Regional US Seed Industry

Part
01
of five
Part
01

Insights and Trends - United States Seed Industry

The eastern corn belt has witnessed increased adoption of genetically engineered stacked seeds (80% for corn), drought-tolerant corn (22%), and organic corn (growing at 34.8% CAGR). A deep dive into the trends has been presented below.

Adoption of Genetically Engineered Seeds

  • The use of genetically engineered seeds of the herbicide-tolerant (HT) variety in soybean farming grew from 17% in 1997 to 68% in 2001 to 94% in 2014 and plateaued thereafter (in terms of acreage).
  • The use of genetically engineered seeds of the herbicide-tolerant (HT) variety in corn farming is currently 90%. The use of genetically engineered seeds of the insect-resistant (Bt) variety in corn farming grew from 8% in 1997 to 19% in 2000 to 83% in 2019.
  • The share of stacked seeds--seed with both HT and Bt characteristics-- in corn farming grew from 40% in 2008 to 80% in 2018.
  • The share of stacked corn seeds grew by only 3% between 2017 and 2018. The slow rate of growth can be attributed to low corn prices and the fact that a high percentage of corn seeds are already stacked type.
  • As of July 2018, stacked soybean seeds were not commercially available in the United States.

Expert Opinion

  • According to Tack and Ariel Ortiz-Bobea of Cornell University, genetically engineering corn "may be a fruitful strategy for counter-balancing climate change". In the future, genetic engineering techniques such as CRISPR can play a significant role in combating climatic effects.

Drought Tolerant Corn Seeds

  • Drought tolerant (DT) corn became commercially available in the United States in 2011. Drought resistant varieties produce healthy yields even when there is a limited supply of water (corn is sensitive to water availability).
  • There are two varieties of DT corn: genetically engineered and conventional (non-GE). The GE variety is created by inserting a gene from the Bacillus subtilis bacteria.
  • The use of DT corn increased from 2% in 2012 to 22% in 2016. Most of the DT corn varieties in the United States are produced through conventional breeding.
  • The eastern corn belt (16-21% in 2016) has been slower to adopt DT corn than the western corn belt. However, Iowa (2.2 million acres) and Illinois (2.1 million acres) have the largest area of DT corn plantations in the United States.
  • The disparity in adoption rates between the western and eastern corn belt can be attributed to the fact that late-stage testing and initial marketing of DT corn were done in the western corn belt and eastern corn belt being less drought-prone.
  • The price of a bag of corn seeds with DT, HT, and Bt was $264 in 2016 and the price of a bag of corn seed with only HT and Bt was $254. The drought-resistant characteristic comes at a $10 premium.

Expert Opinion

  • A report by ERS economists Jonathan McFadden, Seth Wechsler, David Smith, and Steven Wallander--much of the aforementioned data is derived from the report--estimates a DT corn adoption rate of 18% in Illinois, 21% in Indiana, and 20% in Ohio.
  • According to the report, "the decision to plant DT corn can be likened to farmers’ decisions to purchase insurance. Under mild-to-moderate drought conditions, planting DT corn can ‘pay out‘ in the form of reductions in drought-induced yield losses. Farmers who adopt DT corn value the expected avoidance of such yield losses at least as much as the premiums they are willing to pay for the DT technology".
  • The "continued diffusion of DT corn and further development of drought tolerance in other field crops could result in cost savings to farmers, private insurers, and the Federal Government through reduced indemnity payments".

Organic Corn Seeds

  • In 2016, only 533,000 acres (0.3% of the total) of corn farms in the United States were certified as organic. However, while the total corn acreage grew by 2% between 2011 and 2016, the organic certified corn acreage grew by 55% in the same period.
  • The growth in organic corn acreage was 29% in 2016. The United States produced $170 million of organic corn and imported $160 million of it.
  • The majority of the organic corn in 2016 was grown in Wisconsin, Iowa, Michigan, Minnesota, and New York.
  • The fall of the price of regular corn from a high of $6.89 in 2012 to $3.36 in 2016 and the strong demand for organic livestock feed boosted the production of organic corn. The price of organic corn is two to three times that of regular corn; the premium makes it more profitable.
  • While farmers rely on existing networks for support and guidance on conventional farming, such resources for organic farming are scarce.

Expert Opinion

  • According to J. Peter Golbitz, CEO of Agromeris, organic poultry production increased over two times in 2016 and by 50% in 2017. The compounded growth rate for organic poultry production in the United States over the four years leading to 2019 was 46%. Over the same period, organic corn and organic soybean acreage grew at a rate of 34.8% and 27.6%, respectively.
  • Organic corn and soybean acreage amounted to 639,000 acres in 2018. Mr. Golbitz estimates that 1.3 million acres of additional organic soybean and corn farms will be required over the next five years to meet demand and reduce dependence on imports.

Research Strategy

Data specific to seed sales trends in the eastern corn belt is limited in the public domain. However, we have provided trends specific to corn and soybeans, the two major crops in the eastern corn belt. Wherever possible, our research team has highlighted regional differences in the trends. The trends have been identified on the basis of USDA data.
Part
02
of five
Part
02

Market Size and Growth - United States Seed Industry

The US seed market is currently worth over $12 billion and is expected to grow by 8.73% from 2019 to 2023.

FINDINGS

  • The North American commercial seed market was worth $16.21 billion in 2017.
  • According to the International Seed Federation, the United States had the largest seed market in 2013 at $12 billion. The United States still leads the global seed market.
  • The US seed market is expected to see a compound annual growth rate of 8.73% from 2019 to 2023. Specifically, it is forecast to grow by $12.28 billion during this period. The genetically modified (GM) seeds segment is forecast to account for over 50% of this growth.
  • In 2017, the US exported $1.7 billion worth or 411,841 tons of seeds for sowing. The same year, the US imported only $1 billion worth or 204,188 tons of seeds for sowing.
  • The US seeds market is concentrated; only a few key players dominate the market. Bayer AG and Corteva are some key players dominating this market.

RESEARCH STRATEGY

Using publicly accessible information, we sought the market size and projected growth for the US seed industry in a number of ways, none of which proved sufficient to generate an exact picture of this market.

Our first strategy involved exploring trusted market research reports and industry consultancy sources including IBIS World, Market Research, and Markets and Markets. These sources offered many insights into the global industry as a whole and acknowledged that the US accounts for a significant share of the market. However, none of the sources made mention of any segmentation that would allow us to isolate or hone in on the US market specifically.

Next, we turned to news articles published by industry-related websites like Seed World. Although these reports provided relevant information on the North American seed industry, no hard data was offered on the US market alone. We also reviewed pieces by agricultural associations such as the International Seed Federation. This association indeed offered the US market size for seeds. Upon closer examination, it was found that this data was published in 2013, making it outdated.

Another approach we employed involved generating a list of the companies dominating the US seed market and exploring their publicly disclosed financial statements and self-descriptions. We had hoped we could use this information to extrapolate a picture of the market. We found little success with this strategy. Many such companies are privately held and do not release that information and the few we could acquire did not isolate seeds from their other agricultural products and services in reporting. This rendered any estimate arrived at from this approach too inaccurate to be useful.
We also combed through government websites like the USDA to no avail. Since not enough information exists in the public sphere to determine or estimate the current market size of the US seeds industry, we provided the outdated data we found.
Part
03
of five
Part
03

Demographics - Commercial Seed Buyer: United States

A typical commercial seed buyer from the eastern Corn Belt and Delmarva region of the US is a White male above 50 years old. The average size of a farm owned by this individual is 230 acres.

Age, Gender, and Race

  • Commercial seed buyers in the eastern Corn Belt and Delmarva area tend to be farmers and farm producers.
  • In the eastern Corn Belt and Delmarva area, farmers tend to be White. In the US at large, over 90% of farmers are White. Less than 5% of US farmers are Hispanic, while less than 2% are Black.
  • Although women are significant decision makers on farms, most farmers in the eastern Corn Belt and Delmarva area are men. Women account for 36% of farm operators in the US, at large.
  • In the US Eastern Corn Belt and Delmarva area, the average age of a farm producer is 58.6. In the US, in general, the average age of a farm producer is 57.5.

Average Farm Size

  • Currently, about 600,000 US farms are between 10 to 49 acres, while 590,000 are between 50 to 179 acres.
  • Roughly 300,000 US farms are between 180 to 499 acres, while 290,000 are between 1 to 9 acres, and 130,000 are between 500 to 999 acres.
  • In Indiana, the average size of farms owned by farmers is 264 acres, with the median size being 59 acres.
  • In Illinois, the average size is 372 acres, while the median size is 96 acres. The average size of a farm in Delaware is 228 acres, while the median size is 37 acres.
  • In Maryland, the average size of a farm is 160 acres with the median size being 40 acres.
  • A farm in Ohio is 178 acres on average, while the average size of a farm in Virginia is 180 acres.

Income Level

  • The average income per farm in the US is $43,053.
  • In Delaware, it is much higher at $277,316, while in Illinois, it is $69,418, and in Indiana, it is $50,171.
  • In Maryland, the average income per farm is $52,997. In Ohio, it is $29,674.
  • For farmers in Virginia, the average income per farm is $19,306.

RESEARCH STRATEGY

Thorough research across market reports, company websites, and news publications revealed that a typical commercial seed buyer eastern Corn Belt and Delmarva area of the United States is a farmer or producer. To determine the typical age, gender, income level, educational level, and average farm size owned by these individuals, we turned to government resources, including the official website of the United States Department of Agriculture (USDA). There, we found state-specific and nationwide data on the requested information. However, the educational level of farmers in the US or by state was not provided.

Next, we examined agriculture-related publications such as Feed Stuffs. These publications only had reports summarizing the comprehensive census by the USDA. Nothing on the educational level of farmers in the eastern Corn Belt and Delmarva area of the United States was offered.

As a last resort, we perused US agriculture associations like the American Farm Bureau Federation. These resources only provided data on the average income of US farmers. The lack of information on the educational level of these individuals led to the conclusion that it is unavailable on the public domain. Please note that in most cases, we had to address the eastern Corn Belt and Delmarva area by state as opposed to addressing the region in general.
Part
04
of five
Part
04

Competitors to Seed Consultants

CROPLAN, DEKALB Asgrow Seed, and ProHarvest Seeds are some strong competitors to Seed Consultants in the US. These competitors offer a variety of high-performing seeds and are based in the US.

Seed Consultants

DEKALB Asgrow Seed

ProHarvest Seeds

  • ProHarvest provides extensive "high-quality products that work best for the region, that include the newest genetics, and that produce high yields."
  • Like Seed Consultants, ProHarvest Seeds offers a variety of soybean, alfalfa, and corn seeds.
  • The company is headquartered in Ashkum, Illinois. Its website can be found here.

CROPLAN by Winfield

  • Founded over two decades ago, CROPLAN's main mission is to offer quality seeds to farmers.
  • Just like Seed Consultants, the company provides a broad selection of high-performing alfalfa, corn, and soybean seeds.
  • It is headquartered in Arden Hills, Minnesota but caters to customers in all parts of the US.
  • CROPLAN is Winfield's brand of high-performing seeds. Its website can be accessed here.

RESEARCH STRATEGY

To gather true competitors to Seed Consultants, we examined the company's website to understand what it does and offers. Knowing that Seed Consultants offers corn, soybean, and alfalfa seeds, in addition to financing options, we looked for US-based companies doing the same.
Part
05
of five
Part
05

Competitors to Seed Consultants; The Findings

Seed Consultants lures farmers in the Eastern Corn Belt region, while ProHarvest Seeds targets farmers in the Midwest. DEKALB Asgrow Seed and CROPLAN target farmers in all parts of the US.

Seed Consultants

  • Seed Consultants supplies high-performing alfalfa, corn, and soybean varieties that have been bred and tested to "yield specifically for the Eastern Corn Belt’s unique soil types and growing conditions." The company claims its seeds have excellent high yield potential and are resistant to disease.
  • For over a decade, it has been the only eastern Corn Belt seed company that has won 41 State yield contests and four National in the NCGA Yield Contest.
  • Rather than just offering seed varieties like competitors do, Seed Consultants provides financing options with reasonable interest rates ranging from a fixed 0% to 10.5% depending on when the purchase is made and approved. It also offers consulting services. The company claims it is focused on being "Seed Consultants first; salesman second."
  • Seed Consultants targets farmers in the Eastern Corn Belt region, including Western Indiana, Iowa, Eastern Kansas, and Eastern Nebraska.
  • Seed Consultants is owned by Pioneer Hi Bred International, which has an estimated revenue of $3.02 billion.

DEKALB Asgrow Seed

  • DEKALB Asgrow offers corn, silage, sorghum, alfalfa, and canola seeds and products. Its corn seeds feature 100% exclusive genetics and strong agronomics, while its superior silage products help increase milk production.
  • DEKALB claims its grain sorghum varieties have exceptional standability and threshability. Its higher quality alfalfa seeds supposedly come with maximum yield potential and increased weed management. The company's spring canola products have maximum yield potential and are shatter-resistant.
  • For some of its seeds, the company has a Disease Shield technology which provides broad protection against the top yield-robbing seed diseases without sacrificing yield potential. It offers other technologies - such as TruFlex - that are tailored for each variety depending on what customers need.
  • DEKALB Asgrow has exclusive financing offers. Currently, customers can receive a 5% seed discount and a prime -1% variable interest rate when they leverage its Performance Financing. Its Fixed 0% Interest Financing (FARMFLEX) includes a fixed 0% interest rate on eligible seed purchases.
  • The company targets farmers in all parts of the US, including Wisconsin, Texas, North Carolina, Missouri, Illinois, Indiana, and North Dakota.
  • DEKALB Asgrow is owned by Monsanto which has a revenue of $14.6 billion. According to the company's annual report, the global DEKALB brand alone had sales of $6.27 billion in 2018.

ProHarvest Seeds

  • ProHarvest offers a wide selection of high-quality soybean varieties, corn hybrids, wheat varieties, moews corn hybrids, forage seeds, and cover crops. The company claims its products have been treated with the best seed treatments.
  • Its corn hybrids include conventional hybrids, SmartStax, Agrisure Viptera™ 3111, Genuity, Herculex, and Roundup Ready. Soybean varieties by ProHarvest include LibertyLink, Genuity, Roundup Ready, and Roundup Ready 2 Yield.
  • Annually, ProHarvest tests its products to make sure that they meet strict performance standards and deliver excellent performance consistently. The company makes seed recommendations for clients as well, based on climate, herbicide requirements, length of growing histories, soil types, and crop histories.
  • It is an independent, family-owned seed company that claims to listen to customers and offer the best customer experience. ProHarvest claims it has access to the industry's "most advanced seed genetics, trait innovations and seed treatments."
  • ProHarvest targets farmers in 15 US States throughout the Midwest, including Missouri, Iowa, Indiana, North Dakota, Minnesota, and Wisconsin.
  • The company has an estimated revenue of $3.58 million.

CROPLAN by Winfield

  • The CROPLAN brand by Winfield offers a broad selection of high-performing alfalfa, canola, corn, corn silage, cotton, forage sorghum, soybean, sunflower, and wheat seeds. According to the company, these seeds are handpicked from the best genetics in the industry. It offers a multitude of varieties and hybrids that are specially adapted to local conditions.
  • The company also offers different tools to help farmers optimize ROI potential. Some of these tools include the R7 Tool, an "industry-leading decision Ag solution that provides unbiased product performance information and critical field data" and the NutriSolutions 360® System, a complete "plant nutrition management program comprised of various products, tools and expertise."
  • Compared to competitors, the CROPLAN brand includes a broader selection of seeds and varieties.
  • Currently, Winfield caters to over 1,000 locally independent and cooperative agricultural retailers, as well as, their grower clients across the US. It targets retailers and farmers in various parts of the US.
  • Winfield is owned by Land O’Lakes, Inc., which had a 2018 revenue of $14.9 million.

RESEARCH STRATEGY

Seed Consultants, in addition to several other companies mentioned above either have parent companies or are privately-held. For the ones owned by parent companies, we leveraged the annual reports of these parent companies to find a breakdown of revenues for each of their subsidiaries. These parent companies only provided cumulative revenues. We also perused business publications like Bloomberg and Yahoo Finance, but we still found nothing.

For the privately-held companies, we scoured official websites and social media pages. There, we found that these companies do not offer their revenue to the public. We attempted examining financial publications like Inc and Forbes for any mention of their revenue to no avail. As a result, their estimated revenues have been provided.
Sources
Sources

From Part 01
Quotes
  • "Increases in corn and soybean seed prices suggest that dominant firms may be extracting supracompetitive prices from farmers. In 2010, a DOJ listening tour found widespread concern among farmers about the rising cost of seed as a result of the rise of GM technology and the powerful firms that control it.63 Charles Benbrook, research professor at Washington State University’s Center for Sustaining Agriculture and Natural Resources, has observed that in a competitive market, widespread adoption of new technology such as GE seeds leads to a decrease in that technology’s price; however, the cost of GE seeds increased 230 percent from 2000 to 2010.64 Specifically, the seed cost of planting one acre of soybeans increased 325 percent between 1995 and 2011, while the cost of planting an acre of corn increased 259 percent. Meanwhile, yield only increased 18.9 percent and 29.7 percent, respectively, over the same period.65"
Quotes
  • "Economists say that an industry has lost its competitive character when the concentration ratio of the top four firms is 40 percent or higher. The seed industry continues to exceed this benchmark not only across the entire global supply, but across crop types as well. For example, even before the Big 4 merged, three firms (Monsanto, Syngenta, and Vilmorin) controlled 60 percent of the global vegetable seed market."
  • "A number of studies suggest increased market domination removes companies’ incentive to innovate. The U.S. Department of Agriculture’s own data confirms this trend, finding that fewer players mean less innovation. As the seed industry became more concentrated, private research “dropped or slowed” and those companies that survived consolidation are “sponsoring less research relative to the size of their individual markets than when more companies were involved.”"
  • "Seed represents profound potential for improving our food and agricultural systems. Plants can be bred to thrive without pesticides and to naturally resist disease, and to be adaptable to changing climates and environmental conditions; they can also be bred to improve the quality of our food. But to realize all of this potential, we must create structural changes to how seed is managed and shared."
  • "Howard’s newly updated seed chart is similar but even starker. It shows how weak antitrust law enforcement and oversight by the U.S. Department of Justice (DOJ) has allowed a handful of firms to amass enormous market, economic, and political power over our global seed supply. "
Quotes
  • "Wild weather delayed plantings by the most on record, a strong dollarNSE -3.02 % hurt exports, the trade war with China hit demand for the corn-ethanol industry and early snow meant some growers couldn’t even finish harvesting. Despite it all, the crop proved resilient."
Quotes
  • " Organic poultry production more than doubled from 2015 to 2016 and grew another 50% in 2017."
Quotes
  • "The Corn Farming industry declined over the five years to 2019, continuing its fall from historic highs in 2012. The primary function of the industry is the growing of corn for consumption and as an input for a variety of products. The Energy Policy Act of 2005 provided the impetus for the United States to begin weaning itself off its heavy dependence on foreign oil and to begin using corn as a renewable energy source to make ethanol instead. The Energy Independence and Security Act of 2007 further raised demand for industry products by setting the goal to produce 36.0 billion gallons of biofuel by 2022. These regulations created a significant new market for corn, leading corn production to skyrocket prior to the past five years. "