DuPont Co.’s (DD) purchase of a South African seed producer, approved after more than a year of regulatory delays, gives it roughly double the market share of Monsanto Co. (>> Monsanto Company) in the region, a DuPont executive said.
DuPont’s seed subsidiary, Pioneer Hi-Bred, is buying the company, Pannar Seed Ltd., for an undisclosed sum in a deal that was first announced in 2010. An appeals court approved the deal Monday, overturning other regulatory rejections that had delayed the sale.
Pioneer and Pannar, along with St. Louis-based Monsanto Co. (>> Monsanto Company), are the top three seed producers in South Africa, with roughly equal market share, said Dan Jacobi, Pioneer’s vice president over its commercial business in Africa, Asia-Pacific, China and Europe. Acquiring Pannar gives Pioneer a clear advantage over Monsanto in the region, he said.
A Monsanto spokeswoman said the company has farmers growing its corn, cotton and vegetable seeds in Africa, but did not give a breakdown of its seed sales there.
Opponents of the Pannar deal focused in on the effect of consolidation on competition in a market where the top three seed companies were Pioneer, Monsanto and Pannar. But Jacobi said that without the deal there would ultimately be two large competitors anyway.
“There was no standing still here,” he said. “If Pannar wasn’t able to find a partner to ramp up their breeding efforts, they wouldn’t be viable for very long.”
South Africa has been the first country on the continent to adopt genetically modified seeds, but Kenya and Ghana are also “on the road” toward genetically modified corn, Jacobi said. Pannar does business in both countries, which made the deal more attractive to Pioneer, Jacobi said.
Corn yields across sub-Sarahan Africa lag far behind the U.S., due in part to antiquated technologies. African farmers typically yield about 1.5 metric tons per hectare, Jacobi said, versus 10 metric tons in the U.S.
“There’s no question in my mind that Africa will get to that level of production,” he said.