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Integrated approach necessary to boost seed performance and yields
“Seed companies have ample proprietary data from test fields,” explains Rabobank analyst Harry Smit. “In addition they have a good understanding of which input mixes work best with new seed varieties”.
With limited opportunities to expand agricultural land area, efforts worldwide have become increasingly focused on improving farming productivity. This means there are considerable opportunities for companies to provide ways and means to boost crop performance and make sure inputs, designed to boost soil fertility, are used efficiently.
Seed companies are well placed to capitalise. Rabobank’s report identifies two potential models for seed companies seeking future growth. Both recommend seed companies broaden their current range of activities to include a wider focus on agronomic practises, but present two different options for how this could be achieved.
(a)An “asset-light” approach, in which seed companies continue to focus primarily on improving seeds, while outsourcing the study of the day-to-day optimisation of agronomic practices to others, such as farmers, consultancies or agricultural machinery providers. Companies which choose this option will have to be aware that their route-to-market may change as the influence of farm input integrators is likely to grow.
(b)An “asset-heavy” approach, where the seed company looks to develop fully integrated solutions in house. However, seed companies that get involved in the day-to-day management of farms will also have to take a decision on providing performance guarantees. Farmers that pay a premium expect a superior result, which may not always be achievable.
The market of improving agronomic practices is very competitive, with machinery companies, precision agriculture consultancies, extension services and input retailers all offering these services to the farmer. The challenge for seed companies will be to develop unique seed variety and algorithm combinations that bring advantages to the farmer and are not easy to copy.
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