Orison Swett Marden was not an ag retailer, but he was a businessman and a prolific writer. As founder of Success magazine, he focused on optimism and confidence, and his magazine had a circulation of nearly one-half million in the late 1800s and early 1900s.

Marden's quote could serve as a mantra for the three retailers featured here. Each has enjoyed success in the seed segment of the business, but not without sowing a lot of seeds, including investments in knowledgeable employees, good genetics that perform in their respective areas, market analyses, and services and equipment that support continued strong seed sales.

Effingham Equity in Effingham, IL, has sold seed from its beginnings in 1919. But it never emphasized seed much until 1996, says Paul Yoder, the cooperative's seed manager. Since 1996, the cooperative's seed sales have risen from $800,000 to $7 million today. Yoder credits the growth in part to Dennis Montavon, Effingham Equity's general manager, whom he calls “futuristic.”

“Montavon believed that when Roundup Ready technology was first introduced, things were going to change,” Yoder says. Montavon understood the co-op would have to change as technology moved from chemistry into seed traits. As Roundup Ready technology came on strong, crop protection margins also began to narrow, Yoder says.

It was about this time that Montavon decided a full-time seed manager was needed and he hired Doug McDevitt. McDevitt in turn hired two seed specialists to cover 12 locations. Yoder, one of the seed specialists at the time, assumed seed management responsibilities in 1999. His background was in soybean research, but he also had experience in the crop protection business.

Yoder's market analysis showed that the co-op would need several more seed specialists to serve the growing market. “To stay in the [ag retail] business, we needed to be a leader in seed,” he says. “We needed to keep farmers abreast of changes in technology and help keep them profitable. We knew we would stay ahead with seed.”

Since 1999, Yoder has hired six specialists who are “continually walking fields and updating themselves on seed. This is very important as traits are introduced,” he says. “We must be on top of our game, keeping up on our products and those of our competitors.”

The addition of the seed specialists has apparently helped. Between 2001 and 2004, Effingham Equity enjoyed 120% growth in seed sales. In the last year alone, seed corn sales have risen 42%.

The Illinois cooperative sells Mycogen, Monsanto and Croplan Genetics brand corn, soybean and alfalfa seed, and Croplan Genetics wheat seed. It added Mycogen and Croplan Genetics brands in 2000 primarily because of the market situation with StarLink corn. At that time, ADM did not accept StarLink corn and Effingham Equity was in the heart of ADM country.

“Both Monsanto and Pioneer were putting heavy emphasis on tech traits, and our customers wanted to find good conventional corn hybrids,” Yoder says. Mycogen had some very good conventional hybrids, as well as name recognition, so the co-op added it to the lineup.

The co-op added the Croplan Genetics brand for several reasons, including the co-op's strong affiliation with Agriliance, which markets crop nutrients, crop protection products and seed through Croplan Genetics, and services through local cooperatives and independent dealers. Croplan Genetics also had an excellent representative, Yoder says.

The Illinois cooperative plants numerous test plots so that growers can evaluate the genetics that will work best for them. This is important because there are vast differences in soil types in Effingham Equity's territory (encompassing 23 southern Illinois counties). “We conduct replicated tests throughout our 10,000-square-mile sales territory, and there are usually four to five hybrids and two to three soybean varieties that float to the top,” Yoder says.

The cooperative also produces “The Link,” a weekly newsletter featuring crop updates and new developments, such as insect movement, that may affect customers. The newsletter also features market updates and articles on such topics as why petroleum prices fluctuate. In addition to seed, the full-service co-op offers petroleum, hardware, grain, feed, fertilizer, crop protection and custom application services at its 11 locations.

Effingham Equity also helps customers and builds its own seed sales by offering seed treatments. This past year it treated 15,000 to 16,000 units of soybean seed.

Helping to find markets for growers' crops also helps increase business. “We're always looking for markets that fit our territory,” Yoder says. A couple of years ago, for example, the co-op offered a uniform grain contract wherein growers could produce corn to supply its 2- to 2.5-million-bushel-capacity feed operation. Yoder believes that when NutriDense corn hybrids are adapted to the area, growers can, again, help supply product to the feed mill. “We could see a premium advantage for NutriDense corn,” he says.

As the co-op's seed business has grown, so have the challenges of selling seed in today's competitive marketplace. One challenge is dissuading growers from buying from discounters. “We must be able to provide enough service and product knowledge to attract farmers who will pay prices without shopping around,” Yoder says.

Another challenge is getting the entire sales force to embrace and sell seed. Some may be concerned that if their colleagues make a wrong recommendation on seed, they could lose chemical and fertilizer business, Yoder explains.

There is also inventory to consider. “This will continue to be a huge challenge,” Yoder says. But he adds that the co-op is currently evaluating new software programs that will help keep track of all the seed varieties. He illustrates the challenges that retailers have with seed inventory: “We figure that you could have one hybrid with seven grade sizes, four kinds of seed treatments, and another seven different traits [individual and stacked],” he says. “What's more, in five to six years, a bag of seed corn could cost as much as $300 to $350 per unit. That's a huge financial outlay, especially if you're selling 80,000 to 100,000 bags of seed corn.”

Despite these challenges, Yoder is excited about new traits in the development pipeline, such as drought-tolerant corn. “This would have a huge positive impact in our area,” he says.

Just how optimistic is Yoder? He claims, “Our goal is to be selling $25 million worth of seed in 10 years.”

Like Effingham Equity, Co-operative Elevator in Pigeon, MI, has sold seed for several years. Established in 1915, the full-service cooperative offers fertilizer, crop protection products, petroleum and custom application services to growers in a three-county area of Michigan's “thumb.”

For the last three years, the co-op has increased seed sales by about 5% per year. Seed sales fluctuate, however, due to the co-op's business in high-value dry bean seed, explains John Kohr, the co-op's seed division manager. Co-operative Elevator has its own dry bean breeder (and owns navy bean rights) as well as contract production in California, Washington and Idaho.

Co-operative Elevator has helped customers be more profitable and, at the same time, has increased its sales by finding good markets for crops. In addition to a strong relationship with a chili bean processor, the co-op has found niche markets for its customers, such as wheat contracts with a granola bar manufacturer. It also has been in the edible soybean market for years. To get a tofu production contract, growers must purchase the co-op's seed.

Until 15 years ago, the Michigan co-op had never sold soybean seed. Recently, however, it sold 90,000 units and contracts soybean seed production for another company.

Bulk seed systems, which the co-op has promoted heavily, have helped boost soybean and other seed sales. The co-op offers both air and conveyor systems, providing a payment plan on the former. Today 60% of the co-op's soybean seed and 80% of its wheat seed are sold in bulk. Kohr says that 20% of its corn seed and 20% of its dry bean seed are also sold in bulk. Upon request, the co-op will also deliver seed.

Another way the co-op has gained seed sales is by offering seed treatments and inoculation services. This past year it offered Gaucho as a treatment for leafhopper control in dry beans.

Co-operative Elevator has strengthened its seed business by offering attractive contracts and services. But the seed business also has grown due to mergers with other co-ops. Today, Co-operative Elevator has eight full-time salespeople working out of six locations. Three locations offer only Pioneer brand seed. The other three feature NK, Monsanto, Croplan Genetics and Genesis Seed brands. Before merging, the other co-ops sold those brands, and growers wanted to continue to buy them because of their good performance.

Kohr cites competition as the biggest challenge in selling seed. Co-operative Elevator responds to this competition by emphasizing quality. Dry bean seed quality is an example. The co-op follows its own contract production very closely, treating and bagging seed at its Pigeon location. It also does extensive germination and seed coat testing internally and with crop improvement associations.

In September 2003, Apply featured Henry Farmers Co-op of Paris, TN, which had doubled its seed business in the previous four years. One year later, Rodney Gallimore, the co-op's general manager, reports that 2004 seed sales were up 25%. He attributes another year of growth in part to aggressive sales efforts. “We grew market share,” Gallimore says, adding that it reflects well on good employees who provide good recommendations and good service. “We've built our service programs, such as scouting and seed treatment, around our people,” he says. “Our sales staff and location managers are very good.” Henry Farmers Co-op employs half a dozen people who sell seed, crop protection and fertilizer products.

The co-op offered Poncho and Cruiser seed treatments this year to help growers combat flea beetle and seed corn maggot, which also helped sales. “Between 8 and 10% of our seed corn was treated with either product,” Gallimore says. In side-by-side comparisons, the co-op also showed that its ApronMaxx-treated seed yielded an average two to three bushels more per acre than untreated seed.

As demand for bulk seed has grown, the Tennessee co-op has added two more Friesen bulk bins to the two it purchased a couple of years ago. Gallimore says keeping up with bins, boxes and seed tenders is challenging, but bulk seed does cut down on warehousing. “It's also much easier to handle,” he says. “Bulk handling has helped inventory management, but it also means variety selection is more critical.”

The co-op continues to offer Pioneer, Monsanto and FFR brand seed, but it has added three more brands: AgVenture, Golden Harvest and AgriGold. AgVenture has a Roundup Ready corn hybrid that has done exceptionally well in northwestern Tennessee and neighboring Kentucky, Gallimore says. The co-op has sold AgriGold before and added it to this year's lineup because several of its varieties performed well recently in western Tennessee trials. Finally, the co-op is trying Golden Harvest because it added a sales representative who was familiar with the co-op's sales territory.

Last year, Gallimore noted that scouting helped the co-op's seed business. This remains the case, although the number of acres scouted remains about the same. The company scouted about 3,500 wheat acres and was also scouting between 8,000 to 10,000 soybean acres for stinkbug and frogeye.

“The more one sows, the greater the harvest.” These retail operations seem to have taken that philosophy to heart, and have invested in the “seeds” that have helped their businesses to grow.

In the first six months of 2004, Syngenta Seeds acquired important corn breeding material from CHS Research and glyphosate tolerance technology from Bayer CropScience. It also announced plans to acquire Advanta's North American corn and soybean seed business (Garst brand) and the Golden Harvest group of companies. Upon the acquisition of these last two companies, Syngenta Seeds will become second in the branded seed market behind Pioneer Hi-Bred International. Once the Garst acquisition is completed, Syngenta will have approximately 15% of the seed corn market share and 13% of the soybean seed market.

What does this mean for ag retailers, especially in the upcoming months? “Expect business as usual with current sales and marketing structures and a strong focus on building more value with all three brands,” says John Sorenson, president and head of the global corn and soybean business for Syngenta Seeds. “Our objective is to build on each brand and offer differentiated value to growers.”

Syngenta plans to maintain a multi-brand strategy, Sorenson adds. “The brands each have their unique value proposition today, and we plan to retain that so growers have choices,” he says. “Until we have done a complete analysis of the brands and the market, it is premature to be specific on market strategies. We plan to consult with distribution and ask for input. This approach should offer the widest range of customers the best possible level of products and services for increased customer satisfaction. We're committed to the brands and to our distribution partners.”

One of the primary reasons Syngenta Seeds made the acquisitions was to gain critical mass in the marketplace. Upon completion of the acquisitions, the company will have an expanded platform from which to introduce a range of biotech traits beginning in 2005. Eventually, this will include Bt insect resistance, glyphosate tolerance and corn rootworm resistance, followed by output traits.

“Syngenta will more actively pursue licensing arrangements for its traits through a licensing organization now in development,” Sorenson says. “The combined germplasm and research of the various companies will provide an opportunity to strengthen the product lines of each of the brands.”

In February, Syngenta acquired corn germplasm, including breeding materials and inbreds, from CHS Research, which strengthens the company's longer season corn hybrids.

In May, the company announced plans to acquire the NAFTA corn and soybean business of Advanta BV, which owns the Garst brand. This adds significant corn and soybean germplasm, Sorenson says.

In July, Syngenta acquired a 90% stake in the Golden Harvest group of companies, which will expand its market share throughout the Midwest and provide access to Golden Harvest's corn and soybean breeding programs.

“As the integration takes place, the combined strengths of the companies will make Syngenta a stronger contender in the marketplace,” Sorenson says. “We think our approach will ultimately provide more choices for growers and the distribution system.”

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