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to the Organic Broadcaster: "We
have the seeds": Monsanto now the largest vegetable seed producer "Monsanto Company to Acquire Seminis, Inc., a Leading Vegetable
and Fruit Seed Company. Acquisition Expected to Add Near-term Income
Growth and Diversity to Monsanto's Seed Portfolio The news of Monsanto's agreement to purchase Seminis has received little attention from the media other than the financial pages, a few seed industry and anti-globalization web sites. But then again, why should it? How many consumers - of food or seed - have even heard of Seminis? And yet, as Seminis PR man Gary Koppenjan said, "If you've had a salad, you've had a Seminis product." It is estimated that Seminis controls 40% of the US vegetable seed market, 20% of the world market - supplying the genetics for 55% of the lettuce on US supermarket shelves, 75% of the tomatoes, 85% of the peppers and strong holdings in beans, cucumbers, squash, melons, broccoli, cabbage, spinach and peas. Their biggest revenue source comes from tomato and peppers seeds, followed by cucumbers, and beans. In large part these numbers reflect usage of Seminis varieties within large industrial production geared towards supermarkets, but Seminis seeds are also widely used by regional, market, organic farmers and home gardeners. Johnny's, Territorial, Fedco, Nichol's, Rupp, Osborne, Snow, and Stokes are among the dozens of commercial and garden seed catalogs that carry the more than 3,500 varieties that comprise Seminis' offerings. This includes dozens of All-American Selections, and an increasing number of varieties licensed to third parties for certified organic seed production. The brand name companies under Seminis, such as Petoseed, have developed, released, produced and distributed varieties that are common to the market farmer and even home gardener such as Big Beef, Sweet Baby Girl and Early Girl Tomatoes, Simpsons Elite and Red Sails Lettuces, Red Knight and King Arthur Peppers, Gold Rush and Blackjack Zucchinis, Stars & Stripes Melon, and Bush Delicata and Early Butternut squashes (see sidebar for other popular varieties). Many of the Seminis varieties are derived from their in-house breeding programs, as well as industry alliances with DuPont and university partnerships such as Cornell, Texas A & M, and University of California. Their F1 hybrid genetics are considered excellent in many areas including over-wintering brassicas, disease resistance in cucurbits, packing qualities in green beans, and flavor in tomatoes. "Organic farmers love our product," Koppenjan told me, "We have the disease resistance, and this is more important in organics than conventional where farmers have more disease control options." There are complex implications of Monsanto--often associated with the antithesis of the organic movement--purchasing a company that serves the organic community. This has certainly been the catalyst for emails that some catalog companies are receiving. Both Johnny's and Territorial have received strikingly similar emails with nearly the same wording, demanding that the firms reveal their Seminis' varieties, "So I can avoid them at all costs. Otherwise I'll toss your catalog." Seed catalogs may see more of this as Monsanto is a large target amongst those concerned with globalization. While voting with ones dollars can be an effective tool of change, it is also important to recognize that these are also seed catalogs that have recognized the needs of smaller organic producers, offering strong lists of regional varieties and expanding their certified organic selections. None of these companies was overjoyed with news of the acquisition and they all seemed to be in different phases of analyzing its impact. It's not an easy task. Seminis' varieties account for 11% of Fedco Seed's gross sales, and the numbers are much higher in categories like melons and squash. While Fedco's CR Lawn expressed his personal inclination to have nothing to do with Monsanto, the volume of sales demands careful consideration. Fedco is surveying its staff to decide on how to respond, with options ranging from phasing out all Monsanto-Seminis varieties to putting a "tax" on these varieties for funding regional grassroots seed development. Seminis: the history of an acquisition In the early 1990s, billionaire Alfonso Romo set out to become
the global king of vegetable seeds. Romo was a descendent of a Mexican
president, an Olympian athlete in horse jumping, bakery and beverage
mogul and owner of Ciagarrera La Modena - Mexico's largest cigarette
company. He had watched agrochemical companies gobble up seed businesses
in the larger agronomic crops like corn, and he noticed that there
was little attention being paid to the "minor crops" of
the vegetable seed industry. By 1994 he had succeeded in building
Seminis, purchasing longstanding seed companies such as Asgrow,
Petoseed (who had recently purchased the Dutch firm Royal Sluis)
and dozens of Asian seed companies. Seminis grew quickly, thrived
and went public (trading as Empresas La Moderna or ELM, the former
parent company of his cigarette firm which he sold in 1997 for $1.5
billion). According to seed industry insiders, one of their strengths
was also their weakness. Early on the company benefited from internal
competition, retaining the brands such as Peto and Asgrow and allowing
Seminis breeders to vie for product development and placement. This
may have led to excessive inventory - the company's list swelled
to near 6,000 varieties at one point before cutting a whopping 2,500
varieties in 1998 (and leaving more than a few farmers looking for
new varieties). In 2003 Seminis was in a financial slump, shares
slipping to near $0.50/share from previous highs over $7/share.
Fox Paine and Co. - a firm specializing not in agriculture but in
buyouts - stepped in and purchased majority control of the company
and stabilized the slide. Financial analysts and the seed trade
were waiting to see the fate of the gene giant in the hands of this
holding firm. With the Monsanto announcement, the wait is over.
Conjecture and Concern One can only conjecture to Monsanto's intent in purchasing Seminis. We can make educated projections, just as Wall Street financiers have done on news of the acquisition. Financial and agricultural professionals interviewed in the mainstream press, such as Don Basse of the commodity advisory group Agresources, surmised that the acquisition can be profitable for Monsanto only with the application of biotechnology, as Seminis conventional seed business was nearly half a million dollars in debt and continuing to lose money. Basse says that it would be logical for Monsanto to use biotech to increase the nutritional value of fruit and vegetables as opposed to focusing on shelf life or devising pest-resistant strains. Monsanto's press release noted that "Biotechnology applications could be an option, and will be evaluated in the context of Monsanto's research-and-development priorities and potential commercial business opportunities." However the main tone of the announcement focused on the trend of nutrition and healthy lifestyles. Monsanto's CEO put it this way, "The addition of Seminis will be an excellent fit for our company as global production of vegetables and fruits, and the trend toward healthier diets, has been growing steadily over the past several years." "You have to ask yourself why they (Monsanto) would decide to buy this seed company," were the thoughts first shared by Rob Johnston of Johnny's Selected Seeds, "Their Roundup herbicide patent is expiring, so their future profits are in the biotech traits…I think they're going to push and see if consumers will accept it." CR Lawn of Fedco was less certain, feeling that Monsanto would not be bold enough to try and sell this to consumers and farmers, especially after GMO wheat has been shelved for now because of the lack of perceived public acceptance. There is also speculation that if Monsanto can slowly start building the GMO veg-fruit market, then the debate over GMOs will become a moot point - as they will have made their way onto the plate and thus gained acquiescence. However, even if one does not believe that GMO vegetables will be in the Wendy's salad bar in short order, there are more immediate concerns that Seminis will drop many of the hybrid and open-pollinated varieties that regional farmers currently depend on. Prior to the buyout their main product focus had continued to move towards supplying genetic for the larger centers of production. "It's not like they're still breeding tomatoes for the Northeast" Rob Johnston noted. Still, Johnston conceded that it would be difficult for Johnny's to replace some of the Seminis varieties that their customers turn to year after year, such as Gold Rush Zucchini or King Arthur Pepper. And yet he feels certain that we will see cuts coming. Johnston said he was disappointed with the news, in part because he likes not only the quality of product, but the Seminis breeders themselves, "I worry about the future of their breeding programs - that they (Monsanto) will curtail creative directions and focus them on a Monsanto agenda." Organic Seed Alliance has received several emails and phone calls from concerned farmers. Jim Fruth, a Minnesota farmer, contacted us asking us for assistance in "dehybridizing" a Seminis hybrid pepper that has recently been dropped. Like many farmers Fruth has integrated particular varieties into his production and marketing plans, and he says he is now without a variety that is, he wrote, "a vital part of my livelihood." Nash Huber of Sequim, Washington said that after vast trialing he had found that Seminis cabbage varieties have excellent post-harvest holding capacity, extending his marketing season and farm profitability. He did not have high hopes of finding replacements. Mark Hutton worked as a squash and eggplant breeder for Peto seeds before they were purchased by Seminis. From his perspective, farmers like Fruth and Huber should start trialing new varieties soon, "Monsanto is going to look at this from a bean-counter perspective. Low margin varieties get dropped, and this means anything that's not for large commercial production." One seed catalog owner I spoke with believes that farmers should not react to the news by seeking non-Monsanto/Seminis seed sources. He says that there is no indication that Monsanto will drop these varieties, and that rushing to find replacements isn't an answer "Where are you going to go? Some of these varieties are irreplaceable. Are we really going to drop or boycott some of the best material out there because we don't like Monsanto?" He warned that doing so might only accelerate the downsizing of the Monsanto product list, leaving farmers in a real lurch. "The process of breeding alternatives to these (varieties) is a long, long term project. And what are you going to plant in the meantime?" Most of the people I spoke with agreed that there are few options - and this is what is making them react to the news so passionately. In a healthy competitive market, a producer has more than one source to choose from, giving the producer freedom to switch suppliers if they have an issue with their traditional supply chain. In a highly consolidated system, this choice is not easily apparent, and may simply not exist. So is there real reason for worry? Panic? Downright revolution? Or is this just another consolidation and movement towards a "bigger is better" economy that is unavoidable and should be accepted, as we might sigh but settle for a Walmart on the edge of town (and occasionally even find ourselves secretly thankful for the one-stop shopping). Consolidations in the seed world are nothing new. The impact is predictable: A few breeders lose their jobs, farmers scramble to find another variety to fit their production system but something eventually comes along, stockholders either make or lose money, and in the end food still winds up on the plate of most American households at 7am, noon and 6pm. We've been here before in recent times, and we've seen even bigger control of seed ownership and distribution, although not in any of our lifetimes. 150 years ago there was only one mega-distributor of seeds in this country. Lobbying and activism brought about its demise. That distributor was the United States government, and the rabble rousers who broke that monopoly were none other than the American Seed Trade Association - whose largest modern financial benefactor is none other than Monsanto. A look back at this period might provide us with insight for today, and the future of seed. A Brief History of the Development of the Seed Industry in the
United States - The Shift from Public to Private Seed Systems The government's objectives in funding such a massive movement of seed came from the recognition that feeding an expanding continent would require a diversification of foods. To the early colonies, the introduction of wheat, rye, oats, peas, cabbage and many other vegetable crops was as critical to food security as was the adoption of corn, beans and squash. Immigrants were encouraged to bring seed from the old country, founding fathers such as Thomas Jefferson engaged in seed exchange societies, and by 1819 the US Treasury Department issued a directive to its overseas consultants and navy officers to systematically collect plant materials. The first commercial seed crops were not produced until 1866; cabbage seed for the US wholesale market produced on Long Island. The industry flourished to some degree, but early seed trade professionals felt their growth was stymied by the US government programs - as well as the self-replicating nature of their product (the factory contained in the product). In 1883 the American Seed Trade Association formed and immediately lobbied for the cessation of the government programs. They developed powerful allies, such as Grover Cleveland's Secretary of Agriculture, J. Sterling Morton, who wrote that the government giveaway was "antagonistic to seed as a commodity-form and in direct competition with the private seed trade." But the program was very popular with constituents and the USDA's seed budget was kept intact - at one point counting for a full 10% of their overall annual expenditures. In the early part of the twentieth century, the first wave of hybrids
began to provide seed companies with a potential increase in product
profitability - as farmers would now need to return to the seed
distributor for materials each year. However, most of the hybrid
development was occurring at land-grant universities, and the universities
refused to give the companies exclusive rights to the seed. Again
they industry felt its growth was hindered by federal programs and
complained of unfair trade practices. There was also growing data
pointing to a slowing in yield increases from seed developed in
government programs. The industry used this to strengthen their
argument for the privatization of seed development to promote greater
food security. These changes in the public role, along with improvements in hybrid techniques led to the growth of the seed trade following World War II. The trade was well represented during this period by regional companies. The conversion to mono-cropping and large scale corporate agriculture had not yet moved into full swing. The Santa Clara valley grew veggies and fruit, not internet startups, and Americans still planted their Victory gardens. The seed trade reflected this diversity in food production. In the 1960s a few larger seed firms began to purchase smaller companies, mostly to acquire strong hybrid holdings, but the consolidations of this period were minor compared to the frenzy that would come with a Supreme Court ruling on June 16, 1980 in the case of Diamond vs. Chakrabarty. Prior to the Chakrabarty decision a plant (or animal) could be owned, but the genetics could not. This case cleared the patenting of life forms on the bases of their genetic coding. The PTO granted over 1800 such patents following the ruling. Companies that had no historical seed interests began purchasing seed companies, primarily chemical and pharmaceutical firms. In a few short years there were billions of dollars in mergers and acquisitions, with little to no regulatory oversight, creating for the first time a majority ownership of plant genetics by a few multinational companies. No other natural resource - marine, timber, minerals - has ever shifted from public to private hands with such rapidity, such intensity of concentration, and so little oversight. The Immediate and the Future Adaptability has historically been an integral part of the organic movement- responding to customer inquiry and opinion, personal service (a face on the food), localized and decentralized - all traits that help make the organic sector healthy and have promoted its vigorous growth. "The organic seed world is where the organic produce market was twenty years ago," Nash Huber told me, and he should know, with over twenty years in organic produce and a decade as a seed producer. "Produce quality wasn't always so great then, but we worked it out and now are better than the conventional systems. The potential in seed is that the customers - we farmers - will see that in the long run an organic seed trade will serve us." Farmers like Nash are investing in the organic seed trade. He works as an educator in Organic Seed Alliance's WSARE organic seed production trainings, is leading a participatory plant breeding project with the Alliance, produces seed for the organic seed trade as well as his own on-farm use. Carrots are the main cash crop on his 400 acre farm, and he produces 80% of his own seed to insure quality and availability. "I can't afford to have a company drop my source." Seed companies and farmers are not alone in their rising to meet the need for changes in the seed world. In 2003 over 70 university breeders, representatives from farmer-based non-governmental organizations, and policy specialists met at the "Summit for Seeds and Breeds for the 21st Century." The breeders who represented a diverse set of crops, from schools that have traditionally served clients of large scale Green Revolution style agriculture, called on each other to "reinvigorate public breeding" to meet the needs of organic and sustainable agriculture. The group will host a full-blown conference in Ames in September of 2005. While the seed consolidation trend seems to have reached a particularly dark moment in the Monsanto-Seminis acquisition, it may also serve to fuel a momentum in the developing organic seed community. The issues are immediate and fraught with complexity; the answers are long term and require commitment. CR Lawn of Fedco, said "we need to keep working on creating a farmer breeding community. But this is long slow work. You find and replace varieties one by one. You work slowly in the direction you want to go. Seed work is slow work." We'd best get to it. * There were garden or horticultural catalogs, such as Landreth - founded in 1794 - but not a commercial trade that produced and developed varieties for farmers. And, the garden catalogs seed, such as Landreth's, was primarily imported from Dutch, French or English seed firms. For a list of farmer-led seed projects that serve organic and ecological agricultural systems please check the links on: www.seedalliance.org Matthew Dillon is the Executive Director of Organic Seed Alliance (OSA) in Port Townsend, Washington and a member of the Seeds & Breeds Planning Committee. OSA's educational programs train farmers in seed production and crop improvement. The Alliance also works with the seed trade and farmers to develop Participatory Plant Breeding for organic systems.
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