SEEDS: SECTOR OUTLOOK
FOUNDATION & FUTURE TECHNOLOGIES
Small yet mighty, seeds are the critical input for sustainable agriculture. This becomes even more important as the global population enlarges and feeding the world becomes the next major challenge.
Seeds are the cornerstone of successful food production, on which all other variables hinge. Although the amount of seed required to grow crops is relatively small, keeping costs low, the impact of quality seed on yields is a key differentiator. Estimates suggest seed quality affects total yields by up to 25%, depending on the crop; this can be further increased to 45% if other inputs, such as sunlight and water, are efficiently managed.
Modern plant breeding methods and advances in biotechnology equip the seed industry with significant advantages in terms of higher yields, resistance to weeds and disease, and adaptation to adverse growing conditions. By using seeds that conform to certified standards, farmers can ensure a uniform crop with a predictable yield that responds well to applied fertilizers and nutrients. Key seed demographics are oilseeds, comprising soybean, sunflower, canola and cotton, among others; grains, including corn, wheat, rice and millet; and fruit and vegetables.
Grains are the largest segment within the seeds industry, with the star of the show being corn. Together with the soybean, it holds around 70% of total market share, and demonstrates a 12% compound annual growth rate. Key growth drivers are a rising world population, advanced agricultural technologies, a reduction in available arable land, and a need for high investment returns. Demand for hybrid seeds is also on the rise as growers look for ways to raise crops in extreme conditions, thereby increasing the total land available for agriculture.
"By 2020, the global seed market is predicted to be worth more than $92 billion, and the top 10 seed companies will control almost 95% of the industry"
INTERNATIONAL ACTIVITY
By 2020, the global seed market is predicted to be worth more than $92 billion, and the top 10 seed companies will control almost 95% of the industry. North America is the largest seeds market in the world in terms of revenue, with a 27% market share, followed by China with 22%; the remaining countries in the top five – France, Brazil and Canada – only manage around 17% between them. In sixth place, India may just miss out on a top five spot, but 156 million hectares, or 48% of its total land area, are available for agricultural use.
The United States and China have a much smaller proportion of their total land area available for agriculture (18% and 16% respectively), but their markets are well established and much of this land is already put to use. The countries with the highest potential for growth – and therefore of most interest to new investors - are India and Brazil.
The Indian seed industry has a long history; the government implemented three National Seed Projects from the late 1970s until the early 1990s to strengthen seed infrastructure and promote growth. New seed development policy was introduced in the late 1980s, creating an organised seed industry and giving Indian farmers access to high quality seed and planting materials from around the world. The policy also stimulated private investment in the industry, particularly in terms of research and development.
Today, the Indian seed industry is valued at $3.2 billion and is expected to grow at 8.4% per year. Further growth depends on adapting to the latest market demands in infrastructure, technologies and product choice.