| July 31
July 31 U.S. chemical and seed company DuPont
said on Wednesday it completed its three-year effort to
buy a majority stake in South Africa's largest seed company,
overcoming that country's stiff opposition to the foreign
ownership with pledges to keep a rein on pricing and to aid
small South African farmers.
The deal with privately held Pannar Seed Ltd, a 55-year-old
seed company, should provide immediate financial gain to DuPont,
with new products expected to be on the market in August and
September, according to Paul Schickler, president of DuPont
Pioneer, DuPont's agricultural seed unit.
Both Pioneer and Pannar specialize in corn seed, or maize,
and will focus on improving those product lines. But the
companies will also explore opportunities for combining
strengths in crops that include sorghum, soybeans, and wheat.
"This partnership, will result in more products, better
products faster than the two companies could do individually,"
Schickler said in an interview.
DuPont now holds an 80 percent stake in Pannar. Other terms
of the transaction were not disclosed.
DuPont sees Pannar's seed operations, which extend across
nine African countries, helping broaden its infrastructure
across the continent.
Africa has about 86 million acres (35 million hectares)
available for maize production and seed demand is high, totaling
about $350 million in annual sales of hybrid maize seeds in
South Africa alone, according to DuPont officials. Currently,
average grain yields on the continent are only about one-fifth
of those in developed countries like the United States.
Pioneer officials say the South African market is a key
growth opportunity as concerns mount about global food security
and population growth. Pioneer, along with rival Monsanto Co.,
already saturate the United States with their
specialized high-yielding corn and soybean crops and are pegging
future growth to international expansion.
DuPont announced its intent to take a majority stake in
Pannar in September 2010 and had hoped to complete the deal in
early 2011. But opponents convinced regulators in South Africa
to initially deny DuPont's bid.
The critics argued that allowing foreign corporate control
of South Africa's seed supply would erode availability of
traditional seed varieties, hurt export business with countries
opposed to the biotech crops that DuPont develops, and force
farmers deep into debt to pay for expensive seeds that are the
patented properties of the U.S. corporations.
DuPont appealed the rejection by regulators and ultimately
convinced South African officials to allow the transaction under
certain conditions, including pledges by DuPont and Pannar to
keep a lid on price increases for some new products for at least
three sales seasons.
As well, Pioneer and Pannar pledged to keep in place for
three years the maize hybrids currently marketed by Pannar, and
to retain Pannar's current and replacement hybrid maize seeds
and other maize varieties ordinarily sold to developing farmers.
The companies also said they intend to maintain for five years
Pannar's breeding programs in South Africa for sunflower, grain
sorghum, forage sorghum, wheat, dry beans and soybeans.
Pioneer has also committed to investing 62 million South
African Rand (more than $6 million USD) by 2017 to establish a
technology hub in South Africa to bring advanced technologies to
South Africa and Africa to speed and improve plant breeding.
Pioneer will spend about 20 million rand on educating and
aiding small farmers to improve productivity, including the use
hybrid seed, Schickler said. And the company is developing
scholarship and fellowship opportunities for African plant
The commitments have not fully satisfied critics. Mariam
Mayet, director of the African Centre for Biosafety, which
opposed the Pioneer deal with Pannar, said Pioneer would be able
to corner a greater share of the market and control prices for
"Increased prices of maize seed will have a detrimental
effect not only on farmer income but also on food security as we
have already argued during the hearings," she told Reuters.