Independent Seed Companies Are Alive and Kicking

Don't tell John Latham that independent seed companies are on their way out. This third generation seed man is busy building a corn and alfalfa side to the family business.

The Alexander, Iowa, company was historically strong in soybeans, adding corn only in 2004 and alfalfa a couple of years later. For Latham, it only made sense.

"Adding corn let us offer a more complete package to our customer base," he said. "It's an exciting time in the corn business; with so much germplasm and so many traits to choose from, we have to watch so we don't offer too big a lineup."

Ironically, at a time when there are fewer and fewer independents, it has never been easier for them to expand their offerings by taking advantage of licensing arrangements. In some cases like Latham Seeds (the soybean side of the business), that means utilizing their own genetics and cherry picking the germplasm and traits they want from Syngenta, Greenleaf Genetics, Monsanto and Dow AgroSciences. On the Latham Hi-Tech Hybrids side of the business, it means being able to start up a corn business practically overnight.

Long-time corn seed breeders and marketers can benefit as well. "One of the advantages of an independent today is that we can offer the broadest range of traits, as well as conventional and even organic hybrids," said Chuck Cornelius, president, Cornelius Seed. "We have had access to every trait that has come on the market. At the same time, we have a regional focus, developing hybrids that work in our geographic area. We don't have any problem competing on service or performance."

Ben Kaehler, traits licensing leader, Dow AgroSciences, agreed that regionals may have certain advantages over larger companies. "They provide a lot of value to their growers," he said. "They have more knowledge of the growers' geography and their farming practices. They can recommend products that they know will be successful on that geography under those practices."

That value is one reason that brand loyalty remains as strong as it does in the seed trade, added Kaehler. "The growers depend on their seed representative to make the best recommendation," he said. "With all the trait combinations and new products, it is increasingly difficult for the grower to evaluate all the new technologies."

Facing the Competition
Steve Terpstra, vice president/director of sales, Mark Seed Co., sees trait access for an independent as an advantage over companies that are committed to their own traits. "Sometimes it boils down to a question of the genetics and selling a 105-day Liberty Link hybrid versus a 105-day Bt Triple Stack," said Terpstra. "As an independent with access to both, whichever is performing the best is where we go."

For Cornelius, competing with the multinationals is a get down and dirty-as in the field dirty-business. It means focusing on genetics and customer relationships that are personal in a way that large corporations simply can't afford to do. In a very real way, the business stretches back three generations to founder Charlie Cornelius selecting and selling open pollinated corn on the family farm nearly 100 years ago. Although the majors are evaluating profitability of a number by the tens of thousands of bushels they will sell, Cornelius can justify carrying smaller lots of several maturities of organic seed corn. Similarly, he also introduces the latest traits of non-organic hybrids.

"Organic sales may never be huge, but it is part of what we do...the kind of thing we can do that sets us apart from the multinationals," he said.

Cornelius won't get an argument on competitive positioning available to regional, independent seed companies from Diego Angelo. The Corn States licensing strategy lead, Monsanto, works with around 200 such companies that currently license Monsanto germplasm and/or traits in North America. He has a great deal of respect for the brand loyalty they have built.

"We have found through market research and talking to farmers that some of them want that strong relationship with a local company and prefer to buy from them," said Angelo.

In fact, Angelo credited those companies with much of Monsanto's success with traits. "Independent regional seed companies are a very important segment for Monsanto," he said. "Committing to broad licensing of our traits was the right decision for Monsanto because it lets farmers choose the traits and the germplasm and the brand. It is also right because many of these companies have the ability to move traits very quickly into their pipeline. Others take more time, but, as a group, they have been key to getting our business where it is today."

Kaehler indicated that regional companies are appreciated at Dow AgroSciences as well. The company licenses traits and germplasm plus supports regionals' efforts with training, whether it be one-on-one calls with seed company management or training modules working with district sales managers.

The regional seed companies make genetic selections using their own criteria. Localized evaluation and recommendation from a genetic supplier helps reduce the overwhelming number of options a company will offer. "There may be genetics that work great elsewhere," said Latham. "But because we concentrate on our area, we can eliminate a lot of different genetic packages."

Adapting Quickly
Another advantage regionals share is their ability to move fast. "Regionals have a real advantage when it comes to making decisions," said Latham. "You can be pretty nimble with a small management team, bounce ideas off each other and put together a program in a few days."

The ability to get out ahead of the pack is giving both Latham and Mark Seed marketing momentum with their individual responses to cyst nematode problems. "We are one of the few companies that really jumped on the CystX technology from Purdue University and its complete resistance to all four races of soybean nematodes," said Latham. "We've been working on that in our program for the past 10 years and have a product that is a real good fit for high cyst areas. The higher the cyst population, the more effective our varieties are at bringing the population down."

Terpstra said his company's field-proven and patented Cyst Tech process is responsible for new sales that he described as "a little overwhelming." Like Latham, Mark Seed has been working on the problem for about 10 years, though following a different path to cyst control. Cyst Tech rotates the first year CTA (a combination of resistant and susceptible varieties in a specific proprietary ratio) with a second year CTB (a combination of multiple resistance traits from PI99788, Peking and other sources). Terpstra says the results are selling the program and opening up new sales territories for the company.

"Five years ago if you mentioned nematodes, nobody knew much about them," said Terpstra. "Today, Cyst Tech is where our new sales come from. We have traditionally been in the Midwest, but I have a semi load of Cyst Tech seed going to Pennsylvania. It is really changing our borders. It sets us apart. We are even discussing licensing it."

Perhaps that would be the ultimate irony, multinationals licensing technology from a regional. Regardless, the decision by Mark Seed and Latham Seed to pursue cyst control before it was generally seen as a problem in the marketplace is helping differentiate them in the marketplace today. That is key to survival in what Latham admitted is an ever thinning crowd.

"There are fewer and fewer independents left, so the numbers are sort of stacked against us as a group," he said. "However, that also gives us the opportunity to be different from the national and multinational brands. I am very optimistic about the future. There are definitely challenges, but nothing we can't overcome."


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