Bert van der Feltz on East-West Seed's quest for independence:
Helping poor farmers and big investments don't go well together
Almost 35 years later, Simon Groot's East-West Seed is Asia's market leader in hybrid vegetable seeds, helping professional farmers grow their local crops like bitter gourd, onions, pumpkin, wax gourd, kangkong, hot peppers and yardlong beans. Not only with higher efficiency, but also with an increasing amount of awareness and respect towards their communities.
But ever since East-West Seed opened the gateway to Asia and laid the foundation for the adaptation of hybrid seeds, large multinationals are once again eyeballing Simon Groot's breeding company. We asked current president and CEO Bert van der Feltz why the company still turns down every bid, weathering the storm of mergers and takeovers in the global seed industry. And more importantly, how their quest for independence plays a crucial role in making a difference to Asian farmers.
Bert van der Feltz
The large multinationals are very jealous of the huge market share you have these days in Asia. How did it all get to this point?
When Simon Groot started this adventure, none of the poor farmers in rural Asia had ever heard about hybrid seeds. He saw a backward market with farmers not using the right seeds, which were often imported and did not fit the local climate or diet. He saw a huge opportunity to hybridize local varieties and crops in niche markets. On the other hand he also saw that farmers in this part of the world were not treated well. Instead of building a business just dedicated to breeding local hybrids, Simon also felt the urge to improve the knowledge and skills of farmers, a part of society that was sort of forgotten at that time. The combination of the dedication to those two factors is the pillar of our success; it helped us to gain trust in the local communities and build a successful business. It might sound like a clever ‘spin’ that many companies like to use, but for us it is not just a story, it is who we really we are. Farmers know that we are not in this just for the money but that we have another part to play. Some people call that a social enterprise, but for us it means that we do a little bit more than just make money.
These are turbulent times in the seed industry, with seed breeders taking over their counterparts one after another. Are many companies knocking on East-West Seed's doors now that you have become such an important player in Asia?
Yes, they have been knocking on our doors for several years now, but in the good Dutch tradition we know how to say no in a pretty direct way. The message is clear now that we will never be up for sale, not for a hundred million and not for one billion. That took a while, for more than a decade we had to explain to the juggernauts of this industry that we will never be up for sale, simply because it was Simon Groot's strong philosophy to remain independent. We are convinced that as soon as finance becomes a dominating factor like it is for those large listed companies, your horizon shifts. Seed breeding and developing new crops to help local farmers and communities require a long term commitment and investment and can not be judged by stakeholders who only look at quarterly results. If we were to sell ourselves to a big multinational, we would pull out the heart of our company and it will be the beginning of the end.
Does this mean that helping farmers and big investments don't go well together?
No, not for what we do. For big multinationals it makes sense, because investments and mergers helps them to fulfill their goal: to increase their sales globally as soon as possible and save costs. If that is your mission in life, go for it. But it is not our mission. We want to be close to the local community and serve them with the best genetics in a way that is good for both. Don't get me wrong and know that we are still a for-profit company, but we are convinced that serving and understanding those farmers in the best way comes before profit.
But biotech is a fast and expensive industry. Don't you fear that multinationals will eventually push you out of the market as they have the capital behind them to make more progress?
It is true that many multinationals believe that consolidation is needed because biotech is so expensive. Many of those companies are afraid to lose out and become a prey for their competitors. But since we operate in a very fragmented, non-GMO market, we see things a little differently. It took us many years, but in those years we have built up our own brand name and created a reputation of trust among these farmers, they really know who we are. Therefore we are confident enough that the cost of biotech will not become a limiting factor. And if we don't have access to certain materials, there are plenty of opportunities in partnerships and open-licensing platforms available.
In 2014 East-West Seed signed such a partnership with Monsanto for the distribution of their Seminis and De Ruiter varieties in several Asian countries. How does a partnership with one of the largest biotech companies fit in Simon's vision?
Teaming up with other seed companies allows us to serve as a perfect conduit to bring unique patented technology to farmers and help them move forward. Farmers know us as a loyal company and they trust our vision. A partnership with Monsanto does not mean that Monsanto has ownership in East-West Seed or has anything to say about how we operate or in which direction we go. We remain an independent company that still has its own mission and philosophy, but open to partnering and benefiting from other companies’ technology to achieve these goals.
You were one of the first to introduce hybrids in Asia and thereby opened one of the largest growth markets for this industry. Is it not frustrating to see multinationals reaching out to customers via the road that you paved?
Yes, we did open up the gateway to Asia for other breeders by making many local farmers understand the value of hybrids. When Simon started, the market was not as transparent as it is today with all the computers and internet. He didn't have a clue about the market situation and had to go out and talk to farmers and do extensive field research for many years. As a first mover we had an advantage as we gained a lot of trust and built a brand, but as a disadvantage we also spent a lot of time and money on opening the market and blazing the trail that others used to follow us. On the other hand we are also glad with the competition as it keeps us sharp. We do not fear them, because we have built up a name with a very loyal customer base that will stick with us.
Is that also because you offer them a different range of hybrids?
We are part of the rural economy and consider ourselves a company that is Asian to the bone and does not make its decisions from headquarters in Basel or St. Louis. Therefore we understand the local needs and see what is happening in the local market and diet. We became famous for the fact that we professionalize local varieties like bitter gourds, kailan, kangkong, chaisim and others. These are really local crops that Western breeders don't know much about.
No European tomato, pepper and potato varieties at East-West Seed?
Yes and no. We do not believe in converting diets and will not introduce a product like sweet pepper if it does not meet the local diet. Food will always remain very much culturally influenced, and therefore we focus on the crops that farmers have always been growing. Of course diets are changing, but don't fantasize that the Chinese will be eating a Western diet in the next 100 years. The majority of the market will remain open field varieties that the farmers have always been growing. On the other hand we do see that certain markets are changing and create a chance for new crops. So we are not sleeping and keep a close eye on chances in the markets, like the introduction of American sweet corn in Malaysia or the introduction of greenhouse varieties in certain parts of the markets. Yet, you will have to see it in perspective because the market is huge.
You operate on a very local level in economies that are underdeveloped and in which farming is not sexy anymore. How do you cope with the shortage of skilled people in the agriculture sector?
Farming is a difficult and risky business over here. It is hard work, and being outside in the heat on a field is not perceived as sexy anymore. A lot of the young Asian graduates are highly educated and in search of prestigious well-paying jobs as a doctor or engineer, or they move to the big city, working for IT companies or banks. This makes it very difficult for us to attract the right talent. We want to change the perception that the less talented or motivated kids end up at agricultural colleges as a sort of leftovers. There are plenty of inspiring and rewarding jobs in agriculture.
Then how do you make agriculture sexy again?
On the one hand we have our campus recruitment programs, in which we try to build relationships with the best universities and involve them in projects and invite students for training and internships in order to make the brightest people enthusiastic about our industry. On the other hand we have our in-house “East-West Seed Academy” focusing on Seedsmanship. The Academy provides an opportunity for employees to continue learning at work, improve their performance, and grow their careers. In 2015, the Academy trained 434 talents and facilitated more than 2 classes per month. We have training partnerships with Wageningen University and Breedwise BV-Netherlands, a professional training consultancy specializing in the seed sector.
Early 2016 we organized, together with the University of California-Davis, the first ever “Seed Business 101” course in Southeast Asia. Held in Chiang Mai, the course gathered 24 international participants who participated in a crash-course on the seed industry, with lectures and practical courses provided by professors from UC Davis and industry experts. We organized this as an open platform, and a total of 10 different seed breeders participated.
Over the past 34 years we have realized that with Asian talents, learning is best achieved in an Asian agricultural setting, vastly different from a European agricultural setting. Often the training is then given by a Western domain expert, drawing from experiences that the trainee can easily replicate and build on. This is how East meets West in a learning environment.
And then your competitors woo your well-trained employees?
They try by sending their headhunters our way but without success, because our employees are also committed to our mission and vision. They have a connection with the local communities and stick with us. They also know that we need to do a little bit more and that it is not all about money.
Off to something else. How are you dealing with the fact that Asian farmers are known to be big users of chemicals, pesticides and are often known for their loose interpretation of rules and social irresponsibility?
They're small steps, but as a market leader we are able to help move markets into new directions by working together with NGOs in order to make farmers aware of things that are not good for their own community in the long run. Our inspectors are going out into the field with a tablet not only to scout the crops, but also to monitor and report if they see child labor. In addition, we spend the largest part of our budget on the education of farmers to show them how to grow a crop in the most efficient way. We explain them that they should not over-spray, not only because it is bad for the environment, but primarily because it keeps money in their pocket. Having said that, it remains very difficult to change the habits of these farmers because they have always been less educated and used to all these unlabeled pesticides, mix them and over-spray their crops. Especially in countries like Myanmar and Cambodia, where farmers use many cheap, counterfeit Chinese pesticides. But I am optimistic to say that the biggest part of the Asian farming community understands that things need to change.
So when I ask you in ten years about this situation, all of the Asian farmers will be growing organic varieties?
No, definitely not. You might see an increase in the adaptation of biological crop protection, but we have a lot of data available on the MRLs in Asian vegetables, and those figures are still shocking. Therefore the overall food safety will not increase within such a short time. On the other hand the awareness of the situation for sure has increased among a growing group of farmers. We believe that we can contribute to increase this, especially if our entire industry works together and gets more involved in those communities. We can make a small difference, but if we tap into this more together we can make a big difference. It's not about what or how we are doing this, but why we are doing this: to make a difference.
For more information: www.eastwestseed.com