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S&W Seed and Bioceres deal on alfalfa
Sep. 11, 2014
S&W Seed Company, a leading U.S.-based alfalfa seed producer, and Bioceres S.A., a leading agricultural biotechnology company in Latin America, announced they will create a Joint Venture (JV) to develop and commercialize biotech-enhanced alfalfa varieties. The new seed JV combines S&W’s premium genetics with Bioceres “next generation” R&D capabilities. Additionally, the two JV partners will leverage each other’s distribution capabilities and relationships to sell S&W’s elite alfalfa varieties in Argentina directly to local dealers and farmers. This elevates S&W’s Argentine sales and marketing from being distributor dependent, to being end user-facing, both expanding the company’s market presence and expanding the opportunities for enhanced margins.
Argentina ranks as the U.S.’s third largest alfalfa seed export market, behind only Mexico and Saudi Arabia, and represents a major near term growth opportunity for S&W’s conventionally-bred, elite non-dormant alfalfa seed varieties. Argentina has approximately 17 million acres devoted to alfalfa hay production, requiring an estimated 6 to 8 million pounds of alfalfa seed per year. Research in forage crops, including alfalfa, is strongly supported by the Argentine government through its Ministry of Science. In the past decade, total alfalfa acreage has declined compared to other crops, mainly soybeans, and reversing this trend is a priority of the Argentine government. The JV partners believe that their high yielding alfalfa varieties coupled with state of the art biotechnology traits, can become a key asset to Argentina in developing a more sustainable and efficient farmland management model.
Mark Grewal, chief executive officer of S&W Seed Company commented, “Argentina represents one of the largest growth opportunities available for S&W’s leading non-dormant alfalfa seed varieties. While our Australian team has historically been a provider of alfalfa seed into the Argentine market, S&W varieties have had very little presence in the country. By teaming up with one of the country’s most influential agricultural companies we will be creating a unique platform that allows us to bring to the market our elite S&W-branded varieties, while taking advantage of an enhanced operating structure.”
“While we will initially be creating a marketing and distribution company focused on non-biotech enhanced alfalfa seed products,” Mr. Grewal continued, “if deregulation occurs within Argentina, we will have an established sales channel with direct customer interaction to communicate the attributes of any of our biotech-enhanced alfalfa seed products. This is clearly a unique opportunity for S&W with what we believe is significant upside for both us, and our partners at Bioceres.”
Bioceres was founded by 23 farmers, and currently has over 270 shareholders, made up mostly of innovative agricultural businessmen, agriculture cooperatives and other key agribusiness players. Each year, Bioceres’s shareholders plant about 2.5 million hectares in different regions within Latin America. The company has committed a US$50 million investment in agro-biotechnology projects for the 2012-2016 period, the most significant investment in this field in the national private sector. This investment seeks to introduce HB4® technology to soybean, wheat, corn, and alfalfa crops. This technology demonstrated to improve the productivity of multiple crops in conditions of drought and salinity.
Source: S&W Seed news release
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