Industry giants plant seeds of growth with biotechnology
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BY ART HOVEY / Lincoln Journal Star
PHILLIPS — The 75-foot high conditioning tower and the robotic arm neatly stacking sacks on a wooden pallet Tuesday certainly say something about the sizable investment Syngenta and other giants of the seed industry have been making lately.
But it’s the biotechnology breakthroughs inside this growing pile of seed sacks west of Aurora that are more responsible for consolidation that has made Hoegemeyer Hybrids at Hooper the last of its kind in Nebraska.
“We’re really the only traditional independent left,” said Chris Hoegemeyer, a vice president at company headquarters and part of a fourth generation of the business founded 75 miles north of Lincoln in 1937.
As Hoegemeyer sees it, exclusive status comes largely because of the cost of marketing new products and other companies’ growing array of products with insect resistance, herbicide tolerance and other genetically enhanced traits.
Getting just one new innovation over all the production and regulative hurdles can cost from $20 million to $50 million. “It’s a very, very expensive proposition to do research,” he said.
While Hoegemeyer talked by telephone about a trend that has factored into the recent sales of such familiar seed-corn names as Garst, Golden Harvest and Lincoln’s NC+, Nebraska Economic Development Director Richard Baier and others gathered 85 miles west of Lincoln for the unveiling of Switzerland-based Syngenta’s $4.7 million upgrade to its Phillips corn plant.
Baier called seed corn “a huge factor in economic development in this state” and handed over ceremonial pens to Syngenta’s Bill Hunter and Ed Herlein as he quoted Gov. Dave Heineman.
“He said, ‘Please keep writing checks and investing in Nebraska,’” Baier said.
Plant Manager Hunter referred to the upgrade Tuesday as “the single largest investment since the reorganization of Syngenta Seed.”
As described in media invitations, the project is designed to improve seed quality, provide for precision seed treatments and increase seed-conditioning capacity to 650,000 bags per year.
The robotic arm at Phillips is a signature piece of technology that does some of the heavier lifting for 26 employees.
Herlein cited a commitment to “improve people’s lives by making a significant investment in agriculture.”
Syngenta, also a major force in agricultural chemicals, is doing that on a worldwide scale that involves 2004 sales of $7.3 billion, 20,000 employees and a decision to honor those employees by planting 20,000 trees in Africa.
In the United States, said Herlein, “what we’re about is offering choices to the American farmer.”
Viewed in broader terms, Tuesday’s ceremonies mark a concentration in ownership in seed corn that has given Syngenta, DuPont-Pioneer and Monsanto a 70 percent share of all seed-corn sales.
There’s no big secret about the driving force, said Tom Gahm, Syngenta’s director of communications. “Biotechnology is really the area that makes the difference in seed companies,” he said.
More outlets mean a bigger base to put biotechnology traits in seed.
As recently as 10 years ago, Hoegemeyer said from Hooper, there may have been as many as 15 independent seed-corn companies based in Nebraska. Just in the past two years, “I could give you a whole list” of those that have been acquired.
Golden Harvest joined the Syngenta fold last year. Monsanto picked up NC+ for $40 million in early 2005 and added previously employee-owned Fontanelle of Fremont last month.
Lincoln crop consultant Dale Flowerday said corn is the centerpiece of the whirlwind of activity because companies can charge farmers as much as $200 a bag for their premium biotech products.
“It’s about corn,” Flowerday said, “because that’s where the money is.”
In many cases, including Garst and Golden Harvest, the seed is still marketed under familiar names and, according to Syngenta’s Hunter, to largely independent marketers of those names.
“Basically, they are our customers,” he said.
Flowerday put a different slant on name retention.
The industry is in consolidation mode, he said, “because they’re trying to buy up the loyalty of the Humpty Dumpty seed corn companies and the Bo Peeps — and still maintain the image of a local company.”
Reach Art Hovey at (402) 523-4949 or ahovey@alltel.net.
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