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Proceedings of the Fifth Asian Regional Maize Workshop - Search ...

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To recover value, seed companies can <strong>the</strong>oretically charge an amount up to, but not exceeding,<br />

<strong>the</strong> value <strong>the</strong>y add. Farmer benefit is a function <strong>of</strong> <strong>the</strong> value added to improved seed. The<br />

farmer should not get less than 3 times (preferably 5 to 6 times) <strong>the</strong> return on his investment in<br />

seed. Depending upon <strong>the</strong> complexity <strong>of</strong> <strong>the</strong> cross and <strong>the</strong> amount <strong>of</strong> value added, hybrid seed is<br />

generally priced at 10 to 30 times <strong>the</strong> value <strong>of</strong> <strong>the</strong> crop's commodity price.<br />

If a seed company is to become successful, farmers must share in <strong>the</strong> value added (farmer's<br />

benefit). The seed grower must benefit by earning more than what he would from a commercial<br />

crop. And, <strong>the</strong> seed company must benefit by earning an acceptable return on investment. Farmers<br />

will pay for hybrid seed if it benefits <strong>the</strong>m regardless <strong>of</strong> its price premium. Farmers in <strong>the</strong><br />

developing world have centuries <strong>of</strong> crop growing experience, even if <strong>the</strong>y may lack <strong>the</strong> formal<br />

education <strong>of</strong> <strong>the</strong>ir colleagues in <strong>the</strong> developed world. Higher input levels are no disincentive to<br />

use <strong>of</strong> hybrids.<br />

Key words: Hybrid - Seed - Industry, IPR, PVR, UPOV convention.<br />

Intnoduction<br />

The seed industry in <strong>the</strong> developing countries is in an embryonic growth stage. Seed<br />

companies in those countries are typically small fami1y-owned businesses. They generally focus<br />

on multiplying and distributing seed originating from <strong>the</strong> National Agricultural Research Systems<br />

(NARS) and/or <strong>the</strong> International Agricultural Research Centers (lARes).<br />

By contrast, <strong>the</strong> seed industry <strong>of</strong> <strong>the</strong> developed world is mature. It is going through a<br />

period <strong>of</strong> transition involving globalization, restructuring and consolidation. New technologies,<br />

particularly biotechnology have, in recent years, driven this structural change. These technologies<br />

have led to shifting alliances between established seed companies and to links with complimentary<br />

industries. The acquisitions <strong>of</strong> seed firms by agrichemica1 companies, and <strong>the</strong> strategic<br />

alliances being forged between <strong>the</strong>m and food processors and biotechnology firms are notable<br />

examples.<br />

In <strong>the</strong> late 1970's and early 1980's, many multinationals (MNCs) determined that seed would<br />

be <strong>the</strong> primary carrier <strong>of</strong> new technologies and <strong>the</strong>refore began to aggressively acquire seed<br />

businesses (Table 1). By acquiring those businesses, MNCs hoped to capture margins along <strong>the</strong><br />

length <strong>of</strong> <strong>the</strong> agribusiness chain, from <strong>the</strong> laboratory to <strong>the</strong> farmer.<br />

Table 1.<br />

seed industry acquisition and merger mania - 1970s and 1980s (selected examples).<br />

Multinational<br />

Acquired company<br />

Ciba-Geigy<br />

Dow Chemical<br />

Elf Acquitaine (San<strong>of</strong>i)<br />

Hoechst<br />

ICI<br />

Funk Seed International<br />

United Agriseeds<br />

Dahlgren, King Agro, France Canada Semence<br />

Nunhems, Canners, Hi1d<br />

Garst, SES, Sinclair Mc Gill, Mi1n Marsters,<br />

Edw. J. Funk<br />

Contiseeds,<br />

Lubrizo1<br />

Rhone Poulenc<br />

Sandoz<br />

Upjohn<br />

Agrigenetics, (Jacques, McCurdy, Lynnville, Sigco)<br />

Callahan, Clause (50%), Harris-Moran (50%)<br />

Northrup King, Stauffer Seed, Vaughans, Hilleshog,<br />

Weibull, Sluis &Groot<br />

Asgrow, O's Gold, Bruinsma<br />

226

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