By most accounts, the turf seed industry is enjoying some of its best times in the more than a decade.
Sure, producers of turf seed have short-term concerns about the effect El Niño will have on their final sales volume once the spring buying season is over. Much of the Midwest and East experienced one of the warmest winters on record, followed by a generally wet and rainy spring. With so little winter kill and a healthy start to the season, contractors aren’t likely to use nearly as much seed for renovations this year as in years past.
“The seed market is a bit slow this spring with all of the rain across the country,” admitted Scott Harer, marketing director, Advanta Seeds Pacific, Albany, Ore., “Weather is the predominating factor in the market right now.”
| Seed Distribution: THE LOCAL CONNECTION | |
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Finding the variety of tall fescue or Kentucky bluegrass you really want is sometimes a challenge, because varieties are not always sold by themselves. Depending on the seed supplier in your area, the variety may be blended with other varieties to create a seed mix that suits your particular growing zone. The relationship that seed producers and marketers have with distributors varies from company to company and from distributor to distributor. Sometimes the producer delivers straight varieties that the distributor blends, and sometimes the varieties are pre-mixed. Once you’ve located a distributor for a particular variety of seed, you’ll need to talk with it to ensure you get the seed you want. Seed producers and marketers provide phone numbers that allow contractors to call for the names of their local distributor. Below is a list of these phone numbers: | |
| Advanta Seeds Pacific | 800/288-7333 |
| Barenbrug | 800/547-4101 |
| Burlingham Seed Co. | 800/221-7333 |
| Fine Lawn Research | 503/636-2600 |
| Jacklin Seed Co. | 800/688-7333 |
| Lebanon | 800/233-0628 |
| LESCO Inc. | 800/321-5325 |
| Lofts Seed | 800/526-3890 |
| Medalist America | 800/568-TURF |
| Pennington Seed Co. | 800/285-SEED |
| Pickseed West | 541/926-8886 |
| Royal Seed | 800/228-4119 |
| Scotts Co. | 800/543-0006 |
| Seed Research of Oregon | 800/253-5766 |
| Turf Merchants Inc. | 800/421-1735 |
| Turf Seed Inc. | 800/247-6910 |
| Zajac Performance Seeds | 973/423-1660 |
However, the majority of seed producers say that demand for turf is good, prices are reasonable and the outlook for the industry is bright. They point to a strong economy, great demand from all segments of the market and the increasingly positive profile turf seed is receiving as an important economic force.
This respect has manifested itself in a rash of acquisitions, including one by a public corporation trading on the NASDAQ exchange.
MARKET FORCES. The positive economic news that has driven growth in the lawn and landscape contractor market has also driven strong demand in the turf seed market.
“The turf seed market has been rolling along for several years now,” noted Steve Tubbs, president, Turf Merchants Inc., Tangent, Ore. “All segments of the industry have enjoyed growth.”
“Right now, the seed industry is doing great,” concurred Art Wick, director of turf research and development, LESCO Inc., Rocky River, Ohio. “Prices are strong, margins are decent, the supply of available product is not overly abundant and prices are up somewhat. Profits are probably in the best shape they’ve been in the last 15 years.”
“There’s been strong growth in the golf industry and a renewed interest in landscaping,” assessed David Lundell, vice president, Fine Lawn Research, Lake Oswego, Ore. “The economy is encouraging more construction, and people in general are interested in the aesthetics of turf. The industry as a whole is healthy.”
“I am amazed every year as to how strong the U.S. market is for turfgrasses and how it continues a healthy growth pattern,” explained Ronnie Stapp, senior vice president, seeds divisions, Pennington Seed, Atlanta, Ga.
Producers of turf seed have responded by adding production acres in virtually every species of turfgrass, Stapp noted. “And, so far, the warmer than normal winter and typically rainy weather in the Pacific Northwest this spring has set the turf up to generate a bumper crop of seed this year.”
GETTING TOGETHER. By now, news of the ongoing move toward consolidation in the landscape maintenance industry is old hat. But consolidation and acquisition in the seed industry are having an equally significant impact on an industry that has struggled with its fragmented nature for decades.
One major acquisition that occurred early in 1998 involved Jacklin Seed and Medalist America, Post Falls, Idaho, which were purchased by the $2 billion agricultural giant, J.R. Simplot. The real buzz, however, has centered on AgriBiotech Inc., Las Vegas, Nev.
AgriBiotech, which began its venture into the turf industry in 1995, has spent the last two years negotiating deals to purchase some of the industry’s best known seed labels. From ground zero, the company’s revenues have grown to more than $400 million through the purchase of 19 companies in the industry, including seed producers and marketers and biotechnology companies.
According to AgriBiotech co-founder John Francis, he and partner Johnny Thomas saw the potential for consolidation based on what had happened with agricultural crop seed production, such as corn and cotton. More than two decades ago, these industries experienced a consolidation cycle that created a handful of large competitors out of highly fragmented industries.
“If you look at what we are doing in a five-year time frame, it’s what it took 25 years for those two industries to consolidate,” noted Francis. “If you look at the cotton seed business, there is one dominate player. If you look at the corn seed business, you probably have three or four dominate players with 75 percent market share. We felt that if there was going to be one company that would emerge to that level within our sector, then it would be good for all of the seed businesses within the sector and, ultimately, good for the customer.”
The fragmented nature of the seed industry was one reason for AgriBiotech’s acquisition activity, but it was also driven by passage of the Plant Variety Protection Act, which allows seed producers to patent varieties of turf that they develop.
With the ability to patent varieties, companies can spend money on research with more confidence that they will receive royalties for the variety they develop. With in advent of highly expensive gene research in turf that is presently being conducted, known as “biotech” research, having this protection is vitally important.
Seed producers observing this industry trend are watching AgriBiotech carefully as a competitor, but are also hoping that its growth in the industry makes a positive difference.
“The hope is that the consolidations will make the industry a more profitable one for all concerned, be they part of a mass consolidation or an independent com-pany,” said Tubbs. “There is room for both. An efficient, young company with low overhead will fulfill a need in the marketplace just as a consolidator with stockholders and demands for earnings will.”
“Other industries that are fragmented are getting together, and the seed industry is no exception,” noted Mike Robinson, president, Seed Research of Oregon, Corvallis. “AgriBiotech is getting big fast, leaving fewer companies, fewer suppliers and fewer choices in the market.
“I hope that ABT works out,” Robinson continued. “Margins are too thin in general, and profits are small. Maybe AgriBiotech can pull prices up for everyone. We need a decent return on investment so we can invest the dollars into our research program. If we continue to get squeezed, we may have to look at cutting the research program.”
The author is Managing Editor of Lawn & Landscape magazine.
| Gene Technology: GETTING HIGH TECH
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Biotech involves altering the genetic makeup of a plant by adding genes to give the plant a specific positive characteristic. | |
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Contractors know that healthy competition raises the level of the quality of work produced by companies in a given market. This has also been true in the turf seed industry, where the quality of the turf varieties available in the market has steadily increased over the past 10 to 15 years. Turf seed purchased today at most reputable distributors and dealers across the country is by far superior to the varieties on the market a decade ago, and most of these developments were realized using traditional breeding methods. The positive appearance characteristics desired by contractors, such as dark green color, fine leaf texture and high density, have been vastly improved, as as has the turf’s ability to survive in the face of insect and disease attack and heat and drought extremes. Traditional breeding continues to produce better varieties of turf today. But now, some seed companies are taking the process deeper into the genetics of the plant and are exploring methods for inserting genetic material into plants that will help them resist diesease, insect and drought problems. Once these methods are perfected, the biotech revolution may change the way turf seed is viewed by producers and end-users forever. TECHNOLOGY QUEST. More than two decades ago, genetic engineering of agricultural crops such as corn and cotton created highly superior plants that resist disease and insect problems and produce greater yields for farmers. In the years that followed, the focus of high-tech genetic research expanded to include one of the green industry’s most prolific “crops” – turf. Agricultural biotechnology, or biotech, involves altering the genetic makeup of a plant by adding genes to give a plant a specific positive characteristic. Some of the characteristics that have been tested include resistance to nonselective herbicides and increased seed yields in Kentucky bluegrasses. Those optimistic about the potential of biotech research say the initial varieties are as close as three to five years away, while others insist it will be a decade or more before end-users see new varieties on the market. Regardless of the time frame, however, it’s clear that seed producers are determined to keep working toward developing the next revolution in turf seed. “For us, the most optimistic projection we would make would be three years to commercialization, and we think the outside is five years,” said John Francis, partner, AgriBiotech, Las Vegas, Nev. Francis said the company is committed to using biotech research to develop new turf varieties and has agreements with companies holding patents on plant genes to test their effectiveness on turf. Other companies see the enormous potential of biotech research, but see it as a much longer term strategy. -Paul Schrimpf | |
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