Seed companies fight to maintain independence
The window in Tom Burrus’ office gives him a good look at the wide expanse of Illinois River bottomland where his company produces seed corn for farmers across Illinois, Missouri, Iowa and Wisconsin.
Hanging on his wall are sketches of his grandfather and others who’ve had a part in the Burrus Seed Co. since it was founded 1935. The 63-year-old company president knows he is a rare independent in a land of giants.
The bulk of the seed market is controlled by two companies, Monsanto and DuPont, who have entered the field, so to speak, within the last 20 years but now dominate. Local, independent seed companies were common as recently as the ‘90s but have seen their influence and number shrink as large multinational companies have gotten into the game.
There used to be nearly 300 seed companies. Now there are only about 150 that are independently owned. The rough climate for seed companies, though, doesn’t faze Burrus.
“That number is going to continue to shrink,” Burrus said. “I don’t know where it will land, but we certainly feel like we’re one of the long-term players. We feel that when it shrinks from 150 to 100 we are still going to be a player. When it goes to 50 we’re still going to be a player.”
A handful of large companies engaged in a decade long takeover of the seed business, beginning in the mid- ‘90s. They bought up companies small and large, including giants Pioneer Hi-Bred and Dekalb. It guaranteed the large companies market share as they developed seeds that had special traits that make them resistant to weeds, bugs and weather. Monsanto was hardly a presence in the seed business in 1990. Now it’s the largest seed producer.
There may still be space in the competitive landscape for local seeds, according to Chris Shaw, an analyst with equity research firm Monness, Crespi, Hardt. Many of the independent companies that have survived are thriving.
“A big company like Monsanto clearly has to breed for the entire country,” Shaw said. “But I think it’s the independent guy who is really going to have an advantage at really tailoring their product to specific geographic areas. They won’t try to be anything beyond that and I think the local customer appreciates that as well.”
The small companies provide competition necessary to keep prices down. A bag of seed corn doesn’t come cheap, it can run $200-300. This year, with farmers expected to plant near record amounts of corn, the cost for seed on an average-size farm field nearing 500 acres could easily hit $50,000.
Burrus Seed is headquartered is in Morgan County, Ill. The company employs about 60 people full time, though during the peak de-tasseling season they may have up to 600 on the payroll as they have a mix of area teenagers and contract workers plucking the tassels from corn to ensure proper pollination. The company has farmland in an 11-square-mile region covering three counties.
Burrus said the major companies made offers, but they rejected them.
“We like the thrill of the chase and the competition,” Burrus said.
Like many regional seed producers, Burrus says a key part of their success is that they are family owned.
“We publish our home phone numbers, our cell phone numbers, and if a customer ever feels like he didn’t get what he was entitled to, we invite him to call us,” Burrus said. “I don’t think you can call Mr. Monsanto or Mr. Pioneer.”
Wayne Ladage, who farms 1,000 acres in Montgomery County, noted that a Burrus representative will make a nearly 70-mile drive to his farm at any hour.
“Sometimes that might mean coming out in the middle of the night ‘cause we’re running behind, planting corn in May or close to June,” Ladage said. “Because they are farmers too they understand what we’re going through and that’s a closeness we share that’s important to me.”
Ladage also sells Burrus seeds to area farmers. He is loyal. When his farm eventually transitions to other relatives, the 61-year-old Ladage says he expects them to plant Burrus corn.
Another advantage the independents have going for them is that they can still access the special insect and herbicide resistant formulas from the large companies. In fact, they can mix and match features from both a Monsanto and a DuPont product. They pay the large companies for the rights, but it allows a company like Burrus to customize seeds to the needs of their region. A recent legal agreement between Monsanto and Dupont makes it even easier.
After such a contraction frenzy in the seed market, the large companies have started to cool their expansion a bit.
“I think most of those companies, the larger multi-nationals, realized they have probably reached a point of saturation,” said Greg Ruehle, CEO of the Independent Professional Seed Association, a Nebraska based trade group. “In terms of how much market they can control without finding themselves sideways of anti-trust law…or other protections that might be in place.”
Burrus also plans to grow. The company acquired fellow independent Hoblit Seed Company in 2008, marking their entry into soybean seed production. Burrus partners with another independent company in everything from training to growing and they have set their sights on new areas. The company is beta-testing computer software that will control how many seeds are planted based on the soil type it detects and they hope to be promoting that at the Farm Progress Show this summer.
The family company is also looking to the next generation, for the family and the company.
“Now we’ve taken in our fourth generation, which is my niece and nephew and my son-in–law,” Burrus said. “And they are owners with us, so the five of us own the company today.”
And it may not stop there, Burrus said. His grandson was out in the fields last year de-tasseling corn.