Winter months are quiet on the farm, but it's crunch time for seed firms Monsanto Co and Pioneer Hi-Bred International Inc.
While farmers place their orders for next year's crop, the companies are fighting for market share in the multibillion-dollar market for genetically engineered seeds.
Pioneer is developing new strains of biotech seeds, while Monsanto has been aggressively buying up small seed-dealing firmss to get better access to farmers.
The result seems to be a tight competition this year, with Monsanto possessing an edge, according to a recent report from analyst Kevin McCarthy with Bank of America in New York.
Monsanto has vastly improved its network of seed dealers and taken market share away from Pioneer in the crucial market for US corn seed, McCarthy said.
"We think Monsanto will continue to gain market share in the U.S. corn market, as it has done for at least five years running," McCarthy said.
But Pioneer "poses a long-term threat to Monsanto because it is seeking to develop independent technology," he said.
Spokespeople for Monsanto and Pioneer pointed out the overall share of cropland being planted with biotech seed is rising, so both companies stand to profit.
Total plantings of biotech corn jumped from 17.2 million hectares last year to 19.5 million this year, according to the Biotechnology Industry Organization.
Pioneer president Dean Oestreich said Monsanto's recent gains won't offset Pioneer's long-term plans.
"Monsanto has been on a buying spree," Oestreich said. "The way we've competed -- and the way we compete today and will in the future -- is that we're investing our dollars in research."
For years, Pioneer and Monsanto had a symbiotic relationship when it came to selling biotech seeds. In the 1980s, Monsanto first developed genetically modified organisms -- or GMOs -- and sold them through old-school crop firms like Pioneer. Monsanto charged Pioneer a licensing fee to sell the crops and gained access to Pioneer's broad-based sales network.
But Iowa-based Pioneer changed the arrangement in 2003, when it released a strain of genetically engineered corn it made on its own. Oestreich said the company could make higher profits by selling its own biotech seeds and narrowing Monsanto's access to Pioneer's broad sales force.
Monsanto has been doling out cash over the last few years to blunt Pioneer's challenge. In 2004, Monsanto formed a holding company called American Seeds Inc (ASI) with the goal of buying up regional seed dealers.
On Monday, ASI announced the purchase of Landec Corp's direct seed marketing and sales company for US$50 million.
The purchase brought Monsanto neck and neck with Pioneer for the first time in the corn seed business, McCarthy said.
Just five years ago, Pioneer controlled about 40 percent of the market share in corn while Monsanto had about 10 percent, McCarthy said.
After the Landec acquisition, Monsanto pulled to 29 percent of market share while Pioneer slipped to 30 percent, McCarthy said.
Monsanto could match or surpass Pioneer's clout within a year or so, he said.
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