The global seed industry is at a pivotal moment, with a market value soaring to approximately $54 billion in 2023 — an impressive 3.5-fold increase since 1996. This growth is largely driven by the rise of genetically modified (GM) seeds, which now represent almost 50% of the market despite covering only 18% of the global planting area.
Seeds are a highly R&D-intensive sector, with leading global companies investing an average of 14% of their sales in research and development — significantly higher than other areas of the agri-food chain and comparable to the pharmaceutical industry. Over the past three decades, a total of 137 GM traits have been introduced across 12 crops, with corn leading the way, accounting for 52% of these innovations. This trend highlights the critical role of innovation in driving market dynamics.
Rising seed prices have primarily fueled market growth, reflecting the value added to farmers through innovative traits that enhance income. An analysis of US GM seed prices from 1996 to 2022 reveals a consistent upward trend, though a notable decline between 2014 and 2018.
This slump was primarily due to a lack of new trait introductions in cotton. Following the introduction of the Bollgard III trait in 2011, no new trait was added to cotton until 2020, when the XtendFlex trait was introduced. Since 2021, seed prices have risen again, mainly driven by new trait introductions, increased commodity prices, and higher farmer’s income.
Looking ahead, the introduction of new GM crops and the adoption of GM technology in emerging markets will be crucial for sustaining growth.
The Asia-Pacific region is particularly noteworthy, with significant developments in China, India, the Philippines, Indonesia, Bangladesh, and Australia. China is shifting its stance on GM technology, with traits for corn and soybeans expected to be introduced soon. In 2021, China launched a pilot project for GM corn and soybeans, which has expanded significantly. By 2024, China’s GM pilot area is estimated to have increased 150% over the previous year, reaching 1.6 million acres, though this still represents only about 1.5% of China’s total corn planted area. A strategic focus on food security and self-reliance drives the recent policy developments in China regarding GM and New Breeding Techniques (NBTs).
The commercialization of GM seeds could significantly enhance their value and lead to a transformative shift in the Chinese seed industry, similar to the changes seen in the US during the late 1990s and early 2000s. Additionally, NBTs offer the potential to introduce many new traits to food crops previously untouched by GM technology. Chinese companies are heavily involved in NBT research, accounting for about one-quarter of the 700+ traits in the industry pipeline, based on S&P Global’s Seed Innovation database.
In the next 10-20 years, we expect the Chinese seed industry to be unrecognizable from its current state, with significant implications for the global seed market as competitive Chinese companies expand internationally. No clear pathway for international seed players for Foreign Direct Investment in China for GM traits and key crops would create a challenge to benefit from GM commercialization in the country.
In summary, while challenges such as regulatory hurdles and market acceptance persist, the future of the seed industry looks promising. Innovation through GM technology and NBTs will drive growth in established markets like North America and South America, as well as in emerging markets in the Asia-Pacific region, despite ongoing uncertainties in Europe. Harmonization of regulations at the global level is crucial for NBTs to effectively contribute to seed market growth, as disparities can hinder technology adoption. S&P Global’s analysis of countries with NBT regulatory frameworks reveals that 68% of the countries regulate these techniques as conventionally bred, adhering to a definition that excludes transgenes. However, inconsistencies in terminology among these countries — such as cisgenesis, SDN1, and SDN2 — remain a challenge that needs to be addressed. Continued investment in research and development and strategic market expansions will be key to unlocking new opportunities and ensuring global food security in an ever-changing landscape.
This Global Seed Market Update is a summary of a presentation on the same at the Seed Congress of the Americas 2024, held in Buenos Aires Sept. 30 to Oct. 2.
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