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 Main subject - july/aug 2008
continuation: Evolution of the seed industry during the past 40 years
4. Development of seed markets
Let us start with the seed market. During that period the seed market has been multiplied almost by 3, from around 13 billion dollars to 36 billion. It must be noted that the big increase in 2007 is partially due to the low value of the US dollar and does not reflect the true evolution, in particular for the European countries. But what is more interesting to look at is the difference between countries. Except Poland, where the political transition has lead to an explosion of farm-saved seed, all the countries have experienced an increase. The ranking is well correlated to the importance given to agriculture in these countries, the acceptance of new technologies and the speed of development of developing countries.
Evolution of the seed market in the world
5. Development of international seed trade
Linked to globalization the development of international seed trade has been faster than that the global development of the seed market. From 1979 to 2006 the international seed trade has been multiplied by five. This is due in particular to the specialization of production zones for hybrid production and to the development of counterseason production. In this regard, the example of Chile is particularly enlightening.
6. SEED COMPANIES EVOLUTION
At the end of the 1960s, most of the large seed companies were family-owned and many of us still have in mind names like Pioneer, Dekalb, Agrow, VanderHave, Vilmorin, Tezier, Royal Sluis, Funk, Sluis and Groot, and so on and so forth. With the purchase of Asgrow by Upjohn, in 1968, started a process of consolidation with various waves and various actors.
Seed business concentration
Actors have regularly changed, some appearing and then disappearing a few years later, and some continuing to develop by internal and external growth.
One of the most significant effects of that evolution is the concentration of the industry, from 18% of the market in 1985 to almost 45% in 2007, if we take the top 15 companies. It is interesting to note that the concentration increase is mainly due to the top 5 companies that represented last year almost 35% of the global market. Globally this level of concentration is still low compared for example to the crop protection industry. However, this is different if we consider the situation on a crop-by-crop basis. The top 3 companies represent more than 90% of the sugar beet seed market, the top 5 maize companies represent around 85% of the maize market and the top 5 vegetable seed companies represent around 70% of the vegetable seed market, to give a few examples.
This concentration, facilitated by the globalization, has several causes:
- The evolution of technologies that we have just seen, requiring high investments in research and production.
- The increasing need for rapidity in all sectors of business causing the loss of specificity of some activities requiring a vertical integration of the companies.
- Multiple pressures linked to an increasing competitive environment.
The need for high research and development investments is mainly due to the global level of investment that is up to almost 800 million dollars a year for some companies and the strategy of the company or research areas.
To finish my talk, let us have a look at the global communication and regulatory environment of our industry.
Forty years ago, this environment was quite simple. This new environment also caused a less visible but very important change in the management of seed companies. Due to the complexity of the issues we have to deal with and the increasing liability issues we are facing, the seed companies have had to establish legal and governmental affairs departments. These departments may reach hundreds of employees and are now also put in place in small and medium companies.
This evolution, as everything, has advantages and disadvantages, but, for the security of the seed companies in an increasingly regulated world, the advantages are certainly more important.
Speech of Dr. Bernad Le Buanec at opening ceremony of the 2008 ISF Seed Congress
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