for research for its seeds business, part of its plan to plow more money into the sector with the aim of becoming a bigger player in the market. Bayer projects that the global seeds business will expand from 4 percent to 6 percent a year over the next decade.

"We are basically doubling our investment in R&D,” Kremer said, noting that the company is planning to boost the annual research budget from 220 million euros to 450 million euros in 2015 ($280 million to $572 million at current exchange rates). “We want to propel farming’s future.”

A key to its research effort is developing new varieties of seeds, either genetically modified or produced with traditional breeding techniques, that will produce more and better crops – such as crops resistant to herbicides or pests.

"Those are the value drivers,” Kremer said. “We can charge the farmer a little more and he is absolutely pleased to pay this.”

Bayer CropScience has targeted expanding its seeds business as one of the four pillars of its growth strategy. Its seeds business is focused on canola, cotton, rice, soybeans, vegetables and wheat, including genetically-modified varieties as well as hybrids produced with traditional breeding techniques.

The company expects seeds to contribute to 20 percent of its overall sales by 2016 – double what it is today – CEO Sandra Peterson said in a prepared statement in September. Bayer CropScience generated $9.23 billion in revenue last year.

Bayer’s seed sales jumped 39 percent in the third quarter, and 20.5 percent in the first half of the year. Kremer said seed revenue has grown an average of 15 percent to 20 percent a year over the past decade.

To be sure, Bayer is expanding from a smaller base than key rivals. It’s currently ranked No. 6 or No. 7 in worldwide seed sales, depending on which currency exchange rate you use, Kremer said.

"If you compare us to Monsanto or Pioneer, we’re pretty small,” he said. Bayer is No. 1 in the cotton-seed market, however.

In addition to investing in internal growth, Bayer is looking outward as well.

"We have many acquisitions in mind, smaller ones particularly ... to strengthen our position,” Kremer said.

Kremer said shifting the global seeds business to RTP brought it “a lot closer to the big markets, the U.S. and Canada and ... Latin America. A big part of our strategy is focused on Latin America. Having said this, that does not mean that we are abandoning Europe or Asia. That is definitely not the case. We have a headquarters here for a very, very global organization.”

Source: NEWSOBSERVER

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