With the adoption of new technology and more mouths to feed, the seed industry is changing. It has experienced a faster rate of market concentration than any other farm input sector.

In 1995, the top 10 seed companies controlled 37% of the world’s commercial seed sales. Today, 10 companies account for 73%.

The global seed market was worth approximately $47bn in 2013. It is expected to grow to $53bn by 2018. Genetically modified (GM) seed is leading that growth, and is predicted to account for about 50% of all seed by 2018.

The US has the largest domestic seed market at $12bn, followed by China at $9.9bn, France at $2.8bn, Brazil at $2.6bn, Canada at $2.1bn and India at $2bn.

Seed has become increasingly privatised to the point where a handful of large firms now control much of the supply. These same firms also hold dominant positions in the agricultural chemical market.

One company in particular, Monsanto, has successfully captured the markets for most major crops in less than a decade.

Today, its genetically modified seed traits are planted on more than 80% of US corn acres and more than 90% of US soyabean acres.

The process of concentration has not only led to the takeover of big seed companies, such as Pioneer and DeKalb, by other large companies, but it has also caused many smaller companies to simply disappear.

The Big Six companies control 70% of the global seed market, with the top three Monsanto, Dupont and Land O Lakes controlling 50% of the market.

The Big Six

In the 1980s, the US government decided to allow universities to patent varieties, to encourage innovation. This was the catalyst for company money and ownership of traits to flow to private industry.

By the 1990s, numerous mergers between pharmaceutical and chemical companies occurred to take advantages of potential synergies. These new chemical giants were described as life science companies due to their focus on biotechnologies.

Eventually, due to their large size, pharmaceutical and agricultural divisions were spun out. Syngenta, for example, resulted from a merger of the agribusiness divisions of Novartis and Zeneca, but AstraZeneca, which focuses on pharmaceuticals, remains a separate company.

Today, these chemical companies are focusing their mergers and acquisition activity in the developing countries, such as South America. An estimated 1bn farmers in these countries depend on farmer-saved seeds. This presents large opportunity for the big six to capture market share in the growing commercial seed sector.

After taking over the first link in the industrial food chain – commercial seeds – the big six corporations now determine, to an astonishing degree, the current priorities and future direction of agriculture research worldwide.

When a company merges, a number of synergies occur. Firstly, the buyout comes with intellectual property rights, so companies can avoid expensive licensing agreements.

They can also leverage economies of scope. For example, a particular GM trait can be bred into several crop types.

We saw this with the Roundup Ready trait, which is now commercialised in canola, corn, cotton, and soybeans. The big six are not only competitors, they are also collaborators. For example, Monsanto has cross-licensing agreements with all the other big five companies.

Farmer relevance

This new R&D focus on seed and trait technology may hurt EU farmers. Firstly, they will not have access to new seed technology because GM products are banned.

And, secondly, limited new chemical active ingredients are coming onto the market because of a lack of R&D investment.

This will result in crops coming under increased pressure as nature adjusts to existing chemicals.

This reliance on so few seed varieties has seriously eroded the genetic diversity of crops, presenting a reduced choice for farmers who could benefit from varieties suited to their local geography and climate.

These companies have the power to create new varieties with a range of beneficial traits.

However, they have mainly selected traits, such as herbicide tolerance, that would lead to increased sales of their own chemicals rather than for benefits, such as improved nitrogen efficiency or drought resistance.

Symbiotic relationship

The seed and chemical industries have become symbiotically linked. The Bayh-Dole Act in 1980, enacted by the US Government, allowed seed to be patented for the first time and a large amount of private money flowed into the research of new varieties.

In the past the EU was the biggest market for agri-chemicals and a large number of new active ingredients were developed. The high cost of new product development due to legislation has become a major deterrent for chemical companies.

Products that cost a lot of money to develop were banned in the EU, such as the recent suspension of the neonicotinoid insecticides.

All this has affected investor confidence, and rather than risk developing new products, the companies are now focusing on developing their seed and trait technologies. The cost of developing seeds is a lot less than new active ingredients for chemicals and the companies see this as being more sustainable long-term.

The big six are now moving their focus to countries like Brazil and China, where the market demand is for existing chemistries that require no further development with fewer legislative barriers and substantial growth opportunities.