Seed Industry Continues to Deliver New and Innovative Solutions
November 4, 2023 It’s hard to recover from a bad start. That’s just one reason growers and retailers demand so much from their seed providers. And those providers continue to deliver new and innovative solutions.
“It was expected that the seed industry would see a strong year of growth as high commodity prices, although falling from the peaks seen in 2022, supported further increases in seed price,” says Allister Phillips, Founding Partner, AgbioInvestor, a leading source for global crop protection market information and analysis.
Providers Enjoyed a Strong Market
2023 was a good year for Wilbur-Ellis when it comes to seed sales, says BJ Schaben, Director of Seed.
“Sales met expectations and exceeded expectations, actually,” he says. While cotton sales were expected to be down, soybeans and corn more than made up the difference. “From a Wilbur-Ellis standpoint, we continue to grow business in different areas of the country, including the I states,” Schaben says. “We were able to have significant growth there.”
Some segments of ag faced supply challenges. That wasn’t the case for Des Moines, IA-based Landus.
“Seeds are the one area that was affected the least because it’s not like we had a lot of supply issues,” says Jonathan King, Agronomy Lead. “Most of our seed is grown locally. The biggest thing, when I look at the effects of the pandemic on the seed industry, is an inflation issue — where the commodity prices and interest rates are today — you’ve got a variable difference in price per bag of anywhere from $100 a bag from your premium genetics to the lower priced seed. Some of these farmer-operators are going to start looking at different brands in ways they haven’t previously to manage their interest expense.”
BASF, whose seed focus is on canola, soybeans, and cotton, did experience a small supply issue, but it had nothing to do with the pandemic or political turmoil. Instead, it was ag’s eternal nemesis — weather.
“From a canola perspective, we would say that met expectations,” says Bryan Perry, Head of US Seeds and Traits, BASF. “We had some challenges with seed supply due to quality challenges. It was hot and dry last year in Canada, so that limited a little bit of our seed production. So, from that aspect, maybe some missed opportunity though the market grew. We sold everything we had available, and the channel did a great job managing inventories and performance looks good.”
Trevor Varilek, Product Director Seed for global cooperative CHS, says: “In 2023, all the talk was corn. It certainly seemed that the hype was real, and we are seeing the elevator fill up now. As we settled into the growing season, mother nature was not cooperating in many areas and there was real concern on the quality of crop we’d see this fall. However, by and large, early reports have been very good and exceeding many growers’ expectations.”
Technological Advances
Given that the age of agriculture is measured in millennia, and as consumers are disconnected from how food gets to the grocery store, it’s understandable those not part of the industry might think there’s nothing new to learn about seeds. Of course, they’d be wrong.
“We are always constantly trying to innovate, to find new ways to improve the growth of our seed,” Wilbur-Ellis’ Schaben says, “and take some practices away that may be archaic and not as good for the environment.”
Innovations come in a variety of forms.
“In the last few years, we have seen the introduction of GM seeds that make use of Ribonucleic acid in ides resistance to rootworm in corn,” AgbioInvestor’s Phillips says. “RNAi differs to existing Bt insect resistance traits, utilizing double stranded RNAs to initiate post transcriptional gene silencing in target pests.”
Corteva Agriscience also focuses a great deal on research and development. “The pace of innovation continues to accelerate as new technologies become available,” says Tim Glenn, Executive Vice President, Seed Business Unit. “Corteva is at the forefront of this trend, investing nearly $4 million — every single day — on research and development to advance new technologies and sustainable innovations.
“Farmers will continue to benefit from Corteva’s germplasm advancements and biotechnology traits,” Glenn continues. “We see tremendous opportunities in agriculture for gene editing to unlock the natural power of plants by responsibly accelerating their natural variations. Gene editing builds on conventional breeding to empower scientists to deliver innovative, sustainable products that increase yield, productivity, and resilience for growers around the world.”
The Role of the Retailer
Even the best solutions won’t do anyone any good if they aren’t shared with the end user. That’s where a trusted retailer can be critical for both the provider and the grower-customer.
“About one-third of all seed sold in the U.S. is sold through full-service retail channels like local co-ops and farm stores,” Glenn says. “Companies like ours rely on our channel partners to help us serve these customers and learn ways to provide new and better solutions. With Corteva Agriscience crop protection brands already offered in many retail locations, it made sense to match those products with a high-quality, high-yield seed for our customers. We made Brevant seeds available in the U.S. via retail locations for the 2021 planting season.”
For its part, BASF is totally reliant on retailers.
“Our retailers are imperative to our success,” Perry says. “One thing that differentiates BASF from every other major manufacturer in the seed space, today … we only have one go-to-market for our seed, and that’s through retail. If the retailer isn’t successful for me, there’s no other place that a farmer can go to buy my soybean cotton, or canola.
“So much complexity pushes growers to want trusted advisors,” Perry continues. “And you can only have so many people running out to their farms. We feel working through retailers is the best approach.”
With seed providers delivering products globally having that local expert, one who knows the grower and his or her needs is critical.
“The fast-paced breeding leads to more turnover in products reaching the farm gate,” says CHS’ Varilek. This can create angst with the growers that have relied on tried-and-true hybrids/varieties year over year. The retailer needs to invest their time heavily in plots and research days to get a handle on the new products coming each year, so they can be confident in positioning these new products. Seed selling is ‘easy,’ but successful positioning is not.
Retailers that invest in the data and research are going to have the leg up in positioning these new products.”
Challenges, Opportunities
“Seed companies are likely to be concerned about falling commodity prices, farmer spending and the associate pressure on seed prices,” AgbioInvestor’s Phillips says. “Current 2024 futures are trading below the 2023 average trading price, indicating that commodity prices will continue to decline next year. There is a very strong correlation between the value performance of the global seed industry and commodity prices. We have seen a sharp rise in commodity prices over 2022 and 2023, with the value of the seed market increasing alongside it.
“An opportunity for the global seed market is the commercialization of output traits,” Philips continues. “Output traits influence how a GM crop grows or changes some of its key attributes.”
Phillips goes on to say seed companies are likely to be challenged by pressure on pricing in the short-term future, as commodity prices continue to fall,” Philips says.
It’s innovation that will provide new avenues for the seed industry, says Corteva’s Glenn.
“We continue to see new opportunities for farmers through our investment in R&D and the potential of technologies like gene editing to enable new solutions,” he says. “We see biofuels as an exciting opportunity for farmers both now and in the long term.
“As a global agricultural company, we’re always thinking about the potential impacts of the weather,” Glenn continues. “Coming out of several years of variable drought, we are hoping to see much-needed moisture this winter to establish a more normal planting season next year.”
2024 & Beyond
This fall we’ll make decisions on 12 to 14 varieties that we’ll bring into the 2025 season,” says BASF’s Perry. “This time next year we’ll be on the cusp of launching new genetics, new germplasm for soybean producers.”
It can be a bit of a challenge to figure out which solutions to bring to market.
“If you look in the cotton space,” Perry says, weed resistance continues to evolve. So, we’ve been really trying to look at: Where do we see that next challenge emerging? It’s no different than in soybeans.”
For its part BASF is working on providing native traits that help control resistance “If you don’t think about those challenges today, then when you get down the road, it’s hard to have a solution.”
Currently BASF reinvests about 11% of its revenue back into R&D, with about 25% of that spend going to new seed breeding trait development.
“That’s the newer part of our portfolio,” Perry says, “so, we’re probably getting a disproportionate share in the seeds and trait space because it is so new. And it takes a while to bring these things to market. A new active ingredient will take maybe 10 to 12 years, but a new trait platform takes 20.”
Whether it’s at the provider or retail level flexibility is key to success.
“As growers look to diversify or participate in emerging markets, those seed suppliers that adapt and provide solutions will win,” CHS’ Varilek says. “Not only is it providing quality seed,but the supplier must provide training to help growers understand and learn about a cropping system they may not be familiar with. It is the opportunity for the supplier and retailer to be a true partner with the grower, not just the salesman.”
“With all the added demand for soybean crush in the United States, the one thing I continue to see is historically heavy corn farmers are planting a few more acres of beans and getting better at raising beans,” says Landus’ King. “I think as we go into the spring of 2024, we’re going to see a pretty big swing towards soybeans. We had some pretty tough growing conditions this year and farmers are still growing 65-bushel beans just rolling out of bed in a lot of instances. I think there’s going to be a consistent rotation coming to the market a little bit more than in the past with all this added demand for beans. And I don’t think we’ve fully seen the pull on the market yet to really be bidding that into the market, but it has started to happen.”
Trends
“Agriculture is changing for all of us,” Corteva’s Glenn says. “Both customers and our company are embracing innovations and adapting to evolving consumer preferences that are driving the industry. With global population and income growth over the last decade increasing in double-digit percentages, meat consumption, oil, and crop consumption are all on the rise. That’s spurring record demand for ag products, enhanced productivity and increased need for innovative seed, crop protection and digital solutions.
“Our team sees lots of value in continuing to improve the operations side of seed,” Landus’ King says. “From efficient operations and logistics to improving our seed treatment in-house with the best equipment and practices. We have a new state-of-the-art treatment facility based out of Jefferson, IA, that can handle a huge amount of capacity while also ensuring quality and consistency. As we look to the future, we’re going to continue to possibly have a few of those regionally set up, but primarily try to treat the majority of our soybeans out of one location, get them into the market and then go from there.”
AgbioInvestor’s Phillips says new innovations are not coming as fast as they once did. “The number of traits being commercialized significantly slowed from 2014 onwards, which contributed to a reduction in market growth,” he says. “New GM input trait technology was paid for by cannibalizing the value from other input technologies, such as conventional chemical crop protection, resulting in value growth despite any industry headwinds.
“The pressure will be most felt by companies with mature seed businesses, either in terms of market share and/or product portfolio. The last industry slowdown, from 2014-2019, sparked a round of acquisitions and consolidation, however this is unlikely to occur this time round. It is likely that any industry slowdown experienced will not be as severe or as long lasting as the one seen in the 2010s.”
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