The Business of Growth: Spotlight on Seeds

seed sprouts

The seeds of human civilization were, in fact, seeds. Some 12,000 years ago, a member of what had, for tens of thousands of years, been a nomadic hunter-gatherer species realized discarded seeds from previous meal preparations had taken root and were growing. Deliberately repeating that process enabled humans to settle in one place, build permanent homes, and, with less demand on everyone to find food, diversify their individual and collective activities.

From that first planting, the treatment of seeds has been a history of genetic experimentation through selection of seeds from the best plants, cross-pollination of plants with different strengths, grafting, and, in the 21st century, careful manipulation of the plant’s DNA.

As world population growth boomed in the 19th and 20th centuries – with predictions it will hit 10 billion by 2050 – the development and sale of seeds, both in the United States and internationally, grew from hundreds of small, mostly local and regional companies into a multibillion-dollar global business. Mass consolidations in the 1980s were followed by an even more intensive wave of acquisitions in the mid-1990s, when biotechnology revolutionized agriculture in general and seeds in particular.

More than 7,000 seed companies, most family owned, were in business in 1981, with none controlling more than 1 percent of the market. By 2010, only some 150 remained, a number nearly halved by 2015 as six transnational corporations – Monsanto, Dow, Dupont, Syngenta, Bayer, and BASF – bought their way into 63 percent of the global seed market and 75 percent of the agrochemical market.

As those companies went into mega-merger mode in 2016, the U.S. Senate Judiciary Committee held a hearing on “Consolidation and Competition in the U.S. Seed and Agrochemical Industry,” with testimony from five of the “Big 6.” The hearing was sparked by four major new merger announcements, three of those involving five of the Big 6:

  • December 2015 – No. 2 Dow and No. 3 DuPont announced plans for a $59 billion merger
  • February 2016 – No. 4 Syngenta announced it had agreed to a $43 billion takeover by ChemChina, the world’s seventh-largest agrochemical company
  • Sept. 12, 2016 – Agrium, the world’s second-largest fertilizer company, and Potash, No. 4 in fertilizer, announced a $36 billion merger that would create the world’s largest fertilizer company, but also a new major player in seeds and crop chemicals
  • Sept. 14, 2016 – in the largest move yet, an announcement that German-based Bayer, No. 5 in seeds, planned to buy out U.S. biotech giant Monsanto, the largest of the Big Six, for $66 billion

The Monsanto-Bayer, Dow-DuPont, and Syngenta-ChemChina mergers, if completed, would create a new Big 3 dominating world seed production and sales with an estimated 70 percent of the market.

Telling senators it takes 13 years and $136 million to bring a new biotech product to market, Dow AgroSciences President and CEO Tim Hassinger said the Dow-DuPont merger was “pro-competitive” by combining the different capabilities of the two companies to provide better and faster new products to farmers.

Robb Fraley, Monsanto executive vice president and chief technology officer, told the hearing the mergers would enable greater innovation in agriculture through increased research and development by the new companies, enabling them to better improve sustainability and increase farm productivity to meet the food needs of a planet of 10 billion people by 2050.

“That’s why you are seeing the latest round of mergers right now,” he said. “Fortunately, the pace of innovation is accelerating and new tools and applications are creating a healthy disruption in agriculture [that] can and should similarly embrace these revolutionary technologies.”

seed testing USDA

A scientist in the Seed Regulatory and Testing Division, part of USDA’s Agricultural Marketing Service, conducts a test to detect the presence of harmful pathogens in grass seed. Credit: USDA photo

For farmers, seeds have become one of the most expensive elements in farming. In the last two decades, the per acre cost of seed corn has jumped 164 percent, according to a University of Illinois study, although the higher price also reflects major biotech enhancements.

The U.S. government began oversight of the seed industry with passage of the Federal Seed Act in 1939, creating rules and regulations for interstate and foreign commerce in seeds, setting label requirements, and creating standards for imported seeds and provisions for seed testing and evaluation.

The Seed Regulatory and Testing Division (SRTD) of USDA’s Agricultural Marketing Service “tests agricultural and vegetable seeds to ensure the efficient, orderly marketing of seeds and to assist in the development of new or expanding markets.” Test results are reported in a Federal Seed Analysis Certificate, which is required by many nations that import seed and grain from the United States. The SRTD is accredited by the International Seed Testing Association (ISTA).

Farmers rely on USDA’s Economic Research Service (ERS) to provide regular data and analyses on domestic and global production, consumption, and trade in corn, soybeans, and wheat, the three largest U.S. feed and seed crops, among others.

In addition to the ERS reports, seed production and distribution companies use the American Seed Trade Association (ASTA), founded in 1883, to monitor state, national, and international regulations, new technologies and science, and policy issues affecting the seed industry.

“ASTA is an organization formed and directed by its members as an effective voice of action in all matters concerning the development, marketing and movement of seed, associated products and services throughout the world. This mission is supported by the association’s advocacy efforts regarding intellectual property rights, regulatory and phytosanitary reform and regulatory harmonization worldwide in the seed sector,” according to its statement on strategic goals.

One emerging technology that could shorten the cost and time to market of new seeds is CRISPR-Cas, a new genome-editing tool, although first the public and government regulatory agencies, especially in Europe, must be convinced an “edited” plant – and its seeds – is not a genetically modified organism, which many nations have banned.

The German Genetic Engineering Act, representing the standard definition, says: “A genetically modified organism (GMO) is an organism, with the exception of human beings, in which the genetic material has been altered in a way that does not occur naturally by mating or natural recombination.”

CRISPR-Cas proponents claim it is impossible to tell any new properties resulting from the editing process from naturally occurring changes. If that argument is accepted, plant and seed scientists believe gene-edited products may help combat environmental, insect, and disease problems. For farmers, it could mean lower production costs, higher yields, and expanded markets.

Credit for top photo: USDA photo by Neil Palmer

This article was originally published in the 2017 edition of U.S. Agriculture Outlook.

Leave a Comment

  • (will not be published)