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 Main subject - nov/dec 2007
The Transgenic Seed Business in Brazil
Ivo Marcos Carraro
Executive Director Coodetec
carraro@coodetec.com.br
The Brazilian agriculture experienced a significant growth during the 70's decade, when the mechanization initiated a new era, that among other things permitted that the seed business be among the most important in size, for countries with a strong agricultural economy. At present Brazil has the fourth largest domestic seed market, worth some 1.8 billion dollars, second only to France (USD 1.92 billion), China (USD 4.0 billion) and the United States (USD 7.1 billion).
The local market has corn as the main seed crop, with a share close to one billion US dollars), followed by soybean (US$400 million), rice, wheat, beans and cotton. As for seed volumes, soybean heads the list, being sown over 45% of the total cropping area followed by corn with 29%.
The rate of use of certified seed has a low impact on the potential market for soybean seed and other self-pollinated (autogamous) species which is entirely different for corn, with 90% rate of use of certified seed and 98% of the area sown with hybrids.
The consolidation of the seed market was basically due to the development of the Brazilian Seed System, which coincided with the boost in agriculture during the 70's. The simple move towards the use of quality seeds made it possible to achieve higher productivity in practically all the major crops.
It was during this period that the structure for research on plant varieties and the seed industry were structured. Parallel to the appearance of research companies from the public and private sector, the government implemented training programs to improve the technical expertise, as well as credit to finance the construction of facilities and laws to establish the operational frame, within which the system could develop and consolidate.
With the entrance of Brazil to the WTO in the nineties, important legislative changes related to agriculture took place; the law on patents was updated and adapted (1996), the approval of laws regarding biosafety (1995), the cultivar protection (1997) and finally, an entirely new legislation regarding seed production and trade (2003). This legal frame has had a significant influence in Brazil's seed market for the past ten years.
Preceding the release of transgenic seeds into the market, the implementation of the cultivar protection system caused profound modifications to the scheme of relationships among the companies of the different segments within the sector. Several studies have focused on the interferences that happened along the last ten years, forcing the different players to adapt to different types of trade relationships.
Under the previous scenario the seed companies had a relative freedom of action; however, the options for technology and aggregated value were in short supply. After the changes, basically the set of laws regulating the seed business, new and powerful terms appeared such as the breeder, now in control of its creations and the transgenic events patented by multinational companies. Hence, the sense of need for an increased level of professionalism was felt by the companies and the market demanded a higher standard of quality to release new products.
Global companies, traditionally dedicated to the agrichemical market adopted new strategies, incorporating biotechnology and using the seed as the main vector. Hence in a few years and following a general trend, merging, association and acquisition of companies changed the profile of the seed business in Brazil.
The level of competition among seed companies moved to platforms increasingly competitive, excluding minor companies in the process, which until that time were able to secure their niches much more easily.
Corn seed is a clear example of this market concentration, with 90% the share being held by only four large companies. The situation in cotton is pretty much the same as in corn.
In relation to soybean, its distribution is better balanced, certainly as the result of the presence of public companies such as Embrapa, Cooperatives and foundations. In the end, the whole process answers the demand by a globalized world, so there's not much to complain about.
Meanwhile, the local companies must engage as soon as possible in acquiring the necessary professional level, investing in research, quality and business management. This is the difference between staying in the business or being absorbed in the process.
The so-called 'Biotech era' initiated not so long ago, worldwide. In Brazil, it has been termed futuristic and attacked on ideological grounds by sectors of our own government, the Judicial System and some opportunistic NGO. Today, it continues to move fast paced on a global scale that includes Brazil, providing transgenic products as a result of accumulated science, which are not prone to disappearance by simple political pressures.
page 2 ->> The Transgenic Seed Business in Brazil
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