January 23, 2016 • By Tim Hoskins, lowa Farmer Today
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ABOVE: Joe Merschman, president and CEO, reviews a presentation in his office in West Point. Independent seed companies like Merschman Seeds have found ways to keep a market share in the seed business.
WEST POINT — Merschman Seeds got started in 1954 when Bill Merschman sold extra seed oats a seed company didn’t want.
Today, the company sells corn and soybean seed within a 400 mile radius of its.Southeast Io-wa headquarters here. That includes Iowa, Illinois, Missouri, Indiana, Nebraska, Kansas, Tennesse, Kentucky and Arkansas.
Joe Merschman, Merschman Seeds president and CEO, says over the years since his dad started the company, they have been successful by making changes that were responsive to their farmer customers.
They entered the soybean seed business in 1957. The company was one of the first to treat beans.
They expanded into to selling corn in 1992.
Merschman says they recognized the threat of glyphosate weed resistance becoming a challenge for farmers and saw it as an opportunity for the company, offering LibertyLink soybeans.
That helped expand the business in the mid-South where farmers faced weed resistance earlier than the Midwest.
Joe says the company is built on the culture of change.
“My dad liked change,” he says.
“He would never drive the same way back from Ames (to West Point) that he took there.”
Merschman says many independent seed companies are closer to the customer, therefore they can focus on local problems.
Over the years, the number of independent seed compariies has declined, but the market share has held steady in the past 10 to 15 years, says Todd Martin, CEO of the Independent Professional Seed Association.
Independent seed companies once held about 35 percent market share. In the past decade, it has been between 20-25 percent, he says.
Martin explains while there has been some consolidation in the seed industry, some new seed companies started up.
“There are customers that like the local buying experience,” he says, and independent seed companies are “hyper responsive to their customers.”
The seed companies’ man-agement is located closer to the farmer and they can make decisions quicker to react to a changing environment.
In addition, he says the independent seed companies can take advantage of various niche opportunities.
Martin says companies have taken different approaches to become successful.
- Beck’s Hybrids, based in Atlanta, Ind., has expanded as far west as Iowa and expanded their production capacity.
- Latham Hi-Tech Seeds, based in Alexander, Iowa, has been successful with using social media.
- TitanPro, based in Clear Lake, Iowa, offers chemicals, crop insurance and fertilizer along with seed.
Martin says, changing commodity prices is a large challenge that affects all of agriculture.
And consolidation of the larger technology and seed companies presents an opportunity and challenge for independent seed companies.
He says one potential challenge related to mergers of larger seed companies is how that affects supply of biotechnology traits and germplasm and competition in the marketplace.
The reduced competition could potentially mean increased costs and smaller margins for the independent seed companies.
There is also the challenge of new technology, he says. There are higher costs for technology, and this could reduce margins for independent seed companies.
But new tech presents an opportunity as well, he explains. There is growing interest in the use of microbes in agriculture, which could potentially have a lower cost to enter the marketplace.
Merschman is optimistic for the future of independent seed companies.
He says for a lot of independent seed companies, it is a family name on the seed bag that help drives them to provide a good product to their customers.
Members of the Merschman Seed team: John McKillip, controller/treasurer, Henry Merschman Sr., vice president, Bill Merschman, founder and. chairman, and Joe Merschman, president and CEO.