KANSAS SEED GRAIN PRODUCERS TAKE TECHNOLOGY MARKETING TO A NEW LEVEL
by Linda Leake Contributing Editor
What's the best turnkey deal you ever got? A great custom-built home, perhaps? A thriving business?
Kansas seed producers are geared to create turnkey deals with "everybody wins" potential, courtesy of a new endeavor they call AGvantage IP.
AGvantage IP is a non-profit cooperative established in 1998. The co-op's mission is to devise custom identity preservation programs that begin with seed increase and production and end with delivery of the specified grain products to the end users.
The co-op is well positioned to meet its goals, currently representing some 80 professional Kansas-based seed producers boasting a combined database of nearly 20,000 farm customers/producers. Membership ranges from small farmer-owned seed companies to large companies with significant numbers of dealers. AGvantage IP membership requirements include status as a certified seed grower in Kansas, plus a $75 annual fee.
Collectively, the group produces 75,000 acres of seed wheat annually and markets approximately 2,000,000 units of seed wheat. Moreover, they produce about 30,000 acres of soybean seed.
Co-op members have a combined total capacity of greater than 100,000 acres when it comes to wheat, soybean, grain sorghum and corn seed production.
Soon after AGvantage IP was formed, the organization's seven-member board of directors hired Paul Friedrichs, a Kansas City, Kan.-based agribusiness consultant, to take their ideas to the next level. The goal was to create awareness of AGvantage's potential with as wide an audience as possible through personal contact and one-on-one discussion.
Working part time since April 2000, Friedrichs has laid significant groundwork, sharing the AGvantage IP concept and developing relationships with some 150 potential clients, including major biotechnology firms, public and private research institutes, grain handlers and exporters, plus food and baking companies. His principle contacts include heads of wheat research divisions, academic wheat researchers, commodity procurement specialists and licensing agents.
"We view ourselves as a vehicle for technology companies and researchers to market their products," Friedrichs says. "Basically we are a technology recruiter. We find technologies, negotiate deals and place clients with appropriate members of our organization."
"While we are willing and capable of marketing our services relative to a number of major grains, particularly soybeans, we feel wheat holds the greatest potential for us because there is not an infrastructure for wheat seed like there is for corn, soybeans and sorghum," Friedrichs points out. "So we have become the principal entity for wheat, which hopefully will provide access to genetics and markets throughout the world. We provide an existing and successful infrastructure through which people can market the specific and novel traits they are developing."
In its first business endeavor, AGvantage IP negotiated an identity preserved white wheat seed project for Farmland Industries, Kansas City, Mo.
"Our goal was to produce and deliver 200,000 bushels of seed for white wheat to Farmland Industries' Grain Division at their request, and we were successful," say Rodney Ohlde, a principal of Ohlde Seed Farms, Palmer, Kan., who is just starting his third term as AGvantage IP president.
According to Ohlde, AGvantage IP is the only seed organization that is aggressively pursuing identity preservation markets.
In it's most recent project, AGvantage IP is in the process of licensing a Clearfield IMI wheat variety from BASF that is resistant to over-the-top IMI chemical applications.
"Basically, it's a weed control system using a non-GMO resistant wheat variety that won't be killed by the herbicide," Friedrichs explains. "The genetics were developed by the Colorado Wheat Research Foundation and there is currently foundation seed for the project in the ground in Kansas, which should be ready for sale in limited quantities this fall. Large amounts of seed should be ready in 2003."
"As more companies see the advantage of identity preserved products to increase their efficiency and create special end-use products with real value, we will be able to develop more outlets for wheat, which currently is not an economic benefit for producers, " Friedrichs says.
Perhaps, Friedrichs says, a biotech research company develops a specific trait that might have value in the baking industry, but that firm doesn't have the wheat seed infrastructure to pursue the project on a commercial level. "Instead of that company having to grow the seed wheat, plus condition, bag and market it, AGvantage IP offers them an existing infrastructure through which they can more easily go after the target market," Friedrichs explains.
"Thus far, reaction to our group has been very positive and people are saying they like our concept and our model," Friedrichs reports. "While we haven't struck any major deals yet, the majority of the people we are talking with say they want to keep a relationship going. 'When we are ready, we'll make a deal,' they are saying."
Friedrichs is quick to point out that in the world of seed development, progress takes time, generally requiring as long as eight years to release a new wheat variety from the first genetic cross.
ADDED VALUE SPELLS SUCCESS
"Unless we add extra value to our seed products, we are not successful," says AgVantage IP's vice president, Tom Lutgen, a partner and president of Star Seed Inc., Osborne, Kan.
"We believe there are special geographic areas for production and niche markets, and we want to take advantage of those markets with exclusive rights to some special crops for specific end users," Lutgen says.
"We don't need more seed companies," he purports. "Rather, we need a way to make existing seed companies more viable. We think outside the box and don't want to be seen as a seed company, but rather as an asset grower."
At first, many people, including traditional suppliers of genetic products, food industry professionals and grain handlers, thought AGvantage IP was not a good idea,
Lutgen says. The main reason, he believes, is because the program "is different."
"We were ahead of our time with the concept," Lutgen elaborates, "but members and our board have volunteered the time and travel expenses to make this work. It has been an exciting, successful project and now we are seeing the possibilities of what can happen."
"Not any one of us would individually have the resources to develop a new identity preserved product on our own, but collectively our 80-some members can make it happen," Lutgen says
AgVantage IP is important in a lot of respects for small family businesses, says board member Steve Ahring, an agronomist with Delange Seed, Girard, Kan.
"Seventy percent of Kansas seed is marketed by family-run businesses," Ahring points out. "In order to compete with the multinational companies that control technology, we have to work together to develop a viable market share."
There's bound to be a biotechnology breakthrough that impacts a crop's immunity to disease and increases yield, and it could happen in wheat, Ahring projects.
"Since wheat is the leading crop produced in Kansas - eight to 10 million acres of wheat are grown in Kansas annually - we need to have an attractive marketing and distribution package to offer these developers of technology," Ahring says.
"With all of the recent corporate mergers in the ag chemical industry, and budget cuts with land grant universities and research institutions, it makes sense for AGvantage IP to be the 'go between' and put emerging technologies together with the people or companies that can utilize them," concurs Maurice Miller, production and sales manager for Sharp Seed Company, Healy, Kan. Miller serves as secretary/treasurer for AgVantage IP.
"I think AgVantage IP's plan is a positive thing, especially since there are no margins in commodity production," Miller purports. "In the years ahead, identity preserved products will become the major way most farmers can make some money in the farming game. I believe our efforts will create more room for profit margins that producers can keep."
Identity preserved products help the farmer produce seed for both domestic and international markets, adds Tom Clayman, sales manager for Kauffman Seeds, Haven, Kan., who has been an AGvantage IP board member for two years. "Working together, Kansas certified seed growers will have a wider base of products to offer," Clayman says. "We are at the forefront of pursuing a new adventure in agriculture and the public will see that positive, innovative things are happening."
For more information about AGvantage IP call Rodney Ohlde at 785/692-4555 or Tom Lutgen at 800/782-7311, or visit www.agvantageip.com . AM