Thursday, February 25, 2010
Posted by D. Daniel Sokol
William W. Wilson and Bruce Dahl (Dept of Agribusiness and Applied Economics - North Dakota State University) offer their thoughts on Dynamic Changes in Market Structure and Competition in the Corn and Soybean Seed Sector.
ABSTRACT: The purpose of this paper is to analyze the dynamics of R&D investments, and the structure of the seed distribution sector using novel data sets that have not been used before to describe competition in these industries. The results describe four sets of issues of particular
importance. One is that while all agbiotechology firms have increased their R&D expenditures,
there have been sharp differences in the scope of this spending. Most important is that this
has spawned the growth in what is now referred as “seeds and traits.” Second, a large number
of future traits will be commercialized in the coming years. A third set of results indicates that
one firm grew its market share by 14% and a portion of this growth has been through
acquisition. The other three majors lost market share, but the ISC (independent seed
companies) grew by 10%. At the crop reporting district level, the industry concentration ratios
for the four largest firms (CR4) in most regions are .5‐.7. Finally, farmers purchased corn and
soybean seed from 4‐7 different companies in most crop reporting districts (CRD) and up to 20
or more companies in the larger producing regions.