What Can We Learn from a Small Seed Company in the United States as it Grows Its Business?
The crop-breeding programs have accelerated in recent years and should be able to stay ahead of climate change. Roger Enestvedt, Enestvedt Seed
The African seed industry is highly fragmented with hundreds of small- and medium-size seed companies and a few multinationals, which mirrors the 20th century North American seed industry. Rapid consolidation of the U.S. seed industry occurred starting in the late 1990s, yet one small U.S. seed company in particular stands out for longevity and resilience in an era of economies of scale: Enestvedt’s Seed, based in Minnesota, in the northern Midwest region of the United States has been in business since 1900.
Agriculture and the seed industry has changed dramatically in the United States in 123 years, yet Enestvedt’s Seed thrives. What can we learn from this company that applies to seed system work and investments in Africa? What are the major changes that have taken place since Engebret Enestvedt started selling open-pollinated variety corn seed? The following is a short interview between your reporter and Roger Enestvedt (RE), third-generation owner-operator of Enestvedt Seed.
Q: First off, a lot of people are concerned about climate change, crop production, and food security. Will a good crop breeding program and quality seed stay ahead of climate change?
RE: The crop breeding programs have accelerated in recent years and should be able to stay ahead of climate change. The newer genetics and high-quality seed will always be in high demand.
Q: How long has Enestvedt seed been in business?
RE: Since 1900, 123 years now. My grandfather, Engebret, was raising and selling seed when he was going to the St. Paul School of Agriculture (now the University of Minnesota), and that's how we got our start. My great grandfather had immigrated from Norway in 1867, and the seed company started on our homestead. We've been here ever since.
Q: That was about 30 years before hybrid seed corn was available. What were the first crop seeds that Enestvedt sold?
RE: Open pollinated corn varieties (OPVS). Minn13 OPV corn was the first. It wasn't until the 1930s and 1940s when hybrid maize was developed.
Q: Do you know why your family decided to get in the seed business back in 1900?
RE: Our grandfather wanted to diversify and, being settled in the Minnesota River valley, he saw a need for alfalfa seed. And some of the ground here is fairly sandy so he thought maybe he couldn't make a living on crop farming alone. So he diversified into seed. He was really interested in the genetics side, and how good seed and genetics could improve agriculture, so it was a good fit.
Q: How has the seed industry changed in the past 123 years?
RE: We went from horses to tractors, which allowed narrower rows and better use of the land. Of course the OPVS to hybrid corn was a major change. With hybrids, farmers bought new seed every year, which created more investment in research by the companies. The availability of manufactured fertilizer, too, was one of the bigger improvements to productivity.
Q: And more recently, in the past 25 years, what was the biggest change?
RE: Biotech was the biggest change. It helped farmers be more efficient. Computerized equipment, global positioning and satellite systems, too. Just the overall efficiency with new technology seems to be coming faster. Farmers just keep getting more efficient in a lot of ways.
Q: What seed products do you handle now?
RE: Corn, soybean, small grains (wheat and oats), alfalfa, and grass seed.
Q: What is your biggest revenue generator?
RE: Our main focus is on seed corn, by far, followed by soybeans. Small grains are less and less grown in this area due to less livestock and partly because of grain price.
Q: Who would you consider your main competition when it comes to the OPVS you sell?
RE: Back when it was just OPVs, the main competition was with saved seed. Farmers saved their own seed and would make a new purchase once every three years or so, maybe less. No one plants their own corn seed now, of course. Hybrids are so superior to OPVs, so farmers would never plant a corn OPV anymore.
We have competition from other seed companies, but we're pretty small so we don't consider that we're competing with the big companies. We can beat other smaller companies on price because we do everything from start to finish: seeding to production, conditioning to bagging, and sales and marketing is all done in house. So the advantage is quality and price and being able to maintain margins because we do everything ourselves.
Q: What is the source of the genetics, or foundation seed, of your OPV crops?
RE: University of Minnesota genetics is our main source, sometimes we get oats from South Dakota State University, but they're all public institutions. Corn is primarily private company genetics. Years ago the university developed and sold their own inbreds (for hybrid development by seed companies), that would have been in the 1960s and 1970s. These would have been "MINN Hybrids." By the late 1970s, they no longer developed the inbreds but they would educate the breeders about seed production and help the private sector in that way. Everything in the hybrid corn business was privatized by then.
Q: For those not in the seed business, can you explain why your only hybrids are in corn?
RE: Sure, it's pretty simple. Breeders have never been able to overcome the cost-of-goods and technical problems to produce hybrids in most other crops. With corn, the flower is very unique in the crop world. Having that big tassel, which produces the pollen, far away from the silks, which receive the pollen and create a kernel, means that we've been able to detassel and eliminate the pollen in the female plants so they don't pollinate themselves. We can make sure we get 100 percent cross-pollination from the male plants (with the tassels still in place) in the seed field. The cross-pollination gives us hybrid vigor, and it's not as easy to accomplish in other crops.
Q: For OPVs, how often do you introduce a new variety to your customers?
RE: For small grains, we generally evaluate new varieties every year but we don't switch varieties for what we offer to our customers unless we see a vast improvement in performance. If a variety is proven to work and there's no obvious advantage with a new variety, we'll stick with the older varieties. Newer isn't always better.
Q: So what goes into your decision to introduce a new variety and discontinue an older variety?
RE: Yield and disease resistance would be the two main factors. Standability is important. If you have a nice yield in the field but the plant falls over, it's tough to harvest and the quality suffers. Farmers hate a lodged crop, always hard to harvest. And in wheat you want fairly good protein and high test wheat. Same with oats; standability is important, and for livestock farmers they like the taller varieties for more straw. Oat straw makes good bedding for livestock.
Q: How about corn and soybeans?
RE: Yield, of course, is important, but stability, year after year proven yield, is critical. And as with wheat and oats, standability is always important. Harvesting corn that's laying down, and you're running out of time because winter weather is closing in, is awful. Farmers won't buy that hybrid twice.
Stress tolerance is really important, like drought stress. Lots of times we'll have a plot winner in our trials but it won't perform well, or be a real flop, in the farmers' field. So besides yield, yield stability and standability are really important.
Q: How do you interact with the public sector, like the University of Minnesota, and in what ways have they been a partner in your business?
RE: We have a very good relationship with the University of Minnesota. We've been a member of Minnesota Crop Improvement for many years. We used to raise foundation soybean seed for them. And we had some corn inbreds we raised for the University, too. They've been a good partner for us, good value coming out of St. Paul.
Q: There are many differences between the seed industry in North America and Africa, but also many similarities. What advice would you give for someone trying to make it in the seed industry in Africa, where small seed companies still dominate in most crops and regions?
RE: I think it's the same as anywhere. First, you have to have a very good product and good quality seed. Then stand behind your product and give good customer service. If you have a product that performs well — with good service, good quality seed — those customers will continue to come back, no question. Once you have a base of customers, it's easier to attract new customers. You have to treat customers fairly, regardless of the size of their operation, 10,000 acres or 100 acres, treat them right. And giving deals for NEW customers to attract new business just doesn't work really well either. You have to be fair to all customers. If anything, the loyal customer should be getting the better deal, not the new customer.