In an industry where each day seems to bring a new merger or acquisition, we think the future for regional and independent seed companies is very bright. Here’s why.
Consolidation Creates Opportunity
Farmers want choices. Recent volatility in the industry includes the major mergers which formed three global agricultural companies, nationally-owned seed brand consolidation and several other mergers and acquisitions.
Additionally, a significant reduction in regional brands occurred with Corteva consolidating from 10 to five regional brands, and AgReliant moving from eight representative brands to two in the U.S.
In spite of these changes, or because of them, regional and independent seed companies are in a great position to succeed. That’s because farmers still have a strong desire for choice.
The ability to be flexible and adapt quickly to market conditions and growers’ needs gives smaller seed companies a unique advantage. And many times, the ability to offer germplasm from multiple breeding programs rather than a single source, gives smaller companies an edge.
Farmers Aren’t as Brand Loyal
Farms are consolidating, just like the rest of agriculture, which is resulting in fewer, larger and more complex farming operations. Consequently, more people are involved in the decision-making process, including the next generation of younger growers.
With farm profits at a 12-year low, farmers continue to look for ways to maximize profitability. Because of this, we are seeing a shift of farm assets and decision-making to a generation of farmers who are more interested in having a business relationship than a personal relationship.
This change creates an opportunity for companies to identify what services and offers drive real value inside of these larger scale operations.
The result of these combined trends is a decline in brand loyalty as farmers focus on performance, service and ROI. As a whole, growers are open to new ideas and working with innovative companies that can provide measurable value and help grow their bottom line.
Regionals and Independents Stand to Benefit the Most
Farmers perceive smaller regional and independent brands as understanding their operations and being responsive to their business needs. Unique go-to-market strategies, on-farm service and support, flexible payment options and the ability to make quicker decisions give smaller seed companies a clear value proposition.
Regional and independent brands also have a local perspective and a deep understanding of the areas they serve. The ability to match the right seed to the specific soil type and unique weather patterns of the region are critical factors for increasing production potential.
As growers look to reduce input costs, they are decreasing the number of seed brands planted to maximize discounts and support. Regional and independent seed brands are in a great position to sit down with farmers and discuss cost-savings strategies based on share-of-farm seed commitments with a genetic package perhaps better suited for that grower’s particular geography.
The mergers and subsequent consolidations have resulted in fewer remaining regional brands as well as the potential for expanded licensing opportunities. So far, there is no indication that mega-seed companies plan to reduce their licensing agreements. Monsanto Chief Technology Officer Robb Fraley told a Senate hearing last month that the company’s innovations "will continue to be broadly licensed."
With the merger of Dow and DuPont, Corteva appears to be positioned to aggressively grow its licensing business, remain engaged with numerous potential seed trait licensees and broadly license Enlist E3™ soybean technology. This would greatly benefit the remaining regional and independent brands.
Rising to the Challenge
There are significant opportunities for regional and independent seed companies that want to work with larger, more complex and bottom-line focused farm operations. These smaller seed companies must continue to re-evaluate their operations, brand identities and marketing strategy to drive awareness, form meaningful relationships and offer products and services that provide a clear value proposition to farmers.
Companies that embrace these changes will differentiate their marketing, products and services and align with their core competencies to provide value to farmers. A brand that delivers value, with measurable results to back it up, will be the one that succeeds.
About Paulsen and MP Consulting Solutions
Paulsen is partnering with Matthew Paul, of MP Consulting Solutions, to bring a unique offering to independent and regional seed brands. This partnership offers a range of services, including coaching and organizational development, financial and operational analysis as well as go-to-market, branding and marketing strategies.
Matthew has unmatched experience in the seed and agronomy industry, most notably as general manager of AgVenture, Inc. and various leadership roles at Pioneer and PROaccess business units as well as John Deere Renewables.
Paulsen is a full-service marketing agency focused on building brand value for agriculture and rural lifestyle companies. Please contact Sara Steever at email@example.com to learn more.