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Changing face of wheat
When conference realignment upended collegiate athletics a few years ago, some schools lost while others won. It’s much like the latest round of large agribusiness shake-ups. Some companies shedded major parts of their business, while other companies acquired new profit centers.
Wheat seed is one of those affected. Still, it pales to potential profits of corn and soybeans. These row crops are the college football and basketball in conference realignment, while wheat is one of the Olympic sports. It is important to those who participate, but it’s not one of the primary revenue generators. The good news for wheat producers is that firms are still making investment in technologies like hybrid wheat and niche wheats that aim at markets like reduced gluten.
Not many years ago, wheat-breeding companies were the seed industry’s budding superstars.
Global shortages of wheat in 2008-2009 prompted a spate of investment in wheat variety research and development that included the following:
- Monsanto’s purchase of WestBred for $45 million in 2009. This led to Monsanto reentering the wheat seed business after a long layoff.
- Limagrain Cereal Seed’s 2009 entry into the U.S. wheat market. The French farmer-owned cooperative had more than 50 years of history in Europe, but it set up shop in the U.S. by buying and growing regional seed companies.
- An investment in hybrid wheat research and discovery by Bayer CropScience and Syngenta’s AgriPro in the late 2000s. For Bayer, hybrid wheat was its only foray into wheat development. Meanwhile, Syngenta’s hybrid program was designed to complement traditional breeding.
Looking back, it’s easy to see why the massive investment in wheat research took place.
Global weather challenges from 2006-2008 resulted in record-short wheat crops, dangerously low global stocks, and a sharp rise in wheat prices, according to USDA-ARS data.
Farmers responded by growing more wheat. Within a few years, global stocks rebounded, and the world was awash with wheat. It still is today.
That doesn’t mean the major seed and chemical companies are not investing in wheat anymore. The latest round of mergers and acquisitions has just shaken things up a bit.
Here’s what’s new in the wheat business.
Bayer Acquires Monsanto’s Westbred
When Bayer CropScience bought Monsanto in 2018, it acquired Monsanto’s WestBred portfolio. WestBred is an Idaho-based wheat seed company with a full line of hard red winter, hard white winter, soft white winter, hard red spring, and hard white spring wheat varieties.
The acquisition by Bayer gives wheat growers multiple options for crop-protection products that complement their wheat crop, says Jeff Koscelny, Global Wheat Commercial Strategy Lead and WestBred Business Lead.
“Whether you’re looking for herbicides or you’re looking for a fungicide, we now have that as part of our family,” he explains. “I think it’s really going to enhance our ability to conduct research and bring what I’ll call a ‘systems approach’ to our farmers.”
Koscelny had been Monsanto’s wheat lead prior to Bayer’s acquisition of Monsanto. Wheat plays an important role in Bayer’s European business. He says he senses that the same will be true in the U.S.
“There’s a lot of enthusiasm within the Bayer organization and the combined organization. Cereals are such an important crop from a food security standpoint and sustainability. It’s a big business for us in Europe, so we’re going to continue to bring innovation to European farmers and North American farmers.”
Bayer Divests Hybrid Wheat to BASF
When Bayer bought Monsanto, the company had to divest its existing wheat assets. This included a hybrid wheat program based in Lincoln, Nebraska, which was founded in the late 2010s.
BASF officials say their first wheat hybrids are slated for the mid-2020s.
Hybrid wheat has long been a goal of wheat breeders and companies. It occurs when two different wheat varieties are cross-pollinated to form a hybrid.
BASF’s first hybrids will be in hard red winter and hard red spring wheat classes.
“The seed will cost a little more,” says Edward Souza, BASF’s head of global wheat breeding. “So we need to capture value (for farmers) with the hybrids.”
Hybrids typically yield more than regular wheat varieties and also offer greater yield stability, he says. “Put those two together, and we think that is a good proposition,” says Souza.
Syngenta Scales Back on Hybrids
Syngenta, meanwhile, which owns the AgriPro lineup of wheat varieties, had planned to introduce hybrid wheat in the early 2020s. In late 2018, the company announced it would “scale back” on its North America hybrid wheat program, after investing nearly a decade and millions of dollars in hybrid wheat development.
Paul Morano, head of North America cereals for Syngenta, says the company had for years targeted 2021 for a commercial launch date of its new hybrid spring wheat lines and winter wheat hybrid lines shortly thereafter. However, the company determined that under current market conditions, wheat hybrids may not offer the necessary value to farmers to make the technology viable and sustainable.
“There has to be an advantage to farmers, or the effort will not succeed,” Morano says.
The decision came down to economics, he adds. For example, farmers can achieve 10% better yield, or 6 bushels per acre in a 60-bushel-per-acre field. In North America, in today’s competitive wheat environment, a 10% yield advantage over leading varieties may be “too tight for hybrid wheat to successfully compete and have attractive shared value for farmers, seed associates, and Syngenta itself,” Morano explains.
Syngenta will continue its varietal wheat-breeding program and plans to conduct research in early-stage hybrid wheat. The timing just isn’t quite right for hybrid wheat, he adds.
“A lot of things must go right, given that for hybrid wheat the risk of producing the seed is higher, resulting in a higher seed cost for farmers,” Morano says. “We don’t want to go to the market with something that doesn’t have a good chance of succeeding in improving the rate of return that wheat farmers get in every acre they plant.”
Seed companies continue to develop new products and new modes of action for wheat and wheat-related chemistries.
- Niche wheats from Arcadia Biosciences. Under the GoodWheat brand, Arcadia BioSciences is working on a portfolio of niche wheats. These include high-fiber, resistant starch wheat that boosts fiber content without the bitter taste of whole wheat and reduced-gluten wheat that reduces allergenic gluten by 75%. This trait is important for consumers with food allergies.
- CoAXium wheat, from Colorado Wheat Research Foundation, Limagrain, and Albaugh Chemical. Wheat varieties resistant to the ACCase-inhibitor herbicide Aggressor were developed by the CWRF and licensed to PlainsGold and Limagrain in 2015. These non-GMO hard winter wheat varieties allow growers to control grassy weeds such as brome, cheat, and feral rye.