Argentina is a potentially lucrative market for genetically modified seed makers. The South American farming powerhouse is the world’s third-largest soybean exporter and ranks No.2 in corn exports.
The 50-50 venture between Bioceres and Arcadia, dubbed Verdeca, hopes to have its soybean seeds on sale in 2015 or 2016, Arcadia Biosciences CEO Eric Rey said in an interview.
The two companies have already invested about $120 million to develop seeds that will combine transgenic traits for resistance to the herbicide glyphosate with drought tolerance and increased nitrogen and water use efficiency.
Another $20 million to $40 million will be spent over the next four or five years to gain regulatory approval for the seeds in key markets, including other South American nations, the US, China and India, Rey said.
Bioceres is owned by over 230 of Argentina’s biggest farmers, who together plant about 2.5 million hectares of soybeans each year in South America.
The firm has developed its seed technology with the federal government’s science and technology promotion institute, Conicet.
Verdeca’s strategy involves building on a platform of established genetic traits and to take advantage of the expiration of Monsanto’s US patent for glyphosate-resistant soybeans in 2014, said Bioceres CEO Federico Trucco.
Privately held Arcadia has so far focused on developing new agricultural biotechnology and licensing it to other companies who go through the costly process of obtaining regulatory approval.
But as a partner in Verdeca, Arcadia wants to take its new seeds through the regulatory approval process, after which "value goes up dramatically," Rey said.
Verdeca plans to sell its products through conventional seed channels under licensing agreements with major distribution companies, he said.
Risk of introduction
Verdeca is aware of the risk of introducing new soy seeds into Argentina, but Rey is confident that the company’s ownership structure will allow it to generate sales as many of its potential customers are also shareholders. "We have a built-in customer base," he said.
Grupo Los Grobo, one of the largest soybean producers in the world with fields in Argentina, Brazil, Paraguay and Uruguay, owns 3% of Bioceres.
The small number of biotechnology companies in the transgenic seed market is a problem for growers and more competition is needed, Los Grobo President and Bioceres board member Gustavo Grobocopatel said in an interview. "There should be 20 Monsantos and 10 Bioceres," he said.