Integrated approach needed to boost seed yields
Seeds play a crucial role in increasing productivity in global agriculture. However, according to Rabobank's latest report, the seed industry needs to shift its focus away from increasing the genetic potential of seeds toward improving the overall performance of crops in the field. This requires the industry to identify best practise methods by taking account of available fertilizers, pesticides, environmental conditions, planting techniques, and a myriad of other economic and technological factors, in a concerted drive to increase yields. Despite the obvious challenges, seed companies have an important role to play in helping optimize farming practices.
"Seed companies have ample proprietary data from test fields," explains Rabobank analyst Harry Smit. "In addition they have a good understanding of which input mixes work best with new seed varieties."
With limited opportunities to expand agricultural land area, efforts worldwide have become increasingly focused on improving farming productivity. This means there are considerable opportunities for companies to provide ways and means to boost crop performance and make sure inputs, designed to boost soil fertility, are used efficiently.
Seed companies are well placed to capitalize. Rabobank's report identifies two potential models for seed companies seeking future growth. Both recommend seed companies broaden their current range of activities to include a wider focus on agronomic practices, but present two different options for how this could be achieved.
- An "asset-light" approach, in which seed companies continue to focus primarily on improving seeds, while outsourcing the study of the day-to-day optimization of agronomic practices to others, such as farmers, consultancies or agricultural machinery providers. Companies which choose this option will have to be aware that their route-to-market may change as the influence of farm input integrators is likely to grow.
- An "asset-heavy" approach, where the seed company looks to develop fully integrated solutions in house. However, seed companies that get involved in the day-to-day management of farms will also have to take a decision on providing performance guarantees. Farmers that pay a premium expect a superior result, which may not always be achievable.
The market of improving agronomic practices is very competitive, with machinery companies, precision agriculture consultancies, extension services and input retailers all offering these services to the farmer. The challenge for seed companies will be to develop unique seed variety and algorithm combinations that bring advantages to the farmer and are not easy to copy.
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