Already in 1997, the FAO pointed out that out of 7000 species historically used as food, humanity focuses on 30 crops to satisfy 90% of calorie consumption (FAO, 1997). Wheat, rice and maize provided 50% of calories alone (FAO, 1997). In international seed markets a few crop species are disproportionally important. Grains like maize, wheat and rice currently represent almost half of global seed production (IMARC, 2019). Using less and less available edible plant species for global human consumption has manifested as a trend in the 20th century.
At the same time, the seed value chain has grown more complex since seeds are not produced in farming communities anymore. Breeding, seed treatment, multiplication, distribution, as well as laboratory screening in between can all happen under one roof, but are mostly divided between specialized companies (Mammana, 2014). The Canadian Agriculture and Agri-Food department gives an illustrative example for a seed value chain on its website.
The value of the global seed market was estimated at 60-67 billion USD in 2018 and is expected to be growing for the next years (IMARC, 2019; MI, 2018b). North America compromises the largest market of global seed sales, but Asian and Pacific regions are identified as the most promising investment markets in the near future (MI, 2018b; AMR, 2017).
Seed market power is located within North America (one third of the market; IMARC, 2019; MI, 2018b), Europe and Asia, which all brought forth multinational agrochemical and seed corporations. In 2017, of the top 20, two were based in the US, 12 in Europe (France, Netherlands, Germany and Denmark) and six in Asia (China, Japan and India) (Zhang, 2017). The most successful corporations are Bayer-Monsanto, DowDuPont (technically divided into three sub-corporations after the merger (see http://www.dow-dupont.com/)), Syngenta (ChemChina) (IMARC, 2019). During the last years the global seed market has been a stage for spectacular mergers and acquisitions between the most important players in the sector (DowDuPont, Syngenta/ChemChina, Bayer-Monsanto).
Consolidation processes in seed markets
This consolidation is a concern for the global seed industry as it leads to economic inefficiency and market failures. Estimates of the degree of consolidation (in 2012) vary from 48% (Ragonnaud, 2013) to 58% (ETC-Group, 2013) market share of the top four companies or 50% for the top eight companies in 2018 (MI, 2018b). It needs to be noted, however, that some of the corporations are specialized on certain crops (for example, two Dutch companies focusing on vegetables and turf grass respectively; Zhang, 2017) and control market shares exceeding the general estimates in those particular areas.
The consolidation trend is unlikely to change in the near future, unless political steps are taken, as new companies are unlikely to enter the market due to economic entry barriers such as required investment, genetic resources and experience (Ragonnaud, 2013). It is logically consistent then that markets for genetically modified seeds tend to be more consolidated than conventional seed markets (Bonny, 2014).
For example, due to its feature as a non-GMO (GMO = Genetically Modified Organism) market, the EU seed market is less consolidated than worldwide markets (Mammana, 2014). As biotechnology plays almost no role in the European market, it has prevented stark consolidation. However, while the overall EU market is quite diverse, concentration processes do occur for specific countries and crops (Mammana, 2014). Vegetable and maize seed markets are highly consolidated (Mammana, 2014), whereas 50% of the cereals in the EU markets are compromised of saved seeds, meaning that farmers do not buy them, but re-invest parts of last year’s produce (Vilmorin & Cie, 2013). One explanation for this discrepancy is the different effect of breeding efforts on crops. While maize reacts highly positive to hybridization regarding yield, promising wheat hybrids have not yet been designed. The market power of the European seed industry is big enough, however, to expedite notable price increases on farmers: seeds have gotten 30% more expensive between 2000 and 2008 alone. (Mammana, 2014)
Another issue related to global market consolidation are so-called crop orphan sectors: As corporations tend to concentrate their R&D efforts on widely used crops with high promises for returns on investment (due to mass), they neglect less profitable, but regionally vital crops (e. g. African root crops) (Bonny, 2014). With current consolidation processes, smaller businesses, which have so far cushioned this problem by breeding on minor crops, might get absorbed in future.
It should be borne in mind, though, that from the perspective of the total food chain, consolidation of the seed industry is not the most troublesome factor: “Despite the rapid growth and significant weight of the top agrobiotech companies, the influence of downstream sectors on the food chain remains dominant.[…] [Those sectors] act powerfully upon the entire food chain, notably through their requirements and their influence on consumption patterns, as well as on agricultural and food prices.” (Bonny, 2014).
Specifics for genetically modified (GM), conventional and organic seed sectors
Reliable political and scientific sources estimate GM seeds accounting for between a third and almost half of total seed sales (Bonny, 2014; Ragonnaud, 2013). The success of GM seed over conventional seed varies considerably depending on crops. While GMOs are already globally prevalent for cotton and soybeans, other important staple and cash crops (like wheat and rice) appear to exhibit negligible shares (Ragonnaud, 2013). Also, GM seeds are not adopted evenly throughout all regions and countries. In contrast to Europe, where GM seeds are almost irrelevant due to regulations and public rejection, genetically modified varieties reached wide adoption rates (over 90%) for various cash crops in North and Latin America (Ragonnaud, 2013; TMR, 2017). The second sector, conventional seeds, can roughly be red as the negative image of GM seeds – whichever market shares are not comprised of GM seeds, are roughly conventional seeds. The third sector, organic seeds (the term refers to seed produced under organic conditions before sold (Art. 12 lit. i, European Organic Regulation)) is currently almost negligible (MI, 2018a). However, as it might mark a turn in global agricultural paradigms, it is worth a closer look.
The organic seed sector
Organic seeds constitute a minor share of about 2,4-2,7% (own calculations derived from IMARC, 2019; MI, 2018a; MI, 2018b) in the global seed market. However, it is expected to grow substantially in the next years, driven by an increasing consumer demand (TMR, 2017). The US and Canada are currently the biggest organic seed markets.
The organic seed market is less consolidated than the conventional and GM markets (MI, 2018a). Some of the leading companies are subsidiaries of corporations, for example HILD which belongs to Bayer-Monsanto. Most of the organic seed market is composed of a variety of smaller, regional seed companies, however (MI, 2018a; GVR, 2016). Vegetable seeds account for the largest share of organic seed sales. This is a disparity to the conventional and GM seed markets, where grains are the most important crops. For organic seeds, the breeding process, as well as parent material can be conventional and hybrids can be used unless further restrictions of organic growers associations apply, e. g. Bioland, Demeter, etc.. Some countries and regions, e. g. the EU, require organic producers to use organic seeds, if available, others leave the decision to the farmers, e. g. the US. Although minor breeding programs exist dedicated specifically to open pollinated, purely organic varieties (= organic breeding), more than 95% of global organic produce stem from conventionally bred varieties (Lammerts van Bueren et al., 2011).
More transparency needed
In general it can be remarked that the seed industry keeps its secrets and the information officially disclosed is patchy (Mammana, 2014). Market research institutes hold relevant data, but detailed information is not freely available. Therefore, with a lack of official data and due to its political nature, discussions on seed market shares and consolidation in the industry are controversial and normative. Two opposing factions argue, one for a further industrialization of seed supply and one for seed regimes with room for alternatives. Therefore, further unbiased information and transparency is needed in order to give a sound assessment of current and future developments of the seed market as a basis for an objective and productive discussion.
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Bonny, S. (2014). Taking stock of the genetically modified seed sector worldwide: market, stakeholders, and prices. Food Security, 6(4), 525–540. https://doi.org/10.1007/s12571-014-0357-1
ETC-Group. (2013). Putting the Cartel before the Horse…and Farm, Seeds, Soil and Peasants etc: Who Will Control the Agricultural Inputs?, 2013 (Communiqué No. 111). Retrieved from http://www.etcgroup.org/putting_the_cartel_before_the_horse_2013
FAO. (1997). The State of the World’s Plant Genetic Resources for Food and Agriculture. Retrieved from http://www.fao.org/3/a-w7324e.pdf
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Authors: Nina Gmeiner, Svenja Puls