A Look Behind the Seed Scene

After consolidation, seed companies prepare for pressures and new paths. ( iStock )

The dust has settled. After several years of mega consolidations, seed companies are moving forward.

“Initially there were a lot of changes in brands and people,” says Dean Cavey, managing partner of Verdant Partners. “That is all largely behind us. Now they are working through the actual implementation and integration of strategies.”

The Challenges

Like their farmer-customers, seed companies are facing wild cards. A stagnant farm economy, COVID-19 and continued volatile weather are complicating outlooks.

While the impact of these challenges affects all sizes of seed companies, they pack more of a punch for independent or smaller businesses, Cavey says.

“Small- to medium-sized companies simply have less resources so they have less staying power than big multinationals,” he explains. “They don’t have the margins of the companies that actually own the traits or genetics.”

Yet, Cavey notes, the smaller and independent companies have carved out a market niche with strong customer service.

“Relationships continue to be more important than the brand or product performance,” he says.

The Opportunities

This landscape of fewer, but bigger, seed industry players provides business opportunities, says Samuel Taylor, farm input analyst for Rabo AgriFinance.

“Farmers need to make 25 to 30 decisions in a year to plant a crop,” he explains. “How many of those decisions can an input company provide? After the mega mergers, I expect we’ll see a growth in the ancillary services a seed company can provide.”

Taylor says this could include biological options, niche crop seeds or digital services.

Another opportunity seed companies could seize is an offshoot of the COVID-19 pandemic. E-commerce is now accepted and somewhat expected, Taylor says.

“Amazon and other digital platforms have completely destroyed brand value, since they offer broad portfolios of products and solutions,” he says. “In the future, farmers who buy seed online could pick from a plethora of seed options not just what brands are promoted in their area.”

400 The number of seed industry ownership changes in the past 25 years.

1998 The peak of seed ownership changes, which was shortly after patented, genetically engineered seeds were commercialized.

Stats: Phil Howard, Michigan State University