Independent Seed Companies a Dying Breed
Waterloo-Cedar Falls Courier (IA) -- ALEXANDER -- May 31, 2009 -- It's David vs. Goliath, and Latham Hi-Tech Seeds is holding the sling.PAID ADVERTISEMENT
In fact, Latham is leading the charge against consolidation in the seed industry. Thirteen months ago, its former president led an industry-wide effort to make farmers aware of their independent seed options when more and more regional companies were being bought by larger national and international corporations.
The Independent Professional Seed Association unveiled the Seeds for Growth marketing initiative that includes a logo, tag line and integrated marketing campaign.
John Latham, who, with his wife, Shannon, purchased 90 percent of the family business in March and became president, said farmers often don't realize seed companies have been purchased. Once that happens, he said that particular dealer will only push the parent company's products -- genetics, weed and insect control, etc. -- even though they might not be as good for a producer's operation.
"We have access to a lot of traits and genetics and don't tout one over the other," said John Latham, whose father, Bill, spearheaded the independent movement. "We think independent companies work for the best interest of farmers."
Is the initiative working?
Today there are probably only 100 independent seed companies left, according to IPSA CEO Greg Ruehle. That's down from more than 300 companies -- both independent and consolidated -- 13 years ago, he said.
Since the campaign began, an estimated 25 companies sold out or went out of business.
"We're providing alternatives that might slow it (consolidation) down and help (independents) capture or maintain more market share," Ruehle said.
Monsanto, based in St. Louis, is the world's largest seed company. During the past decade or so, the corporation has purchased numerous seed companies such as Asgrow, DeKalb, Fontanelle and Kruger Seeds of Dike. It also sells Roundup herbicide and licenses Roundup Ready and YieldGard technology.
During the first six months of fiscal year 2009, Monsanto recorded record net sales of nearly $6.7 billion. Last year Latham recorded $20 million in sales in the Midwest, with a good portion in Northeast Iowa.
When Dennis Kruger sold his company in 2006, he said it would expand the pool of genetics and traits available to their customers. Monsanto spent $980 million on research and development last fiscal year. It recently built a corn breeding research station in Independence.
Monsanto spokesman Darren Wallace said consolidation and the company's vast financial resources have accelerated yield improvement. In the last 10 years, average corn yields in Northeast Iowa have improved about 20 to 40 bushels per acre, according to Iowa State University Extension statistics.
"By developing technologies, they're not only available to large companies but small ones who would like to license them," Wallace said.
ISU economist Mike Duffy said consolidation has hurt producers. While he concedes it has spurred production, Duffy said farmers are paying more for seed than they should due to less competition and choices are more limited.
On Tuesday, Duffy said a producer called and said he couldn't find corn seed in Iowa that wasn't genetically modified. Corn seed that cost $50 to $100 a bag 10 years ago, now tops $350 for hybrids with stacked traits.
"When you have a few firms, the ability to set price is greater," Duffy said. "That's also a problem."
John Latham said his company is in it for the long haul. He said the family has received lucrative offers from big companies in the past, but all were turned down.
"We think it's important farmers have an independent option out there," he said.
Author: By Matthew Wilde, Waterloo-Cedar Falls Courier, Iowa
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