I was cleaning out some old files in our basement the other day, much to the delight of my husband. (Part of the downside of working from home: file storage. Part of the downside of being a packrat working from home: lots of file storage. Enough said.)
Anyway, I came across a red file folder that held the notes and a rough draft of the very first story I ever wrote for Prairie Farmer, when I was but a college student. (See? Pack rat.) In fact, it was a test story given to me by then-editor Mike Wilson and used by him to decide whether to hire me. The story was on the independent seedsmen of the day, and it was published in December of 1997 as part of a larger package of stories on the Midwest seed industry.
I stood there in front of the file cabinet, reading this little story in 2011, and HOLY COW. There are, in this story, companies that no longer exist, people who are no longer in the business, a giant who’s but one among four, and a entire industry that’s changed. (How’s that for a massive understatement?)
Thirteen years ago, it was all about the chemistries. When I graduated from college, the “good jobs” were those as chemical reps, and they came with high salaries and Jeep Grand Cherokees. Roundup Ready changed all that. Now it’s all about the traits. The very year after this story was published, Monsanto bought DeKalb, and this industry began a consolidation of historic proportions. A couple years ago, I saw a presentation where a seed industry leader showed a graphic charting all the consolidations, mergers and buyouts. It looked like an organized version of a toddler’s crazy coloring page. To think, in 1997 there were 300 seed companies? Monsanto alone has bought 100 of them, rolling them into Channel Bio.
And I think, it’s largely been to the farmer’s benefit. Think of the options we have available now. Stacked traits, insect resistance, weed protection, refuges in a bag – we hardly knew what a refuge was in 1997. Today, we’re disappointed if we don’t average over 200 bushels. In 13 years, the bar has been, effectively, raised.
I’ve copied that original story below, which first appeared in the December 1997 Prairie Farmer. I’d link to it, but it was so long ago, it was pre-digital. Shoot, we barely had the wheel then.
Take a minute or two and give it a read. Think it over and let me know what you think. It’s always useful to reflect on where we’ve been.
Competitive edge for the little guys is no fairy tale
By Holly Hinderliter
Think of it as Snow White and the Seven Dwarfs. One great big company – Pioneer Hi-Bred International – and several smaller, independent companies competing for seed industry market share.
That comparison was drawn by Frank Thorp, past president of Thorp Seed Co., who estimates that those eight companies fight for approximately 75% of the market share. He adds that more than 300 other companies struggle for the remaining 25%. Compound those figures with the amount of money it takes to develop a seed variety with the biotechnology and genetics that producers demand, and you are looking at a pretty tough arena for the little guy to compete in.
So how do the smaller companies survive and thrive in an industry driven by being first with the best technology? The leaders at Thorp Seed Co. believe in alliances to help offset the costs of technology. Frank Thorp, the third generation in the 61-year-old family company, calculates that approximately 10 alliances currently exist within the seed industry.
“Independents just can’t afford it. It’s easy to breed – you can breed seed corn in your back yard. It’s testing and sorting that’s costly,” he says.
To become competitive in the technology arena, Thorp See Co. joined forces with four other companies to form Golden Harvest. Thorp’s company benefits by creating a national name and obtaining a proprietary breeding program.
Chan Sieben, executive director of the Independent Professional Seedsmen Association (IPS), observes that smaller companies have competed with multi-national very well in the past. They’ve done so by selecting varieties that are highly adapted to their localized market and producing a high quality product that is supported by direct and personal service.
Munson Hybrids resident Bud Davis agrees. He believes personal contact is what can give the smaller companies the competitive edge.
“By and large, a lot of these companies are solidly entrenched in their regions and have a strong sense of loyalty built up,” he says. Munson’s strategy has been to increase germination from the 95% industry norm to 98%, a goal that they have reached in many areas.
Being open to change, rather than being fiercely independent, also is important to success for smaller companies, according to Thorp. Independents must look at their assets and see how they want to develop them, he contends.
Another family-owned and operated company, Burrus Power Hybrids, has chosen to develop its assets and meet the competition in a slightly different way. To provide an alternative to Bt corn, Burrus will launch a new program in 1998 called “Scout and Save.” The program’s aim is to provide an alternative to paying up-front technology fees for insect control.
According to Tom Burrus, farmers will receive a $3 per bag refund if they us an integrated pest management approach, provided that the farmer purchased either 100 units or 100% Burrus seed corn. Producers will then use that money to hire a crop scouting service or to scout the field themselves. If necessary, the farmer can treat the field with a rescue insecticide, if infestations are above economic thresholds.
Burrus envisions the new program as a way for his company to compete while continuing to test the Bt technology. With its regional testing plots, the company hopes to produce varieties that will perform best for the Illinois and Missouri service areas.
“We may not be the first with a particular technology, but we have proven performers,” Burrus says.
Burrus sees his company’s future success lying in two main areas: satisfying the farmer and providing value-added products.
Though “value-added” may seem to be the latest buzzword in the industry, Wyffels Hybrids sees it as far more than that. Bob Wyffels, who owns the company with his brother, is very optimistic about the future of value-added products, especially the high-oil corn that their company has marketed for the past five years.
According to Wyffels, some 1 million acres were planted to high-oil corn this year, the most widely planted value-added product. He predicts that acreage count will double in 1998.
Why the popularity? Wyffels calculates that high-oil premiums will make $30-40 more per acre for farmers. Because high-oil corn makes such good animal feed, it is very popular among large swine and poultry integrators. Since Pioneer has yet to sell DuPont’s TopCross high-oil corn, and DeKalb only began to do so last year, it would appear that Wyffels has already beaten the competition to the punch.
The continuing challenge, Sieben feels, will be to select the right technologies for each company’s market and to deliver them through superior performance varieties.
“The ability to focus in on customer needs and to match those needs with a seed company’s ability will be critical,” Sieben says.
So perhaps the fairy tale will end happily for the dwarf seedsmen after all.
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