When Dow AgroSciences announced its intention to acquire Dairyland Seed Company, a 100-year-old, family-owned seed company, the news wasn't exactly shocking. After all, seed companies have been aligning themselves with the major trait providers for several years.
It is simply further evidence that the seed industry will continue to consolidate in the coming months and years. The main reason for that consolidation is producers' rapid adoption of trait technology.
“The number-one concern of our owner group was how long Dairyland Seed could continue with the current business model, says Tom Strachota, CEO of Dairyland Seed and soon to be general manager for the Dow AgroSciences business. “We were competing in a marketplace where biotech traits were becoming a driving force behind our sales.”
Partner with a leading trait provider, and there's access to trait technologies that independent seed companies can't develop on their own. And Dow, in return, now has access to world-class corn, alfalfa and soybean germplasm, as well as another outlet for the company's traits.
It's not as if Dairyland jumped at the first bit of interest that came down the road, and its response came with some careful forethought by the Strachota family. “We had many companies express interest over the years, from a host of directions,” Strachota says.
Will this trend continue? Absolutely. While no one will say who is on the selling block, a good bet is that more seed companies will be courting partners in the coming months. Trait providers are on the hunt to acquire other seed companies that fit into their business models, and seed companies are positioning to ensure they are around for the next 100 years.
Mark Moore is a regular contributor to Farm Industry News.