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14 SEEDWORLD.COM DECEMBER 2015 INNOVATION AND RECORD commodity prices drove continued investment in agriculture during the past decade but the winds have changed. Commodity prices have declined and farmers started scaling back purchases in 2014 and thats continued through 2015 and is forecast into 2016. These cut- backs have made a dent in the bottom lines of agribusiness companies including the seed industry. Looking at the top six seed and agrichemical companies nearly all are trying to scale back. Some are divesting businesses some are buying back shares some are restructuring and some have announced massive layoffs. And some are combining sev- eral of these measures. During the most recent round of earnings announcements Monsanto reported a decrease in net sales of nearly 500 million for its seeds and genomics business in fiscal year 2015. In addi- tion Monsanto announced the company plans to begin global restructuring actions to enhance competitiveness by delivering cost improvement and to support long-term growth. DuPont reported a seasonal operating loss of 210 million due to lower volumes and a 108 million negative currency impact. We saw significant negative impacts from currency as well as market weakness in agriculture emerging market industrial pro- duction and oil and gas says Nick Fanandakis DuPont execu- tive vice president and chief financial officer. For Dow sales were 12 billion down 16 percent year over year. The company attributed the decrease to pricing and cur- rency. Volume rose 2 percent excluding the impact of divesti- tures and acquisitions. Gains were reported in most operating segments excluding Agricultural Sciences. There will be consolidation among seed and agchemical companies at the top experts agree. Julie Deering BASF reported a sales decrease of 5 percent in the third quarter compared to the same period in 2014. And Syngenta reported sales for the third quarter were 12 percent lower due to depreciation of most currencies against the dollar. Bayer might be the best-positioned company as its Crop ProtectionSeeds posted a slight sales increase in a weaker market environment particularly in Latin America. The subgroup achieved its highest sales growth in the AsiaPacific region at 7.2 percent. Business expanded by 4.3 percent in North America and 3.1 percent in Europe. By contrast sales in the Latin AmericaAfricaMiddle East region moved back 1.2 percent. The Inevitable Consolidation is inevitable with the cost of research and the need for return says Bill Goodbar president of the Goodbar Group. Thats going to be the driving force he says. Monsanto proved you can make good money off of traits but its getting harder and more competitive. The auto industry went through it and so did the pharmaceutical industry. Its big money with big research and development budgets and expenses. Dean Cavey managing partner at Verdant Partners LLC attributes the current business environment to decreased com- modity prices and the need to diversify product offerings. There are two things that have thrust this subject into the spotlight during the past few weeks Cavey says. The first is that commodity prices have decreased to levels that make it dif- ficult to justify a continued high level of research related to seeds and traits. The second is larger companies are looking to expand their footprint in the global agricultural markets. For example Monsantos run at Syngentas chemistry platform Monsanto is looking to reach more farmers with a more complete offering of products around the world and do it more efficiently. This has then prompted other companies to evaluate how they will compete in this space he says. All the major players are looking at new and better ways to compete. Both Cavey and Goodbar believe there will be an announcement in the coming months but where it comes from and which companies are involved remains to be seen. Realignment Looms