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National Agricultural Library Cataloging Record:

Fernandez-Cornejo, Jorge

 The seed industry in U.S. agriculture.

 (Agriculture information bulletin ; no. 786)

 1. Seed industry and trade--United States. 2. Seeds--Prices--United

States.

 3. Seed industry and trade--Law and legislation--United States.

 4. Seeds--Research--United States. 5. Seeds--Biotechnology--United States.

 I. United States. Dept. of Agriculture. Economic Research Service. II.

Title.

HD9019.S432
The Seed Industry in U.S. Agriculture: An Exploration of Data and Information

on Crop Seed Markets, Regulation, Industry Structure, and Research and

Development. By Jorge Fernandez-Cornejo, with contributions from Jonathan

Keller, David Spielman, Mohinder Gill, John King, and Paul Heisey. Resource

Economics Division, Economic Research Service, U.S. Department of Agriculture.

Agriculture Information Bulletin Number 786.

Abstract

The unprecedented growth in crop yields and agricultural total factor productivity

over the past 70 years owes much to a series of biological innovations embodied in

seeds, beginning with the development of hybrid crops in the United States in the

early part of the 20th century, continuing with the adoption of high-yielding varieties during the Green Revolution of the 1960s and 1970s, and more recently,

modern biotechnology. Throughout this period, the seed industry evolved, as small

businesses gave way to larger enterprises that integrated plant breeding, production, conditioning, and marketing functions. The industry was further shaped by

widespread mergers and acquisitions in the latter part of the century, rapid growth -

in private research and development (R&D), shifting roles of public and private

R&D, and a “coming of age” of agricultural biotechnology. 

Keywords: Seed markets, seed costs and prices, regulation, plant breeding, field

crops, research and development, industry concentration, biotechnology.

Note: The use of brands or firm names in this publication does not imply endorsement or approval by the U.S. Department of Agriculture.

Acknowledgments

The authors wish to thank Kitty Smith, Keith Wiebe, Greg Traxler, and Carl Pray for

their thoughtful reviews of the whole manuscript and their valuable comments. We

also thank Thomas Salt, Jeffrey Strachan, and John Turner, who reviewed portions of

the manuscript and provided valuable comments and suggestions. We are grateful to

Jeffrey Strachan for providing updated data on plant variety protection certificates.

We also thank John Weber for valuable editorial assistance, Wynnice Pointer-Napper

for graphics and document layout, and Victor B. Phillips, Jr., for cover design.

1800 M Street, NW

Washington, DC 20036-5831 January 2004
ii ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

Contents

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .vi

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Background: The Science of Seed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Improved Seed Is a Major Contributor to Crop Yield Gains and 

Agricultural Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Contribution of Plant Breeding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Purchased Seed Use, Purchase Value, and Trade Have Grown in 

Recent Decades . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Seed Market Size and Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Seeding Rates and Costs for Major Field Crops . . . . . . . . . . . . . . . . . . . . . .7

International Seed Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Regulations Have Affected the Seed Industry . . . . . . . . . . . . . . . . . . . . . . . . . .18

Appropriability and Agricultural R&D . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

IPR Protection in the Seed Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

IPR in the International Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

Regulation To Ensure Seed Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Environmental and Consumer Protection . . . . . . . . . . . . . . . . . . . . . . . . . .23

Seed Industry Structure Is Characterized by Growth 

and Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

Early Industry Structure: 1920-1970 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

Modern Industry Structure: 1970-Present . . . . . . . . . . . . . . . . . . . . . . . . . .25

Mergers and Acquisitions Rose in the Past Three Decades . . . . . . . . . . . . . . .30

The Effects of Concentration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37

Roles of Private and Public Sector R&D in Crop Seed Have Shifted . . . . . .41

Returns to R&D Spending on Plant Breeding . . . . . . . . . . . . . . . . . . . . . . .41

Public R&D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

Private Sector R&D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

Plant Breeding Research Patterns by Crop . . . . . . . . . . . . . . . . . . . . . . . . .47

Research Patterns in Terms of Scientist Years . . . . . . . . . . . . . . . . . . . . . . .49

Introductions and Trials of New Varieties Are Increasing Over Time . . . . . .51

PVP Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

Agricultural Biotechnology R&D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52

Field Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53

Determination of Nonregulated Status . . . . . . . . . . . . . . . . . . . . . . . . . . .61

Adoption of Crop Biotechnology Products . . . . . . . . . . . . . . . . . . . . . . .61

Concentration and Private Sector R&D . . . . . . . . . . . . . . . . . . . . . . . . . .62

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● iii

List of Figures

1. Corn yields and total factor productivity in U.S. agriculture . . . . . . . . . . . . . .1

2. Adoption of hybrid corn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

3. Adoption of biotech crops in the United States . . . . . . . . . . . . . . . . . . . . . . . . .4

4. Yields for major crops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

5. Corn yields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

6. Soybean yields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

7. Cotton yields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

8. Wheat yields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

9. Farm and seed expenditure indices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

10. Seed expenditures share of total farm expenditures . . . . . . . . . . . . . . . . . . . . .8

11. Market shares of four largest firms, U.S. corn seed industry . . . . . . . . . . . . .30

12. Market shares of four largest firms, U.S. cotton seed industry . . . . . . . . . . . .37

13. Plant breeding as a share of total agricultural R&D expenditures . . . . . . . . .46

14. Public and private research expenditures on plant breeding . . . . . . . . . . . . . .46

15. Research effort by crop, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

16. Number of PVP certificates issued for corn, soybeans,

cotton, and wheat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52

17. Total number of field release applications, by year . . . . . . . . . . . . . . . . . . . . .55

18. Total number of field release approvals, by year . . . . . . . . . . . . . . . . . . . . . . .55

19. Four-firm concentration ratio in APHIS field release approvals 

for corn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62

20. Four-firm concentration ratio in APHIS field release approvals 

for soybeans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62

21. Four-firm concentration ratio in APHIS field release approvals 

for cotton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
iv ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

List of Tables

1. U.S. seed use for major field crops, by crop and marketing year . . . . . . . . . . .7

2. Estimated values of commercial markets for seed . . . . . . . . . . . . . . . . . . . . . . .8

3. U.S. farm seed expenditures and farm seed price index . . . . . . . . . . . . . . . . . .9

4. Estimated U.S. market and purchased seed value, 1982 . . . . . . . . . . . . . . . . .10

5. Estimated U.S. market and purchased seed value, major crops, 1997 . . . . . .10

6. Seeding rate, cost per acre, and share of acres with purchased seed,

major field crops in surveyed States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

7. Seeding rate, cost per acre, and share of acres with purchased wheat 

seed in surveyed States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

8. Exports and imports of U.S. seed for planting . . . . . . . . . . . . . . . . . . . . . . . .14

9. Regional and country shares of U.S. seed exports . . . . . . . . . . . . . . . . . . . . . .15

10. Regional and country shares of U.S. seed imports . . . . . . . . . . . . . . . . . . . . .16

11. U.S. exports of corn and soybean seed by country of destination 

and volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

12. Global seed sales of top international seed companies . . . . . . . . . . . . . . . . . .26

13. Estimated seed sales and shares of U.S. market for major 

field crops, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

14. Global seed and pesticide sales of major multinational firms, 1999 . . . . . . . .27

15. U.S. market shares of corn seed by company . . . . . . . . . . . . . . . . . . . . . . . . .31

16. U.S. market shares of corn seed by company . . . . . . . . . . . . . . . . . . . . . . . . .31

17. U.S. shares of soybean varieties, public versus private . . . . . . . . . . . . . . . . . .36

18. U.S. market shares of soybean seed varieties . . . . . . . . . . . . . . . . . . . . . . . . .36

19. U.S. market shares of soybean seed, by company . . . . . . . . . . . . . . . . . . . . . .37

20. Share of cotton varieties planted in the United States, by firm 

or institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38

21. Share of wheat seed sales by principal private and public breeders in the

United States, 1980-81 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40

22. U.S. wheat market shares, public and private varieties . . . . . . . . . . . . . . . . . .40

23. Estimated returns to crop research in U.S. agriculture, various years . . . . . . .41

24. Public agricultural research and development . . . . . . . . . . . . . . . . . . . . . . . . .43

25. Private agricultural research and development . . . . . . . . . . . . . . . . . . . . . . . .45

26. Private sector firms engaged in plant breeding, major field crops . . . . . . . . .46

27. Plant breeding R&D expenditures by company . . . . . . . . . . . . . . . . . . . . . . .48

28. Research expenditures on crop improvement for corn, public 

and private . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49

29. Research expenditures on crop improvement for soybeans,

public and private . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49

30. Private research and development expenditures of the 14 largest

seed firms, by year and crop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● v

31. Number of firms and scientist years (SY) engaged in private plant 

breeding for major field crops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50

32. Number of scientist years (SY) devoted to plant breeding, public 

and private, by crop, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50

33. Public and private research in plant breeding, scientist years (SY),

and cost, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50

34. Stages and time required in plant breeding . . . . . . . . . . . . . . . . . . . . . . . . . . .51

35. Research time required for developing new seed varieties 

major field crops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52

36. Plant variety protection certificates issued for new crop varieties,

field crops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53

37. PVP certificates issued for major field crops . . . . . . . . . . . . . . . . . . . . . . . . . .54

38. Applications for field releases by APHIS,

by crop and year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54

39. Status of field release notifications and permits . . . . . . . . . . . . . . . . . . . . . . .55

40. Number of applications for field releases, by crop . . . . . . . . . . . . . . . . . . . . .56

41. Share of applications for field releases received by APHIS,

by trait . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56

42. Status of notifications and field release permits, by company,

1987-2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56

43. Field release approvals for corn, by company . . . . . . . . . . . . . . . . . . . . . . . . .57

44. Field release approvals for soybeans, by company . . . . . . . . . . . . . . . . . . . . .58

45. Field release approvals for cotton, by company, . . . . . . . . . . . . . . . . . . . . . . .59

46. Field release approvals for wheat, by company . . . . . . . . . . . . . . . . . . . . . . . .59

47. Field release approvals for corn, soybeans, cotton,

and wheat, by company, 1987-2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60

48. Crops no longer regulated by USDA, 1987-2001 . . . . . . . . . . . . . . . . . . . . . .61

49. Crops no longer regulated by USDA, by trait, 1987-2001 . . . . . . . . . . . . . . .61

50. Biotech patent ownership for corn and soybeans, by company . . . . . . . . . . . .63

51. Status of petitions for deregulation, by company, 1987-2001 . . . . . . . . . . . . .63
vi ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

Summary 

The U.S. seed industry changed dramatically over the past century, as more farmers

purchased their seed (instead of using seed saved from the previous harvest) and

small seed businesses gave way to larger enterprises that integrated plant breeding,

production, conditioning, and marketing functions. The industry was further shaped

by widespread mergers and acquisitions in the latter part of the 20th century, rapid

growth in private research and development (R&D), shifting roles of public and

private R&D, and a “coming of age” of agricultural biotechnology. 

To assess these developments, this report examines the composition of U.S. and

international seed markets, regulations affecting agricultural seeds, the structure

and evolution of the seed industry, and trends in private and public R&D in plant

breeding. Particular emphasis is placed on seeds for the major field crops: corn,

cotton, soybeans, and wheat. 

Improved Seed Is a Major Contributor to 

Crop Yield Gains

Over the past 70 years, yields of all major field crops in the United States registered a remarkable increase. For example, average corn yields rose from 20 bushels

per acre in 1930 to 140 bushels per acre by the mid-1990s. Over the same period,

cotton yields rose nearly fourfold, soybean yields increased more than threefold,

and wheat yields climbed more than 2.5-fold. More than half of the yield gains are

attributed to genetic improvements achieved by plant breeders.

Purchased Seed Use, Purchase Value, and Trade Have 

Grown in Recent Decades

The United States is the largest seed market worldwide, followed by China and

Japan. Seed expenditures by U.S. farmers rose from about $500 million per year in

1960 to nearly $7 billion in 1997. In real terms, seed expenditures climbed about

2.5-fold in the same period, despite minimal real increases in the index of seed

prices paid by farmers. A large portion of the increase in real seed expenditures

may be explained by increases in the share of seed purchased by U.S. farmers from

commercial sources, which, in turn, can be explained by increases in seed productivity attributable to scientific improvements in plant breeding. The United States

is a net exporter of seed. In 1996, the U.S. seed trade surplus was $384 million:

$698 million in seed exports, mainly to Mexico, Canada, Italy, Japan, and

Argentina; and $314 million in seed imports, mainly from Canada, Chile, the

Netherlands, and China.

Intellectual Property Rights Effect Significant Changes 

Hybrid corn varieties developed in the first half of the 20th century and, widely

accepted by farmers, provided the private sector a natural method of protecting

plant breeding investments—saved hybrid corn seed produces substantially lower

yields, encouraging farmers to repurchase seed every year. This development,

combined with a strengthening of legal protection of intellectual property rights in

the second half of the 20th century, brought large-scale change to the seed industry,

particularly increases in R&D and industry concentration.
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● vii

Seed Industry Structure Is Characterized by 

Growth and Consolidation

From the commercial production of hybrid corn seed in the 1930s to the recent

mergers and acquisitions, the history of the U.S. seed industry is marked by extensive structural change and transition. Until the 1930s, most commercial seed

suppliers were small, family-owned businesses lacking the financial resources

necessary to pursue their own research and development. These small businesses

depended almost exclusively on plant breeding research in the public sector. Seed

businesses served primarily to multiply and sell seeds of varieties developed in the

public domain. 

Market concentration in the U.S. seed industry increased in the latter part of the

20th century, with the four largest corn seed firms accounting for nearly 70 percent

of U.S. corn seed sales in 1997 and the four largest cotton seed firms providing

more than 90 percent of the cotton seed varieties planted. In contrast, the public

sector still accounts for a large share of the wheat seed varieties used by U.S.

farmers. Although the increase in seed industry concentration has raised concerns

about its potential impact on market power, preliminary empirical results for U.S.

cotton and corn seed industries over the past 30 years suggest that increased

concentration resulted in a cost-reducing effect that prevailed over the effect of

enhanced market power. 

Private and Public Sector Roles in Crop Seed 

R&D Have Shifted

Private R&D expenditures on plant breeding increased 1,300 percent between 1960

and 1996 (adjusted for inflation), while real public R&D expenditures changed

little. With the development of commercially viable corn hybrids in the 1930s,

R&D expenditures on corn varieties were the first to shift from public to private.

Private seed companies’ share of total expenditures on plant breeding R&D on

corn increased from close to half in 1970 to more than 70 percent in 1989. The

shift from public to private R&D expenditures on soybean plant breeding is more

recent, as the share of private sector R&D for soybeans rose from 6 percent to

almost 25 percent between 1970 and 1984. Private sector R&D for improved

wheat varieties has been limited. As a result, farmers have relied on public sector

wheat varieties for new sources of seed. Public sector research also emphasizes

many minor field crops, such as oats and barley. Although a large amount of plant

breeding R&D shifted from the public sector to the private sector, ample research

opportunities still exist for both sectors.

Introductions and Trials of New Varieties Are 

Increasing Over Time 

Improved plant varieties are a product of research and development. Seeds embody

the scientific knowledge needed to produce a new plant variety with desirable

attributes, such as higher yield potential, greater disease resistance, or improved

quality. The number of plant variety protection (PVP) certificates issued by USDA

provides a useful indicator of plant breeding research efforts. The number of PVP

certificates issued by USDA has grown rapidly since the 1970 Plant Variety

Protection Act. This growth suggests the positive effects of the Act on generating

private sector incentives for plant breeding R&D. Growth in PVP certificates has

been highest for soybeans and corn, which together account for more than half of
viii ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

all certificates issued for field crops. By the end of 2002, 2,612 certificates had

been issued for varieties of U.S. origin for the four major field crops, including

1,078 for soybeans, 648 for corn, 568 for wheat, and 290 for cotton. Most PVP

certificates are held by the private sector. 

As indicated by the number of field releases issued by USDA’s Animal and Plant

Health Inspection Service (APHIS) to allow breeders to pursue field testing, plant

breeding research through biotechnology is increasing. Between 1987 and June

2001, APHIS received over 7,600 applications for field releases of biotech varieties

and approved 6,700. The number of applications received annually by APHIS

increased from 9 in 1987 to 1,206 in 1998. The majority of applications for field

releases received from private and public institutions are for testing improved varieties of major crops. By mid-2001, more than 3,300 applications had been received

for corn varieties. Other field release applications included 761 for potatoes, 601

for soybeans, 532 for tomatoes, 481 for cotton, and 209 for wheat. 

After undergoing years of field tests, extensive review, and determination by

APHIS that unconfined release of a genetically modified organism does not pose a

significant risk to agriculture or the environment, the organism in question is no

longer considered a regulated article and can be moved and planted without APHIS

authorization. As of mid-2001, APHIS had received 79 petitions for deregulation

and had granted 53. Thirty-six percent of these deregulated varieties have herbicide-tolerance traits, 20 percent have insect-resistance traits, and 19 percent have

traits to improve product quality.
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 1

Introduction

In 1798, Thomas Malthus predicted that geometric

population growth and arithmetic food production

increases would lead to chronic food shortages, with

dire consequences for the future of humanity. Those

predictions have failed to materialize largely because

worldwide agricultural production has increased

enough to accommodate a sixfold increase in population. In particular, the unprecedented growth in crop

yields and agricultural total factor productivity (ratio

of total outputs to total inputs) over the past 70 years

owes much to a series of mechanical, chemical, and

biological innovations driven by agricultural research

and development (fig. 1).

To a large extent, these yield increases resulted from a

series of biological innovations embodied in seeds. The

first, and possibly most significant, innovation was the

development of hybrid crops, particularly corn, in the

United States in the 1930s. Improved varieties also

raised yields in many other crops. Developing countries

also adopted high-yielding crop varieties, spurring the

Green Revolution of the 1960s and 1970s. More

recently, modern biotechnology, especially genetic engineering, is facilitating the development of new biological innovations embodied in seed. 

The Seed Industry in U.S. Agriculture

An Exploration of Data and Information on Crop

Seed Markets, Regulation, Industry Structure, and

Research and Development

Figure 1

Corn yields and total factor productivity in U.S. agriculture

Corn yield, bushels per acre

Source: Fernandez-Cornejo et al., 1999.

Yield

Productivity--(right axis)

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

0

20

40

60

80

100

120

140

160

0

50

100

150

200

250

Total factor productivity index

Succesful 

light 

tractor 

developed

Adoption 

of 

hybrid 

corn begins

Fertilizer used 

on 10% of corn acres 

Herbicide 

used on 

10% of corn 

acres

Adoption of 

hybrid corn 

reaches 95% of 

corn acres

Fertilizer used 

on 90% of 

 corn acres

Herbicide used 

on 90% of 

corn acres

Adoption of 

 biotech crops begins
2 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

Modern U.S. agriculture owes much to the application

of science. Scientific discoveries in the fields of chemistry, engineering, and biology have contributed to the

development of a highly productive and technologically innovative modern agricultural sector. Central to

this modernization process has been the application of

science to modern plant breeding. 

The first application of modern scientific methods to

plant reproduction is credited to Gregor Mendel in the

mid-19th century (Sears, 1947). Up to then, farmers

engaged in plant breeding in a less systematic or

conscious manner, usually by exploiting chance mutations and natural selection processes. Mendel’s

research focused on the identification of particular

traits in garden peas, and the ways in which such traits

were inherited by successive generations. Mendel’s

work on the laws of heredity, though lost for 34 years,

eventually gave rise to extensive scientific research

into the inheritance of traits in other plants and crops

(Jenkins, 1936, p. 483). 

A significant portion of this later research focused on

corn and corn hybridization. Essentially, hybridization

is a traditional breeding process in which inbred lines

are crossed to create seed varieties with greater yield

potential than exhibited by either parent (see box on

terms and concepts). Hybridization allows breeders to

enhance biological characteristics more predictably

and more quickly than natural selection or chance

mutations. Breeders also protect their intellectual property by keeping knowledge of their hybrid varieties

from being passed on to others. Early 20th century

studies, including De Vries and Correns (1900) on the

inherited nature of corn endosperm texture, Shull and

East (1908) on hybrid vigor arising from their experiments in corn breeding, and Jones (1918) on the

commercial potential of higher yielding hybrid corn,

led to major breakthroughs in plant breeding (Heisey,

1999). 

By the late 1920s, hybrid corn breeding programs

were showing signs of success, particularly large

increases in yields. Corn, as an open-pollinated crop,

was well suited to the inbreeding-hybridization

process. From the perspective of the farmer, hybrid

corn seed had many advantages, including higher yield

potential, greater uniformity in maturity, and resistance

to lodging, making large-scale mechanization possible

(Sprague, 1961, p. 107). From the perspective of the

seed firm, hybridization had two commercial advantages. First, simple examination of a hybrid seed does

not reveal its lineage, thus offering companies proprietary control over the seeds they develop. Second, the

enhanced vigor of hybrid seed is not transmitted to its

offspring, thereby requiring farmers to buy new seed

every year to ensure continued vigor. Crops cultivated

from seed saved from a hybrid crop grown in the

previous year are typically less vibrant and significantly lower in yield. 

The application of science to plant breeding, and

specifically to corn, was a timely development in U.S.

agriculture. In the early 20th century, corn was the

dominant field crop in U.S. agriculture. Yet, despite

the crop’s importance, corn yields were stagnant at the

time. Publicly supported research and development of

hybrid corn seed, an effort later taken over by

commercial seed companies, helped reverse this trend

during the 1930s (Airy et al., 1961, p. 145). The first

seed company was organized for the commercial

production of hybrid corn in 1926, but hybrid corn

seed production only began to expand in the early

1930s, as several new firms began production (Jenkins,

1936, p. 479). By 1960, the share of corn acreage

cultivated with hybrid seed in the United States had

reached 95 percent (fig. 2), and almost all open-pollinated (OP) corn cultivated in the United States was

Background: The Science of Seed

Figure 2

Adoption of hybrid corn

Source: Agricultural Statistics, NASS, USDA, various years.

Percent of total corn acreage

1931 1935 1940 1945 1950 1955 1960

0

20

40

60

80

100
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 3

Plant breeding concepts: “The essence of plant breeding

is the discovery or creation of genetic variation in a plant

species and the selection from within that variation of

plants with desirable traits that can be inherited in a stable

fashion. The plant breeders’ final selections of superior

plants will form the basis of one or more plant varieties.

Plant breeders use all available technology both to create

genetic variation and to select from within that variation.

“Different types of plant variety have been developed,

depending upon the physiology of the plants of each

species and the ways in which the plants of the species can

be reproduced. For example, varieties of rose and potato

can be reproduced vegetatively, that is to say, can be reproduced by using a part of a plant as the basis for producing

another complete plant. Rose varieties can be reproduced

by propagating a bud or a cutting from a plant of the

variety. Potato varieties are normally reproduced by propagating a tuber of the variety.

“Varieties of grasses and most vegetables and cereals are

reproduced sexually, that is by pollination of the female

part of a flower (the stigma) by pollen from the male part

of a flower (the anther). Here, however, one must make a

distinction. The plants of some species, for example wheat,

will tolerate, through successive generations, the fertilization of the stigma by pollen from the anthers of the same

flower or from another flower on the same plant without

loss of vigor. Plant varieties of such species can be based

upon a single plant or on a small number of plants which

will reproduce themselves precisely through successive

generations. All the plants of a variety of this kind, known

as “self-pollinated” varieties, will be genetically the same

or very similar.

“The plants of many species are not adapted to self-fertilization or cannot tolerate self-fertilization through successive generations and will become less vigorous if forced to

self-pollinate (they will suffer from “inbreeding depression”). In these plants, the female part of the flower must

be fertilized by the pollen from another flower, or from a

flower of another plant. Varieties of such species, known as

“cross-pollinated” varieties, are populations of plants based

upon the controlled cross-pollination of a sufficient number

of selected diverse, superior plants to secure enhanced

performance without suffering in-breeding depression.

“Yet a further category of variety is based upon the

controlled cross-pollination of parent lines, so that the seed

resulting from the cross-pollination inherits its genetic

make-up from the parent lines. Such varieties, known as

“hybrids,” will typically exhibit greater vigor (“hybrid

vigor”) than the parent lines on which they are based,

resulting, for example, in plants with higher yields, better

resistance to stress, etc. The same controlled cross-pollination must be repeated each time the seed of those varieties

is produced.” (UPOV, 2003). 

Agricultural biotechnology is the application of scientific techniques, including genetic engineering, to create,

improve or modify plants, animals and microorganisms.

Agricultural biotechnology improves upon conventional

techniques, such as selective breeding, by enabling

scientists to move genes and the desirable traits that 

they express with greater efficiency and precision

(USDA, 2003).

Genotypes are the genetic traits or characteristics

expressed by a particular variety (UPOV). 

Germplasm is the genetic material that contains a variety’s

inherited characteristics.

Cross-pollinating species are those in which the pollen is

primarily dispersed from one plant to another. 

Self-pollinating species are those in which the pollen is

primarily dispersed within the same plant.

Organisms are living things that may be categorized for

purposes here as plants, animals, or microorganisms,

including bacteria. An organism is categorized based on

such factors as its structure, mobility, source of nutrition,

or cell structure (UPOV; USDA 2000).

Sexual reproduction includes any production of a variety

by seed but does not include the production of a variety by

tuber propagation (PVP Act, Chapter 4, Sec. 41, USDA,

Agricultural Marketing Service (AMS), 2001). 

Tuber propagation means propagated by a tuber or a 

part of a tuber (PVP Act, Chapter 4, Sec. 41, USDA,

AMS, 2001). 

Variety refers to a plant grouping within a single botanical

taxon [taxonomic group] of the lowest known rank, that,

without regard to whether the conditions for plant variety

protection are fully met, can be defined by the expression

of the characteristics resulting from a given genotype or

combination of genotypes, distinguished from any other

plant grouping by the expression of at least one characteristic and considered as a unit with regard to the suitability

of the plant grouping for being propagated unchanged. A

variety may be represented by seed, transplants, plants,

tubers, tissue culture plantlets, and other matter (PVP Act,

Chapter 4, Sec. 41, USDA, AMS, 2001). 

Term and Concepts
4 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

replaced by hybrids by the 1960s (Fernandez-Cornejo

et al., 1999; Shoemaker et al., 2001, p. 9).

The commercial success of hybrid corn in the United

States was followed by such plant breeding advances

as hybrid sorghum and improved varieties of soybeans

and cotton. The first commercial seed field of hybrid

sorghum was planted in 1955; by 1960, 70 percent of

the U.S. sorghum acreage was planted with hybrid

seed (Airy et al., 1961, p. 145). Sorghum is now

mostly grown from hybrid seed. Other vegetables,

including onions, spinach, tomatoes, and cabbage, are

also grown from hybrid seed (Emsweller, 1961). 

The application of science to plant breeding also

produced significant gains in crop yields in other countries. During the late 1960s and early 1970s, scientific

breakthroughs in the breeding of key crops, such as rice

and wheat, boosted production in many developing

countries. When combined with the proper use of fertilizers, pesticides, and other inputs, these new varieties

offered yield increases of 1 percent per year through the

1990s (Morris, 1998, pp. 3-4). The unprecedented

growth in agricultural output in the developing world is

often referred to as the “Green Revolution” and has

played an important part in improving food security in

such countries as India and China. 

Despite its major role in plant breeding, the development of hybrids through interbreeding can require up

to 12 years to develop market-ready seeds. Even then,

those hybrids may still generate only limited desired

traits or, possibly, unwanted characteristics (Gould,

1983; Ollinger and Fernandez-Cornejo, 1995, p. 17).

Scientific discoveries in the field of genetics, beginning with Watson and Crick’s postulate on the double

helix model for DNA in 1953 and continuing through

the creation of the first genetically engineered (GE)

plant in 1982 (Shoemaker et al., 2001, p. 9), have

significantly reduced the number of residual unwanted

characteristics that often result from traditional plant

breeding crosses, thus increasing the speed at which

breeders can develop desirable new varieties. 

GE crops are classified into one of three generations

(Panos, 1998): crops with enhanced input traits, such

as herbicide tolerance, insect resistance, and resistance

to environmental stresses, such as drought; crops with

added-value output traits, such as nutrient-enhanced

seeds for feed; and crops that produce pharmaceuticals, bio-based fuels, and products beyond traditional

food and fiber. At present, the adoption of GE crops is

generally limited to those with first-generation traits.

The most common herbicide-tolerant (HT) crops are

characterized by resistance to the herbicide glyphosate.

Commercially available HT crops include soybeans,

corn, canola, and cotton and became available to a

limited extent in 1996. The share of HT soybeans to

total U.S. soybean acreage grew from 17 percent in

1997 to 68 percent in 2001 and 81 percent in 2003.

HT cotton expanded from 10 percent of total U.S.

cotton acreage in 1997 to 56 percent of cotton acreage

in 2001 and 59 percent in 2003 (fig. 3). Insect-resistant

GE crops in use today incorporate a gene from the soil

bacterium Bacillus thuringiensis (Bt). The bacterium

produces a protein toxic to lepidopteran insects. Plants

produce the toxic protein throughout their life,

providing them with long-term protection. The Bt gene

has been incorporated in corn to protect the crop

against the European corn borer, and in cotton to

protect against the tobacco budworm, bollworm, and

pink bollworm (Fernandez-Cornejo and McBride,

2000). Bt corn increased from 1 percent of total U.S.

corn acreage in 1996 to 26 percent in 1999, fell to 19

percent in 2000 and 2001, and climbed back to 29

percent in 2002. Bt cotton increased from 15 percent

of cotton acres in 1996 to 37 percent in 2001 and 41

percent in 2003.

Figure 3

Adoption of biotech crops in the United States

Percent of acres

1995 1997 1999 2001 2003

0

20

40

60

80

100

Ht soybeans

Ht cotton

Bt cotton

Bt corn

Ht corn

Source: Fernandez-Cornejo, 2003.
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 5

Over the past 70 years, there has been a remarkable

increase in the yields of all major field crops in the

United States, and more than half of the yield gains

are attributed to genetic improvements achieved by

plant breeders. 

Among the four major field crops examined in this

report, yield increases have been most significant for

corn; the next highest increases were for cotton,

soybeans, and wheat (fig. 4). Average per acre yields for

corn in the United States rose from 20 bushels in 1930

to about 70 bushels in 1970 and reached 140 bushels by

the mid-1990s (fig. 5). Soybean yields have also

increased substantially since the 1930s (fig. 6). Overall

per acre yields for soybeans increased from about 13

bushels in 1930 to nearly 40 bushels in the mid-1990s. 

Cotton yields stagnated from 1866 to 1935. Yields

grew rapidly from 1935 to 1960 as higher yielding

cultivars were introduced together with synthetic fertilizers and pesticides (fig. 7) (Meredith and Bridge,

1984). After reaching a plateau during the 1960s and

early 1970s, cotton yields resumed their rapid growth.

Overall, cotton yields rose nearly fourfold during

1930-98 (figs. 4, 7). Wheat breeding has relied heavily

on genetic improvement of self-pollinating varieties.

Though wheat yields have grown steadily since 1950,

the rate of growth has not been as high as that of corn

and cotton (fig. 8). Still, overall wheat yields increased

2.5-fold during the period. 

Contribution of Plant Breeding

Crop yields have benefited from genetic improvements

through plant breeding as well as from improved pest

management, mechanization, and fertilizer use. Still,

extensive evidence suggests that crop yields have

benefited the most from plant breeding, which

includes the use of improved hybrids and varieties.

Studies of the determinants of increased crop yields

for corn, soybeans, and wheat conclude that 50 percent

or more of the overall yield gain for each crop can be

attributed to genetic improvements of plant varieties.

For the same crops, the annual rate of yield gain due to

plant breeding improvements is 1-3 percent per year

(Duvick, 1992, p. 291). 

Different estimates of plant breeding’s contribution to

crop yield gains reflect differences in the period

covered and the complex nature of the research.

Thirtle (1985, in Fuglie et al., 1996, p. 44) concludes

that between 1939 and 1978, biological inputs

(improved seed varieties and changes in agronomic

practices) increased average annual yields by 1.7

percent for corn, 1.1 percent for soybeans, 0.5 percent

for cotton, and 1.5 percent for wheat. Over the entire

period, biological inputs contributed to 50 percent of

the yield growth in corn, 85 percent for soybeans, 24

percent for cotton, and 75 percent for wheat. Fehr

(1984, in Fuglie et al., 1996, p. 44) estimates that

genetic improvements accounted for 89 percent of the

Improved Seed Is a Major Contributor to Crop Yield Gains and

Agricultural Productivity

Figure 4

Yields for major crops

Source: Agricultural Statistics, NASS, USDA, various years.

Yield index (1930=1.00) smoothed

Soybeans

Cotton

Wheat

Corn

1930 1940 1950 1960 1970 1980 1990 2000

0

1

2

3

4

5

6

7

Figure 5

Corn yields

Source: Agricultural Statistics, NASS, USDA, various years.

Bushels per acre

Actual

Trend

1930 1940 1950 1960 1970 1980 1990 2000

0

20

40

60

80

100

120

140

160
6 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

gain in corn yields between 1930 and 1980, a 90-

percent gain in soybean yields between 1902 and

1997, 67 percent of the gain for cotton yields between

1936 and 1960, and a 50-percent gain for wheat yields

between 1958 and 1980. 

The effects of other contributing factors to crop yield

gains—fertilizers, pesticides, machinery, and labor—

vary widely. For example, Cardwell (1982, reported in

Duvick, 1992, p. 29) concludes that, since 1930, better

weed control has accounted for 23 percent of corn

yield gains in Minnesota, synthetic nitrogen fertilizer

has accounted for 19 percent, and plant breeding has

accounted for 59 percent (16 percent for the shift from

open-pollinated to hybrid seeds, and 43 percent for

other breeding improvements). 

The remarkable yield gains over the past 50 years are

observed not only in crops cultivated under ideal

conditions, where complementary inputs, such as soil

fertility and water supply, are optimal, but also in

crops cultivated under less ideal conditions, where

yield-improving inputs are not optimized due to such

conditions as drought or pests. Many new varieties

possess genetic qualities that improve seed productivity in both favorable and unfavorable environments.

For example, the improved root strength in newer

hybrid corn varieties increased the plant’s ability to

resist stalk-rot fungi, heat, drought, limited nitrogen

nutrition, and pests, such as the European corn borer

(Duvick, 1992, pp. 292-293). Still, despite the

improved plant varieties, crop yields have been

subject to periods of stagnation or slow growth.

Cotton yields, for example, stagnated between 1960

and 1980 before increasing again in the 1980s (Fuglie

et al., 1996, p. 44).

Figure 6

Soyebean yields

Source: Agricultural Statistics, NASS, USDA, various years.

Bushels per acre

Actual

Trend

1930 1940 1950 1960 1970 1980 1990 2000

0

10

20

30

40

50

Figure 7

Cotton yields

Source: Agricultural Statistics, NASS, USDA, various years.

Pounds per acre

Actual

Trend

1930 1940 1950 1960 1970 1980 1990 2000

0

200

400

600

800

Figure 8

Wheat yields

Source: Agricultural Statistics, NASS, USDA, various years.

Bushels per acre

Actual

Trend

1930 1940 1950 1960 1970 1980 1990 2000

0

10

20

30

40

50
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 7

Demand for seed is primarily determined by the profitability of the crop that the seed produces. Seed use

by U.S. farmers depends on several factors, including

the acreage under cultivation, the seeding rate per

cultivated acre, cropping practices, and variations in

geographic location and agroclimatic conditions. 

Seed Market Size and Value

The U.S. seed market is rapidly growing in size and

value. U.S. farmers used over 6.5 million tons of seed

for major field crops in the 1996/97 crop marketing

year (table 1). In 1997, the estimated total value of the

commercial U.S. seed market was $5.7 billion,

roughly 20 percent of the world market in seed (table

2) (FIS/ASSINSEL, 2001). The U.S. seed market is

the largest seed market worldwide. China, at $3.0

billion, and Japan, at $2.5 billion, are the next largest

seed markets. 

Total seed expenditures by U.S. farmers rose from

about $500 million in 1960 to over $6.7 billion in

1997 (table 3, fig. 9). In real terms, seed expenditures

climbed about 2.5-fold in the same period, despite

minimal real increases in the index of seed prices paid

by farmers (about 7 percent in 38 years, table 3). Similarly, when measured as a share of total farm expenditures, seed expenditures increased from 2 percent in

1970 to 4 percent in 1997 (fig. 10). 

A large portion of the increase in real seed expenditures may be explained by increases in the share of

seed purchased by U.S. farmers from seed, particularly

for major field crops, which account for the largest

share of seed purchased (tables 4, 5). In 1997, 81

percent of all U.S. soybean acreage (up from 55

percent in 1982) and 78 percent of all U.S. cotton

acreage (up from 50 percent in 1982) were cultivated

with purchased seed. These increases, in turn, can be

explained by increases in seed productivity attributable

to scientific improvements in plant breeding. Seeding

rates have also increased (tables 6, 7).

Seeding Rates and Costs for Major 

Field Crops

Seeding rates, acreage used in crop production, and

share of seed purchased are the key agricultural factors

affecting the demand for purchased seed in U.S. agriculture. Seeding rates, seed prices, and seed costs per

acre for corn, soybeans, cotton, and wheat over time

are presented in tables 6 and 7. For 1972-95, the

average seed cost per acre is derived by multiplying

seeding rate per acre and seed price. For 1986-97,

average seeding rate and seed cost per acre are based

on data from the Cropping Practices Surveys and the

Agricultural Resource Management Survey (ARMS). 

Seeding rates per acre can vary, depending on

geographic location and cropping practices. Seeding

rates tend to change slowly over time but the acreage

Purchased Seed Use, Purchase Value, and Trade Have Grown in

Recent Decades

Table 1—-U.S. seed use for major field crops, by crop and marketing year

Seed use

Crops 1986/87 1987/88 1988/89 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97

Thousand tons

Corn 468 482 523 529 540 566 528 563 510 571 580

Sorghum 44 36 42 36 34 48 39 34 34 45 39

Soybeans 1,653 1,684 1,766 1,664 1,701 1,705 1,726 1,914 1,877 1,929 2,064

Barley 429 376 360 324 350 310 314 283 266 283 278

Oats 608 505 433 374 306 290 285 240 205 194 219

Wheat 2,520 2,550 3,090 3,009 2,787 2,931 2,973 2,889 2,679 3,123 3,075

Rice 130 150 150 180 180 195 180 210 205 186 185

Cotton, upland 93 106 89 94 110 120 115 117 118 144 125

Total 5,945 5,889 6,453 6,210 6,013 6,165 6,160 6,250 5,894 6,475 6,566

Sources: ERS estimates, based on data from the Agricultural Resource Management Survey and the Cropping Practices Surveys

(USDA, ERS, 2002).
8 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

planted with a particular crop can vary from year to

year. For example, in 1996-97, planted acreage for

soybeans, corn, and oats increased while acreage for

cotton, sorghum, and wheat decreased. Demand for

purchased seed may also be affected by decreases in

the use of saved seed for such crops as soybeans. As a

result, seed use for each of the crops varies from year

to year (table 1). But, total seed consumption for the

major field crops remained fairly constant between the

1986-87 and 1996-97 marketing years, ranging from

5.9 to 6.6 million tons per year. 

Corn. Corn seeding rates and costs vary substantially

by State. States where crops are mostly irrigated, such

as California, or receive abundant rainfall, such as in

the eastern Corn Belt, support heavier seeding rates,

and consequently, higher seed costs per acre than other

States. Within the Corn Belt, average seeding rates and

seed costs per acre in selected States vary considerably, primarily because of differences in soil productivity, moisture availability, and seed price (table 6).

For example, in 1989, Minnesota had the highest

seeding rate (25,800 kernels) per acre. As a result,

Minnesota had the highest average cost per acre at

$21.44. South Dakota had typically lower and more

variable precipitation than other corn-growing States,

resulting in lower seeding rates. 

The price of seed per unit also affects seeding costs.

For example, in 1988 and 1989, the average corn

seeding rate was constant at 24,100 kernels per acre,

but the average seeding cost per acre for the 10 leading

corn-producing States rose from $18.64 in 1988 to

Table 2—Estimated values of commercial markets

for seed

Country Internal commercial market

1

Million dollars

United States 5,700

China 3,000

Japan 2,500

ComonweaIth of 

Independent States2 2,000

France 1,370

Brazil 1,200

Germany 1,000

Argentina 930

India 900

Italy 650

United Kingdom 570

Canada 550

Poland 400

Mexico 350

Spain 300

Netherlands 300

Australia 280

Hungary 200

Denmark 200

Sweden 200

Other 1,967

Total 24,567

1 Data provided in this table are the most recent figures (available at

the Secretariat of the International Seed Federation). Data refer to

different years depending on the countries. Data include planting

materials. The total represents the sum of the commercial seed markets of the countries listed by FIS/ASSINSEL. See source for details.

The commercial world seed market is assessed by FIS/ASSINSEL

at approximately US$30 billion. 2 States from the former Soviet Union (Armenia, Azerbaijan, Belarus,

Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan).

Source: FIS/ASSINSEL (2000).

Figure 9

Farm and seed expenditure indices

Source: Data sources provided in table 3.

Expenditures index (1910 = 1.00)

Seed

Farm

1910 20 30 40 50 60 70 80 90 2000

0

20

40

60

80

100

120

140

Figure 10

Seed expenditures' share of total 

farm expenditures

Source: Data sources provided in table 3.

Percent

1910 20 30 40 50 60 70 80 90 2000

0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 9

Table 3—U.S. farm seed expenditures and farm seed price index

Real farm

seed price

Share of total Prices paid index

Total farm farm Farm seed by farmers, (relative to Real

Expenditures production production price index index prices paid expenditures

Year on seed expenditures expenditures 1984=100 1984=1.00 by farmers) on seed

——Million dollars—— Percent Million 1989

dollars

1960 519 27,376 1.9 0.2247 0.2657 0.8456 1,953

1961 545 28,590 1.9 0.2226 0.2675 0.8321 2,037

1962 565 30,279 1.9 0.2311 0.2719 0.8499 2,078

1963 619 31,598 2.0 0.2460 0.2764 0.8902 2,240

1964 661 31,812 2.1 0.2439 0.2772 0.8797 2,384

1965 720 33,650 2.1 0.2524 0.2852 0.8850 2,524

1966 760 36,508 2.1 0.2492 0.2967 0.8398 2,561

1967 814 38,181 2.1 0.2535 0.3020 0.8392 2,695

1968 831 39,525 2.1 0.2630 0.3091 0.8509 2,688

1969 871 42,115 2.1 0.2684 0.3242 0.8278 2,687

1970 928 44,452 2.1 0.2843 0.3384 0.8404 2,743

1971 1,072 47,107 2.3 0.3131 0.3543 0.8837 3,026

1972 1,115 51,688 2.2 0.3419 0.3764 0.9081 2,962

1973 1,617 64,554 2.5 0.4228 0.4349 0.9722 3,718

1974 1,941 70,980 2.7 0.5453 0.4942 1.1032 3,927

1975 2,138 75,043 2.8 0.6198 0.5430 1.1415 3,938

1976 2,366 82,742 2.9 0.6113 0.5784 1.0569 4,091

1977 2,484 88,884 2.8 0.6613 0.6103 1.0837 4,070

1978 2,638 103,250 2.6 0.6922 0.6599 1.0490 3,998

1979 2,904 123,304 2.4 0.7252 0.7511 0.9656 3,866

1980 3,220 133,139 2.7 0.7838 0.8397 0.9335 3,835

1981 3,428 139,444 2.8 0.9137 0.9167 0.9967 3,739

1982 3,172 140,306 2.3 0.9340 0.9548 0.9782 3,322

1983 2,987 139,608 2.5 0.9350 0.9779 0.9562 3,055

1984 3,548 141,876 2.8 1.0000 1.0000 1.0000 3,548

1985 3,941 132,433 3.0 1.0106 0.9894 1.0215 3,983

1986 3,511 125,084 2.8 0.9776 0.9681 1.0098 3,627

1987 3,259 130,992 2.7 0.9819 0.9832 0.9987 3,315

1988 4,060 139,907 2.6 0.9915 1.0549 0.9399 3,849

1989 4,397 146,662 2.6 1.0937 1.1169 0.9792 3,937

1990 4,518 153,302 2.6 1.0777 1.1603 0.9288 3,894

1991 5,113 153,279 2.8 1.0469 1.1816 0.8860 4,327

1992 4,913 152,940 3.2 1.0394 1.1940 0.8705 4,115

1993 5,163 160,506 3.2 1.0671 1.2232 0.8724 4,221

1994 5,373 167,504 3.2 1.1406 1.2542 0.9094 4,284

1995 5,462 174,120 3.1 1.1587 1.2879 0.8997 4,241

1996 6,212 182,439 3.0 1.2162 1.3561 0.8968 4,581

1997 6,711 188,443 3.7 1.2556 1.3942 0.9006 4,814

Sources: Expenditures for 1910-80 from Lucier et al. (1986); expenditures for 1981-97 from Agricultural Statistics (USDA, NASS, various years).

Price indices from Agricultural Statistics (USDA, NASS, various years).
10 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

$20.40 in 1989, due to an 11-percent increase

(nominal; 5 percent in real terms) in corn seed price. 

Soybeans. Soybean seeding rates per acre showed little

year-to-year variation. For example, the seeding rate

per acre was constant at 57 pounds from 1980 to 1985;

the rate increased to 59 pounds in 1986 and 60 pounds

in 1989 (table 6). Seeding costs per acre, however,

varied significantly due to changes in the average seed

price of soybeans. Seeding rates per acre were the

same (70 pounds) in 1995 and 1996, but seeding costs

per acre were higher in 1996 ($18.62) than in 1995

($16.80) due to higher seed prices. Soybean seeding

rates tend to be lower in Southern States, such as

Arkansas, Georgia, Mississippi, Tennessee, and

Louisiana. Northern States, on the other hand, have

higher seeding rates and yields, and therefore have

higher seed costs per acre than Southern States. 

From 1986 to 1996, farmers in the major soybeanproducing States used purchased seed on more than 70

percent of the planted acreage and consequently had

higher production costs per acre. The choice of

purchased versus homegrown seed is influenced by

many factors, such as difference in seed price and

yield. Although homegrown seed is cheaper than

purchased seed, homegrown seed requires cleaning,

inoculation before planting, and germination tests, and

in some instances, the seeding rate may have to be

increased. Furthermore, the yield potential of new

purchased varieties may exceed that of (older) homegrown varieties. 

Table 4—Estimated U.S. market and purchased seed value, 1982

Share of total Share of acres Market value Share of 

Total market market value planted with of purchased market value

Seed stock value of seed1 of seed purchased seed seed of purchased seed

Million dollars Percent Percent Million dollars Percent

Corn 1,294 27.8 95.0 1,230 40.2

Soybeans 954 20.5 55.0 525 17.2

Cotton 144 3.1 50.0 72 2.4

Wheat 888 19.1 10.0 89 2.9

Total, major crops 3,280 70.6 58.4 1,915 62.6

Other crops 1,369 29.4 83.4 1,142 37.4

Total 4,649 100.0 65.8 3,057 100.0

1 Including the market value of saved seed.

Source: McMullen (1987b, pp. 86-87).

Table 5—Estimated U.S. market and purchased seed values, major crops, 1997

Share Share

Share of of acres Market of market

Seeding Total market total market planted with value of value of 

Seed stock Acres rate per Seed cost value of value of purchased purchased purchased

planted acre1 per acre2 seed3 seed seed seed seed

Million Kernels Dollars Million Percent Percent Million Percent

acres or lbs dollars dollars

Corn 80.2 27,665 28.87 2,316 35.1 100.0 2,316 40.2

Soybeans 70.9 70 18.78 1,331 20.2 81.0 1,078 18.7

Cotton 13.3 14 10.49 139 2.1 78.0 109 1.9

Wheat

4 71.0 83 12.21 867 13.1 37.0 321 5.6

Total, major

crops 235.3 4,653 70.6 3,823 66.3

1 For corn, kernels per acre was used; for soybeans, wheat, and cotton, pounds per acre was used. Based on figures from select States,

from USDA, Agriculture Resource Management Survey (ARMS), 1998. 2 Seed cost per acre is based on USDA's ARMS data. 3 Including the market value of saved seed. 4 Compiled from statistics provided in this report on winter wheat, spring wheat, and durum wheat. Seeding rate, seed cost per acre,

and share of acres planted with purchased seed are based on the weighted averages of the three types of wheat. For durum, the seed

cost per acre was not available and was estimated according to the percent change in the unit price of the crop.

Source: Acres planted from Agricultural Statistics (USDA, NASS, 1998); other data from ARMS.
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 11 Table 6—Seeding rate, cost per acre, and share of acres with purchased seed, major field crops in surveyed States

Deflator:

Corn Soybeans Cotton (Index of Real price of seed

Acres Seed Acres Seed Acres Seed prices paid

Average Average

with price Average Average

with price Average Average

with price by U.S.

rate per cost purchased per rate per cost purchased per rate per cost purchased per farmers) Corn Soybean Cotton

Year acre per acre seed bushel acre per acre seed bushel acre per acre seed bushel 1984=1.00 per bushel per bushel per 100 lbs

Kernels Dollars

Percent Dollars Pounds Dollars

Percent Dollars Pounds Dollars

Percent Dollars ———1

984 

dollars———

1972 20,955 4.90 NA 21.50 68 5.90 NA 5.21 25.00 4.35 NA 17.40 0.38 57.11 13.84 46.22

1973 20,955 5.03 NA 22.20 68 9.89 NA 8.75 25.00 4.56 NA 18.30 0.43 51.05 20.12 42.081974 20,955 5.66 NA 25.00 68 10.74 NA 9.50 25.00 6.33 NA 25.30 0.49 50.58 19.22 51.19

1975 22,110 8.74 NA 36.50 63 11.03 NA 10.50 26.00 8.74 NA 33.60 0.54 67.22 19.34 61.88

1976 22,110 8.74 NA 36.50 63 7.77 NA 7.40 26.00 7.41 NA 28.50 0.58 63.11 12.79 49.27

1977 22,110 9.57 NA 40.00 63 13.65 NA 13.00 26.00 7.88 NA 30.30 0.61 65.54 21.30 49.65

1978 22,110 10.29 NA 43.00 63 12.10 NA 11.50 26.00 8.06 NA 31.00 0.66 65.16 17.43 46.98

1979 22,110 10.88 NA 45.50 63 12.60 NA 12.00 26.00 8.61 NA 33.10 0.75 60.58 15.98 44.07

1980 21,945 12.46 NA 52.50 57 9.88 NA 10.40 26.00 9.15 NA 35.20 0.84 62.52 12.39 41.92

1981 21,945 14.23 NA 60.00 57 13.30 NA 14.00 24.00 9.74 NA 40.60 0.92 65.45 15.27 44.29

1982 21,879 15.12 NA 63.70 57 10.17 NA 10.70 24.00 9.98 NA 41.60 0.95 66.71 11.21 43.57

1983 21,896 15.26 NA 64.60 57 9.60 NA 10.10 24.00 10.27 NA 42.80 0.98 66.06 10.33 43.77

1984 21,900 16.67 NA 70.20 57 12.73 NA 13.40 24.00 11.52 NA 48.00 1.00 70.20 13.40 48.00

1985 21,912 16.96 NA 71.80 57 13.31 NA 11.90 24.00 11.57 NA 48.20 0.99 72.57 12.03 48.72

1986 23,800 19.09 100 65.60 59 10.44 73 10.80 18.13 7.81 68 46.60 0.97 67.76 11.16 48.13

1987 24,000 18.30 100 64.90 59 10.05 73 11.30 19.09 8.46 81 48.10 0.98 66.01 11.49 48.92

1988 24,100 18.64 100 64.20 62 12.86 73 11.90 18.00 8.36 86 47.70 1.05 60.86 11.28 45.22

1989 24,100 20.40 100 71.40 60 15.52 68 14.70 18.00 8.17 67 50.10 1.12 63.93 13.16 44.86

1990 24,700 20.50 100 69.90 62 14.20 71 12.50 17.00 7.80 70 54.30 1.16 60.24 10.77 46.80

1991 24,906 20.79 100 70.20 64 15.07 73 12.80 17.00 8.11 66 58.20 1.18 59.41 10.83 49.26

1992 25,304 21.35 100 71.80 65 15.40 73 12.40 16.00 8.74 74 59.70 1.19 60.14 10.39 50.00

1993 25,564 22.72 100 72.70 NA 16.29 73 12.40 16.00 9.39 69 62.70 1.22 59.43 10.14 51.26

1994* 25,824 23.54 100 73.40 NA 17.25 72 13.60 16.00 9.49 66 63.50 1.25 58.52 10.84 50.63

1995* 26,588 24.50 100 77.10 70 16.80 71 13.40 15.00 9.67 64 68.20 1.29 59.87 10.40 52.96

1996** 27,500 25.97 100 77.70 70 18.62 76 14.80 14.00 9.85 66 73.00 1.36 57.30 10.91 53.831997** 27,665 NA 100 83.50 70* NA 81 16.10 14.00 NA 78 74.90 1.39 60.07 11.58 53.88

* States included: corn: IL, IN, IA, MI, MN, MO, NE, OH, S

D, and

WI; soybeans: IL, IN, IA, MN, MO, NE, OH, A

R, GA, KY, LA, MS,

N

C, and T

N; cotton: A

R, GA, CA,

LA, MS, and TX.

**

States included: corn: IL, IN, IA, MI, MN, MO, NE, OH, S

D, and

WI; soybeans: IL, IN, IA, MN, MO, NE, OH, A

R, LA, MS, and T

N; cotton: A

R, CA, GA, LA, MS, TN,

and TX.NA = not available

Sources: Average rate per acre is based on data from Cropping Practices

Surveys and Agricultural Resource Management Survey (

ARM

S). Cost per acre for 1972-85 is co

mputed by multiplying rate per acre (pounds) with the price of seed per pound; cost per acre for 1987-96 is based on data from Cropping Practices

Surveys and

ARMS. Seed prices and deflator are

from Agricultural Statistics (U

S

DA, NASS, various years).
12

● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

Table 7—Seeding rate, cost per acre, and share of acres with purchased wheat seed in surveyed States

Deflator:

Winter wheat Spring wheat Durum wheat (Index of Real price of seed

Acres Acres Acres prices paid

Average Average with Price Average Average with Price Average Average with by U.S. Winter Spring

rate per cost purchased per rate per cost purchased per rate per cost purchased farmers) wheat, wheat,

Year acre per acre seed bushel acre per acre seed bushel acre per acre seed 1984=1.00 per bushel per bushel

Pounds Dollars Percent Dollars Pounds Dollars Percent Dollars Pounds Dollars Percent —— 1984 dollars——

1972 68 3.36 NA 2.97 73 3.21 NA 2.63 NA NA NA 0.38 7.89 6.99

1973 66 7.92 NA 7.20 74 3.97 NA 3.20 NA NA NA 0.43 16.56 7.36

1974 68 8.55 NA 7.50 75 10.5 NA 8.40 NA NA NA 0.49 15.17 17.00

1975 74 7.50 NA 6.10 75 10.4 NA 7.70 NA NA NA 0.54 11.23 14.18

1976 74 7.38 NA 6.00 81 8.78 NA 6.50 NA NA NA 0.58 10.37 11.24

1977 70 5.15 NA 4.40 86 7.44 NA 5.20 NA NA NA 0.61 7.21 8.52

1978 69 6.79 NA 5.90 81 6.89 NA 5.10 NA NA NA 0.66 8.94 7.73

1979 67 8.21 NA 7.40 72 6.48 NA 5.40 NA NA NA 0.75 9.85 7.19

1980 69 8.72 NA 7.40 79 8.71 NA 6.60 NA NA NA 0.84 8.81 7.86

1981 73 8.89 NA 7.41 79 0.53 NA 7.22 NA NA NA 0.92 8.08 7.88

1982 73 9.10 NA 7.42 79 9.10 NA 6.89 NA NA NA 0.95 7.77 7.22

1983 72 8.74 NA 7.28 87 9.70 NA 6.69 NA NA NA 0.98 7.44 6.84

1984 73 8.51 NA 7.40 69 7.33 NA 6.37 NA NA NA 1.00 7.40 6.37

1985 72 8.23 NA 7.16 79 8.03 NA 6.10 NA NA NA 0.99 7.24 6.17

1986 70 7.22 43 NA 89 7.67 52 5.94 93 7.13 33 0.97 NA 6.14

1987 73 6.20 40 NA 88 6.97 49 5.56 102 7.62 44 0.98 NA 5.66

1988 75 7.67 53 7.55 90 8.58 46 5.89 99 8.05 47 1.05 7.16 5.58

1989 77 9.59 41 6.57 89 8.82 40 6.71 99 10.13 47 1.12 5.88 6.01

1990 74 8.61 39 8.01 88 8.40 39 6.05 97 7.50 27 1.16 6.90 5.21

1991 74 8.65 36 6.89 89 6.52 32 4.72 100 6.66 27 1.18 5.83 3.99

1992 74 8.65 36 7.41 91 8.39 41 6.06 96 7.56 36 1.19 6.21 5.08

1993 72 8.25 40 7.73 93 8.54 40 5.98 100 7.69 40 1.22 6.32 4.89

1994* 71 7.68 39 7.90 95 10.11 38 7.37 103 12.60 37 1.25 6.30 5.88

1995* 74 9.10 33 7.80 96 10.24 36 7.12 109 12.24 41 1.29 6.06 5.53

1996** 69 8.27 32 8.50 101 14.61 21 8.10 107 13.88 20 1.36 6.27 5.97

1997* 73 NA 36 10.00 98 NA 41 7.30 112 NA 12 1.39 7.19 5.25* States included: winter wheat: CO, ID, IL, KS, MO, MT, NE, OH, OK, OR, SD, TX, and WA; spring wheat: MN, MT, ND, and SD.

** States included: winter wheat: CO, ID, KS, MT, NE, OK, OR, SD, TX, and WA; spring wheat: MN, MT, and ND.

NA = not available.

Sources: Average rate per acre is based on data from the Cropping Practices Surveys and Agricultural Resource Management Survey (ARMS) ARMS. Cost per acre for 1972-85 is computed

by multiplying rate per acre (pounds) with the price of seed per pound; cost per acre for 1987-96 is based on Cropping Practices Surveys and ARMS. Seed prices and deflator are from

Agricultural Statistics (USDA, NASS, various years).
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 13

Cotton. Average cotton seeding rates and seed costs

per acre vary from year to year. From 1972 to 1985,

average seeding rates per acre ranged from 24 to 26

pounds. However, average cost per acre was highest in

1985 ($11.57) due to a higher cotton seed price of

$48.20 per 100 pounds. From 1986 to 1996, cotton

seeding costs per acre were lower due to lower seeding

rates. Although cotton seed price over the same period

was much higher than in previous years, lower seeding

rates offset the higher cost of producing cotton. From

1986 to 1997, the share of the cotton acres planted

with purchased cotton seed ranged from 64 to 81

percent. 

Wheat. The average seeding rates per acre for winter

wheat vary from year to year (table 7). From 1972 to

1996, the average seeding rates per acre ranged from 66

to 77 pounds. Areas where moisture is plentiful in the

growing season, due to either heavy rain or irrigation,

support heavier seeding rates. Seeding costs per acre

reflect either seed price or seeding rate per acre or both.

Average share of winter wheat acres planted with

purchased seed also varied from year to year. The type

of winter wheat (white, soft red, and hard red), as well as

local economic situations, seed prices, and yield of

purchased seed, apparently account for much of the variation. For example, in 1993, Washington, Idaho, Oregon,

Ohio, and Illinois used purchased seed on more than 60

percent of the winter wheat acreage. In the rest of the

producing States, the share of acreage planted from

purchased seed ranged from 21 to 51 percent (USDA,

1993). The average seed cost per acre of spring and

durum wheat also varied across geographic regions and

from year to year due to changes in seeding rate and

seed price. Farmers used homegrown spring and durum

wheat seed on more than 50 percent of their acreage. 

International Seed Markets

The United States is a net exporter of seed, with a seed

trade surplus of $384 million in 1996 (table 8). The

value of U.S. seed exports grew from $305 million in

1982 to $698 million in 1996. This increase primarily

reflects increases in exports of seed for forage crops,

vegetables, flowers, and corn. Mexico, Canada, Italy,

Japan, France, the Netherlands and, more recently,

Argentina, are the largest importers of U.S. seed.

Together, these countries accounted for approximately

72 percent of total U.S. seed exports in 1996 (table 9).

On a regional basis, North America and Central America

(39 percent), Western Europe (29 percent), Middle East

and Asia (18 percent), and South America (10 percent)

accounted for 96 percent of the total value of U.S.

exports in 1996.

Some demand for seed in the United States is met by

imports, which compete with U.S.-grown seed in quality,

price, and other factors. While both exports and imports

of seeds grew substantially over the past two decades,

the growth rate of seed imports has exceeded that of seed

exports in the United States. The value of total seed

imports increased from $87 million in 1985 to $314

million in 1996, a growth rate more than three times that

of exports (table 8). This increase is largely reflected in

increased seed imports for corn, forage, vegetables,

flowers, and other crops. Moreover, the United States

also takes part in an extensive amount of multidirectional

trade in international seed markets, in which the seeds

for many of the same crops are exported and imported.

In 1996, U.S. demand for imported seed was met by a

number of different countries. Canada (28 percent),

Chile (18 percent), and the Netherlands (9 percent)

had the highest shares of total value of U.S. seed

imports. On a regional basis, the leading suppliers of

seed to the United States were North America and

Central America, followed by South America, Asia,

and Western Europe (table 10).

In terms of volume, the six leading importing countries of U.S. field corn seed are Italy, Mexico, Canada,

France, the Netherlands, and Spain. Shares of these

countries’ imports of U.S. field corn, which vary from

year to year, dropped from 79 percent in 1995 to 63

percent in 1996 (table 11). Over the same period, the

volume of U.S. corn seed exports to the six leading

importers fell to 53,955 metric tons, a 19-percent

decline. Despite this drop, total U.S. corn seed exports

to all countries reached 86,183 metric tons in 1996, an

increase of 2 percent over 1995 (table 11). 

The top three importing countries of U.S. soybean

seed by volume are Mexico, Italy, and Japan. In 1996,

volume of U.S. soybean seed exports to these three

leading trading partners was 63,881 metric tons, an

increase of 11 percent from 1995. Together these

countries accounted for 86 percent of total U.S.

soybean seed exports. From 1995 to 1996, soybean

seed exports to Japan increased 41 percent but exports

to Italy declined 12 percent and exports to Mexico

remained unchanged. Over the same period, however,

the volume of total U.S. soybean seed exports to all

countries increased 16 percent, from 63,982 metric

tons to 73,911 metric tons.
14 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

Table 8—Exports and imports of U.S. seed for planting

Item 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

Million dollars

Exports:

Forage 66 65 70 59 74 75 94 96 104 101 114 116 120 115 139

Vegetables 115 122 135 120 128 138 167 153 176 220 221 218 240 242 231

Flowers 5 6 9 8 9 8 9 11 13 14 19 19 22 27 32

Corn1 55 73 46 89 77 63 66 68 138 181 177 168 181 165 144

Grain sorghum 28 32 33 33 29 16 29 55 27 28 34 34 20 12 19

Soybeans 22 12 19 17 19 36 26 54 45 41 30 28 23 25 25

Trees/shrubs 2 22 2 22 3 42 2 3 22 2 4

Sugarbeets 4 4 3 2 21 2 12 3 33 4 2 3

Other 8 14 5 28 31 33 26 68 81 82 68 31 41 77 101

Total exports 305 330 322 358 371 372 422 510 588 672 669 619 652 667 698

Deflator, index 

of prices received

by farmers 0.938 0.948 1.000 0.901 0.854 0.867 0.966 1.015 1.017 0.974 0.965 0.991 0.977 0.995 1.097

Exports in 1984 $ 325.0 348.2 322.0 397.2 434.6 428.8 436.8 502.3 578.2 690.1 693.6 624.8 667.4 670.1 636.2

Imports:

Forage 17 34 17 18 39 65 52 43 35 31 45 45 39 44 52

Vegetables 31 31 32 34 42 49 58 56 60 79 82 83 85 97 107

Flowers 12 10 18 18 18 21 21 24 23 24 27 31 35 43 56

Corn2 12 6 22 14 9 5 10 37 18 15 35 29 44 35 63

Trees/shrubs 1 11 1 11 2 22 2 221 2 4

Other 3 21 2 3 4 46 9 14 10 17 23 22 32

Total imports 76 84 90 87 112 146 147 168 147 165 201 208 227 243 314

Imports in 1984 $ 81.0 88.6 90.0 96.5 131.2 168.3 152.2 165.5 144.6 169.4 208.4 209.9 232.4 244.1 286.2

Trade balance 229 246 231 271 258 226 275 342 441 507 463 411 425 424 384

Trade balance

in 1984 $ 244.0 259.6 231 300.6 303.4 260.5 284.6 336.8 433.7 520.6 485.2 414.8 435.1 426.0 350.0

1 Does not include seed for sweet corn or corn seed provided as food aid. 2 Certified corn.

Source: Compiled by Mohinder Gill from USDA's Foreign Agricultural Service (FAS) data.
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 15

Table 9—Regional and country shares of U.S. seed exports

Region and country 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

Percent of total value

North and

Central America 30.0 32.8 31.2 25.0 20.7 24.7 23.0 33.4 26.4 24.8 30.7 33.7 31.7 29.5 39.0

Canada 9.5 8.8 8.9 7.4 6.3 9.4 8.3 6.2 10.2 10.0 11.3 11.8 11.9 13.2 12.2

Mexico 18.0 21.9 19.6 15.1 12.3 13.0 12.6 25.4 14.4 13.2 17.8 20.1 18.0 14.7 25.5

Other 2.5 2.1 2.7 2.5 2.0 2.3 2.1 1.8 1.8 1.6 1.6 1.8 1.8 1.6 1.3

South America 6.9 8.0 8.8 7.0 9.0 7.6 10.9 5.7 4.3 4.1 5.6 7.4 8.1 8.6 9.8

Argentina 0.7 1.0 2.0 1.1 2.5 2.5 3.0 2.0 1.4 1.4 3.0 3.0 4.1 4.4 6.0

Brazil 1.7 2.0 1.0 1.1 1.1 1.2 1.2 0.6 0.5 0.6 0.5 1.0 0.9 1.1 0.8

Chile 0.3 0.6 1.1 0.3 0.4 0.5 0.8 0.6 0.6 0.6 0.6 1.0 1.1 1.0 1.0

Colombia 1.0 1.2 1.4 0.8 1.0 0.9 1.1 0.6 0.6 0.6 0.6 0.7 0.6 0.7 0.6

Venezuela 2.4 1.9 2.2 2.9 3.0 1.4 3.3 0.6 0.6 0.6 0.4 0.7 0.5 0.5 0.4

Other 0.8 1.4 1.0 0.8 1.0 1.1 1.5 1.4 0.5 0.5 0.5 1.1 0.8 0.9 1.0

Western Europe 35.2 29.8 26.4 37.5 36.4 39.7 34.9 29.4 40.7 42.3 36.1 30.3 30.3 34.9 29.3

France 5.5 4.9 4.2 9.6 6.2 4.5 4.5 3.7 7.4 7.2 6.3 6.0 4.9 5.1 4.2

Germany 2.7 2.0 1.7 1.8 1.7 1.6 1.4 1.3 1.7 3.0 1.9 1.8 2.8 1.6 1.9

Greece 2.3 1.7 1.4 1.9 2.3 1.3 1.8 1.0 1.4 2.0 1.3 1.8 2.8 1.9 3.4

Italy 10.2 8.5 8.3 12.5 12.7 19.3 12.4 11.2 16.8 16.2 14.8 10.7 10.0 11.5 10.1

Netherlands 4.8 4.8 3.4 4.6 5.8 5.4 4.4 4.2 4.9 6.0 4.4 4.7 4.7 6.6 3.7

Spain 1.5 1.0 1.2 1.4 1.6 2.1 4.4 2.9 3.4 2.5 2.4 2.0 2.3 3.7 2.5

United Kingdom 3.4 2.6 2.2 2.7 2.8 2.6 2.9 2.6 1.9 1.7 1.7 1.4 1.4 1.9 2.0

Other 4.6 4.2 4.0 3.1 3.4 2.8 3.1 2.5 3.2 3.5 3.5 1.8 1.3 2.6 1.5

Eastern Europe and

former Soviet Union 0.9 1.1 0.5 3.3 4.8 0.2 2.0 1.0 2.0 3.7 1.6 7.2 5.4 1.3 0.8

Romania 0.2 0.2 0.2 0.3 0.5 0.0 0.6 0.3 0.8 1.5 0.5 2.0 2.2 0.0 0.0

Ukraine 0.4 0.1 0.0 0.3 0.7 0.0 0.0 0.0 0.0 0.0 0.0 4.7 0.5 0.7 0.1

Other 0.3 0.8 0.5 2.7 3.6 0.2 1.3 0.7 1.2 2.2 1.1 0.6 2.7 0.5 0.7

Middle East and Asia 20.8 21.3 26.5 21.9 23.9 22.6 24.4 26.0 22.3 21.2 21.6 17.1 20.9 19.8 17.6

Hong Kong 0.4 2.6 0.6 0.3

Japan 11.9 11.2 11.5 10.7 9.5 12.3 11.8 8.9 7.8 7.1 8.1 8.2 9.0 8.8 9.8

Saudi Arabia 3.4 3.1 4.5 2.8 3.6 2.0 4.2 10.4 10.0 9.4 7.9 2.3 2.6 1.7 1.5

South Korea 0.5 0.7 1.5 0.8 0.9 1.0 1.0 0.7 0.6 0.7 0.9 1.2 1.7 1.4 1.3

Other 5.0 6.3 9.0 7.6 9.9 7.4 7.5 6.0 3.9 4.0 4.7 4.9 5.0 7.2 4.7

Africa 4.1 4.5 4.7 2.9 3.2 3.0 2.9 2.7 2.7 2.5 2.9 3.0 2.1 3.8 1.3

Oceania 2.1 2.6 1.9 2.4 1.9 2.2 2.0 1.5 1.5 1.4 1.4 1.3 1.7 2.0 1.7

Australia 1.7 2.2 1.5 2.0 1.6 1.8 1.7 1.2 1.2 1.2 1.2 1.0 1.3 1.6 1.4

Other 0.4 0.4 0.4 0.4 0.3 0.4 0.3 0.3 0.3 0.2 0.2 0.3 0.3 0.4 0.3

World1 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

1 Totals may not add due to rounding

Source: Compiled by Mohinder Gill from USDA's Foreign Agricultural Service (FAS) data.
16 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

Table 10—Regional and country shares of U.S. seed imports

Region and country 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

Percent of total value

North and

Central America 30.0 32.8 31.2 38.5 43.4 44.4 35.8 33.2 33.4 31.4 32.6 31.2 33.9 37.1 33.5

Canada 9.5 8.8 8.9 26.7 35.1 37.7 30.4 27.0 26.1 24.9 25.4 22.8 27.2 29.2 27.5

Mexico 18.0 21.9 19.6 4.0 2.9 2.0 2.1 3.2 3.4 3.8 3.2 4.5 3.1 3.8 3.5

Other 2.5 2.1 2.7 7.7 5.4 4.7 3.2 3.2 4.0 2.7 3.9 3.9 3.6 4.1 2.5

South America 6.9 8.0 8.8 9.2 7.0 6.0 8.3 17.7 12.3 11.7 21.2 17.2 18.9 17.4 24.0

Argentina 0.7 1.0 2.0 0.0 0.0 1.5 0.7 4.0 1.0 0.7 3.6 3.3 2.8 2.0 4.9

Chile 0.3 0.6 1.1 8.2 6.2 4.0 6.8 13.3 11.2 10.7 17.2 13.5 15.7 14.8 18.1

Other 5.9 7.0 5.6 1.0 0.8 0.5 0.8 0.4 0.1 0.3 0.4 0.5 0.4 0.6 1.0

Western Europe 35.2 29.8 26.4 21.0 18.7 19.2 16.8 16.3 15.7 18.0 16.2 21.7 18.7 18.1 15.9

Denmark 1.1 0.9 0.7 1.6 1.2 2.1 1.9 1.5 1.4 1.2 1.7 2.6 1.3 1.5 1.8

France 5.5 4.9 4.2 1.4 1.1 1.7 1.0 1.3 1.4 1.8 1.7 2.2 2.4 2.3 2.0

Germany 2.7 2.0 1.7 1.4 2.2 2.5 2.2 1.8 1.6 2.2 2.0 2.5 2.4 1.9 2.0

Italy 10.2 8.5 8.3 1.7 1.1 1.2 1.6 1.0 1.0 1.2 1.2 0.9 0.9 1.1 0.9

Netherlands 4.8 4.8 3.4 11.7 10.5 10.2 9.2 8.9 9.3 10.7 8.7 12.3 10.6 10.2 7.8

Other 10.7 8.6 8.0 3.2 2.5 1.5 0.9 1.9 0.9 1.0 0.9 1.2 1.2 1.1 1.4

Eastern Europe and

former Soviet Union 0.9 1.1 0.5 1.8 0.4 0.5 1.3 3.3 0.7 0.1 0.5 1.7 1.9 0.5 0.4

Asia 20.8 21.3 26.5 20.1 22.2 19.4 24.5 24.9 30.5 31.3 22.4 21.1 20.0 19.9 21.1

China 0.0 0.0 0.0 2.4 3.9 6.8 9.0 5.5 4.8 6.0 7.0 7.3

India 0.0 0.0 0.0 3.3 6.5 2.9 7.5 3.5 3.1 5.2 2.7 1.8 1.9 2.4 2.4

Japan 11.9 11.2 11.5 6.1 6.1 6.0 6.4 6.9 7.6 7.8 6.2 9.0 7.7 6.3 5.3

Taiwan 0.0 0.0 0.0 7.6 6.0 6.7 4.5 6.2 4.8 3.5 3.6 1.8 0.8 1.1 1.0

Thailand 0.0 0.0 0.0 0.0 0.0 0.7 1.6 2.8 5.4 5.3 4.0 2.8 2.0 2.5 2.6

Other 8.9 10.1 15.0 3.0 3.6 3.1 2.0 1.5 2.9 0.5 0.4 0.8 1.5 0.6 2.5

Africa 4.1 4.5 4.7 6.4 4.0 3.9 3.8 0.7 0.9 1.3 1.1 1.4 1.0 1.6 1.0

Oceania 2.1 2.6 1.9 3.0 4.3 6.5 7.4 4.0 6.4 5.5 4.5 4.6 3.1 3.3 3.5

Australia 1.7 2.2 1.5 2.2 1.8 2.1 1.8 1.6 2.2 1.9 2.0 1.4 1.9 1.6 1.6

New Zealand 0.4 0.4 0.4 0.8 2.6 4.5 5.6 2.4 4.2 3.5 2.5 3.2 1.2 1.7 1.9

Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

World1 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

1 Totals may not add due to rounding

Source: Compiled by Mohinder Gill from USDA's Foreign Agricultural Service (FAS) data.
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 17

Table 11—U.S. exports of corn and soybean seed by country of destination and volume

Commodity/country 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

Metric tons

Corn seed:

Canada 1,621 2,505 2,582 1,548 4,076 7,561 8,192 8,678 15,421 16,890 13,217

France 2,121 2,542 2,439 2,873 9,666 10,953 13,859 8,177 6,188 7,732 5,030

Italy 7,939 12,229 8,741 12,168 20,889 21,773 23,955 14,178 11,782 15,042 10,383

Mexico 3,703 3,143 3,151 10,205 10,329 7,963 12,472 15,750 16,453 15,175 15,088

Netherlands 5,127 695 1,060 351 2,437 10,354 2,791 4,834 7,977 7,062 6,691

Spain 1,245 2,049 4,134 1,836 4,132 2,076 2,853 2,492 4,004 4,796 3,546

Subtotal 21,756 22,121 22,915 28,981 51,529 66,952 65,054 56,039 62,170 66,697 53,955

All others 22,906 10,291 10,632 7,876 18,837 26,770 13,455 32,690 43,126 17,724 32,228

Total, all countries 44,662 32,412 33,547 36,857 70,366 93,722 78,509 88,729 105,296 84,421 86,183

Soybean seed:

Italy NA 44,348 27,833 20,185 55,937 65,571 34,500 27,764 15,711 14,672 12,970

Japan NA 4,151 5,277 1,608 2,325 6,947 7,341 7,439 9,654 19,741 27,751

Mexico NA 12,630 8,922 100,380 36,731 4,827 32,674 19,472 8,891 23,116 23,160

Subtotal NA 61,129 42,032 122,173 94,993 77,345 74,515 54,675 34,256 57,572 63,881

All others NA 14,035 11,698 6,409 11,998 13,659 9,070 14,216 13,700 6,410 10,030

Total, all countries NA 75,164 53,730 128,582 106,991 91,004 83,585 68,891 47,964 63,982 73,911

NA = not available.

Source: Compiled by Mohinder Gill from USDA's Foreign Agricultural Service (FAS) data.
18 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

Agricultural innovations, such as improved plant varieties, are a product of research and development.

Seeds embody the scientific knowledge needed to

produce a new plant variety with desirable attributes,

such as higher yield, greater disease resistance, or

improved quality. To fully understand the nature of the

seed industry, it is necessary to consider the regulations that affect the costs and benefits faced by public

and private sector innovators, agricultural producers,

and other agents in the seed market. 

Appropriability and Agricultural R&D

Some agricultural innovations are imperfectly appropriable, meaning that the innovation, or the knowledge

embodied in the innovation, can be transmitted to,

imitated by, or reproduced by prospective competitors

with minimal difficulty or at a low cost, and with little

or no obligation to compensate the innovators (Cohen

and Levin, 1989, pp. 1090-1991). Plant breeders, in

particular, face both the risk of imitation by competing

seed firms and the risk of seed reproduction by

farmers themselves. For example, once marketed, plant

breeding innovations embodied in the seeds of

improved self-pollinated varieties, such as wheat, can

be easily adapted by competing seed firms into their

own product lines without compensation to the innovators if property right protections are not available

(Beach and Fernandez-Cornejo, 1994, p. 5). Once the

seeds are sown, they can also be reproduced and used

by farmers as seed for planting in subsequent years,

again without compensation.

If innovators are unable to assert property rights over

their innovations or the knowledge used in creating

innovative products, they may be unable to realize the

full rewards of their efforts. This effect may reduce the

private incentives for further innovations. If the innovation provides social benefits, as is frequently the

case with agricultural sector innovations, then limited

private incentives may result in research underinvestment. The establishment of patent laws and other

forms of enforceable legal protection, which provide

innovators limited market power, thereby generating

private incentives for research, offer a potential solution to this appropriability problem and its social

consequences. Public investments in socially desirable

research and development, particularly in areas in

which private incentives are inadequate, offer another

possible solution. 

IPR Protection in the Seed Industry

Providing private incentives to innovators and inventors is a clear and longstanding priority in U.S. agriculture and industry. The U.S. Constitution charges the

Congress with the responsibility of establishing laws

that award innovators exclusive proprietary rights over

their inventions and ideas for limited periods of time.

The first intellectual property rights (IPR) legislation

passed by Congress was the Patent Act of 1790, which

protects the intellectual property rights of inventors,

discoverers, and innovators, and establishes a framework through which they may obtain financial rewards

through the functioning of the market system (see box

on timeline of regulations). The Patent Act and its

subsequent amendments, however, do not extend IPRs

to new plant varieties; rather, they classify biological

innovations, such as new plant varieties, as “products

of nature” and exclude them from protection (Fuglie et

al., 1996, p. 35). 

In 1790, the lack of protection over plant varieties was

of limited relevance to most farmers, breeders, and other

agricultural sector participants because farmers of that

era relied on nonhybrid varieties of seed for planting

new crops. These plant varieties were seeded by the

natural processes of pollination. Seeds from self-pollinating crops, such as wheat or cotton, could be saved

from one crop harvest and planted for the next without

the seed losing yield potential or vigor. Seeds from

cross-pollinating crops, such as corn, could also be

saved from one harvest and planted for the next.

However, before the advent of hybrid varieties, farmers

had to select more carefully among these seeds to maintain the desirable characteristics they wanted.1

The use of saved seeds to plant subsequent crops

severely limited the extent to which innovators might

realize the benefits of plant breeding efforts. In practical terms, it was nearly impossible for an innovator

to maintain appropriability over nonhybrid seeds, thus

Regulations Have Affected the Seed Industry

1 This genetic malleability of corn, on the other hand, meant

that farmers could more easily select for characteristics they

wanted on their own.
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 19

1790. The first intellectual property rights (IPR) legislation

passed by Congress was the Patent Act of 1790, which

protects the intellectual property rights of inventors, discoverers, and innovators and establishes a framework through

which these individuals may obtain financial rewards

through a functioning market system. The Patent Act and its

subsequent amendments do not, however, extend IPRs to

new plant varieties; rather, they classify biological innovations, such as new plant varieties, as “products of nature”

and exclude them from protection.

1883. One of the oldest international IPR agreements is the

Paris Convention for the Protection of Industrial Property of

1883, which seeks to harmonize patent regimes among its 100

signatory countries. However, the convention provides its

members only limited property rights protection for 

innovation of plant varieties and biological processes for plant

production.

1930. The first IPR legislation enacted to specifically address

issues of plant breeding was the Plant Patent Act of 1930

(PPA). Administered by the U.S. Patent and Trademark Office

(PTO), the PPA provides patent protection over asexually or

vegetatively reproduced plant varieties. The PPA also includes

patent protection for spores, mutants, hybrids, newly found

seedlings, or plants found in an uncultivated state, and extends

property rights for a period of 17 years.

1952. The Patent Act of 1952 (PA) extends patent rights to

agricultural innovations under a much more general category

that includes “any new and useful process, machine, manufacture, or composition of matter, or any new and useful

improvements thereof.” Patent protection under the PA covers

agricultural machinery, equipment, chemicals, production

processes, and similar inventions, and is termed “utility patent

protection.” More importantly, the PA’s broad definition of

what may be entitled to patent protection leaves an important

opening for covering innovations in biotechnology and genetic

engineering.

1961. The International Convention for the Protection of New

Varieties of Plants was adopted in Paris, France, with the

objective of providing intellectual property rights to the

breeders of new varieties of plants. The Convention established

the International Union for the Protection of New Varieties of

Plants (UPOV—Union Internationale pour la Protection des

Obtentions Végétales), an intergovernmental organization

headquartered in Geneva, Switzerland. The Convention was

revised in 1972, 1978, and 1991. The 1991 revision attempts to

expand protection to address new issues in agricultural

biotechnology. 

1960s. The American Seed Trade Association formed the

Breeders’ Rights Study Committee to examine issues related to

plant breeders’ property rights. This effort helped enact the

Plant Variety Protection Act in December 1970.

1970. The Plant Variety Protection Act (PVPA) grants

breeders a Certificate of Protection that gives them exclusive

rights to market a new plant variety for 18 years from the

date of issuance. These exclusive rights are subject to a

research exemption and a farmer’s exemption.

1971. The Consultative Group on International Agricultural

Research (CGIAR) is established as a key institution in the

free international exchange of plant genetic materials. CGIAR,

a global network of agricultural research centers, receives

funding from multilateral agencies, governments of both industrialized and developing countries, and private foundations.

Included within CGIAR’s charter is the coordination of efforts

to preserve plant genetic material and distribute these resources

to research institutions in member countries.

1980. Breeders’ rights were strengthened by the U.S. Supreme

Court’s 1980 decision in Diamond v. Chakrabarty, which

extends patent rights to genetically engineered microorganisms, an important tool and product of biotechnology.

1983. FAO member countries passed Resolution 8/83, the

International Undertaking on Plant Genetic Resources (the

Undertaking), to ensure free access to genetic material

whether existing in the public domain or developed

commercially.

1985-88. A series of rulings by the PTO’s Board of Appeals

and Interferences widened the scope of patent protection for

genetically engineered organisms by including plants and

nonhuman animals. These rulings extend IPR to a wide

range of new biotechnology products in the form of utility

patents awarded under the PA. These products include seeds,

plants, plant parts, genes, traits, and biotechnology

processes.

1994. The 1994 amendment to the PVPA, which went into

effect in April 1995, brought the PVPA into conformity with

international standards established by the International

Union for the Protection of New Varieties of Plants and

allowed the United States to ratify the 1991 International

Convention for the Protection of New Varieties. Protection

provided by Certificates of Protection extended from 18 to

20 years for most crops.

2000. A case involving Pioneer Hi-Bred brought before the

U.S. Federal Court of Appeals reinforced plant breeders’

intellectual property protection through protection certificates issued under the PVPA or through utility patents

awarded under the PA. This ruling extended the options

available to plant breeders seeking to assert property rights

over their innovations.

2001. FAO members approved an International Treaty on

Plant Genetic Resource for Food and Agriculture growing

out of the International Undertaking in November 2001,

although the agreement is subject to ratification by member

states. 

Timeline of Regulations Related to Intellectual Property Rights to Plant Varieties
20 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

limiting the role of an IPR regime where nonhybrid

seeds play a central role in agriculture.

By the 1920s, the development of hybrid corn seed

offered farmers an alternative to open-pollinated corn.

Hybrids also proved beneficial to plant breeders: As

long as the lineage of a hybrid remains known only to

the breeder, the hybrid cannot be easily reproduced,

thus providing the plant breeder with control and

appropriability over the innovation. Moreover, seed

saved and planted from the harvest of a hybrid crop

tends to diminish in yield and vigor in subsequent

harvests, thus ensuring breeders a continuous market

for their seed so long as other higher performing

hybrid seeds do not enter the market. The unique

nature of hybrids led to extensive commercialization of

the corn seed industry in the 1930s, even in the

absence of a regulatory framework to protect new

plant varieties. 

The first IPR legislation passed to specifically address

issues of plant breeding was the Plant Patent Act of

1930 (PPA). Administered by the U.S. Patent and

Trademark Office (PTO), the PPA provides patent

protection over asexually or vegetatively reproduced

plant varieties. PPA specifically covers plants derived

from parts of the parent other than its seeds or tubers,

and thus covers plants that contain the exact genetic

makeup as the parent plant. The protection includes

spores, mutants, hybrids, newly found seedlings, or

plants found in an uncultivated state and extends property rights for a period of 17 years (USITC, 1995, p.

16). Patent owners have the right to exclude others from

reproducing their plants asexually or vegetatively and

may enforce ownership through civil action brought

against parties alleged to be infringing upon their

patents. The PPA’s explicit exclusion of plants that are

sexually reproduced or propagated by tubers reflects the

perception at the time that such varieties were not

adequately identifiable, uniform, or stable enough to

constitute varieties requiring patent protection.

The Patent Act of 1952 (PA) extended patent rights to

agricultural innovations under a much more general

category, which includes “any new and useful process,

machine, manufacture, or composition of matter, or

any new and useful improvements thereof” (35 U.S.C.

§ 101, in USITC, 1995, p. 16). The PA also includes

patent protection for agricultural machinery, equipment, chemicals, production processes, and similar

inventions and is termed “utility patent protection.”

The protection and exclusionary rights offered under

the 1952 PA are, under many circumstances, significantly greater than similar protections and rights

offered by the 1930 PPA and the 1970 Plant Variety

Protection Act. More importantly, the PA’s broad definition of what may be entitled to patent protection left

an opening for covering innovations in biotechnology

and genetic engineering. 

Still, neither the 1930 PPA nor the 1952 PA contained

language that extended IPR to seed- and tuber-propagated varieties. In the early 1960s, the American Seed

Trade Association (ASTA) formed the Breeders’

Rights Study Committee to examine the issue, an

effort that contributed to the enactment of the Plant

Variety Protection Act (PVPA) in December 1970

(USITC, 1995, p. 16). 

The 1970 PVPA grants breeders a Certificate of

Protection that gives them exclusive rights to market a

new variety for 18 years from the date of issuance.

These exclusive rights are subject to two exemptions:

(i) a research exemption, which allows the use of the

seed to develop new varieties; and (ii) a farmer’s

exemption, which allows a farmer whose primary

occupation is growing crops for sale to save seed from

a protected variety to plant on the farmer’s land, and to

sell from that seed to another farmer whose primary

occupation also is to grow crops (Strachan, 1992).

Saved seed that is sold under exemption (ii) must meet

the applicable State seed laws and must be labeled to

show the variety name as protected under the PVPA.

Further, the PVPA does not extend protection to fungi,

bacteria, and first-generation hybrids. Like the 1930

PPA, the 1970 PVPA is enforceable through the

actions of a protected variety’s owner. To enforce

protection, an owner of a protected variety may bring

civil action against parties allegedly infringing on

his/her property rights, and would typically seek an

injunction to prevent others from further violations

(USDA, AMS, 2000a).

The 1994 amendment to the PVPA, which went into

effect in April 1995, brought the PVPA into

conformity with international standards established by

the International Union for the Protection of New Varieties of Plants (UPOV)2 and allowed the United States

to ratify the 1991 International Convention for the

Protection of New Varieties (Fuglie et al., 1996, p. 35).

The amendment extends the length of protection

2 Acronym from the French Union Internationale pour la 

Protection des Obtentions Végétales.
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 21

provided by a Certificate of Protection from 18 to 20

years from the date of issuance for most crops (25

years for trees, shrubs, and vines) (USDA, AMS,

2000a). The amendment also prohibits farmers from

selling saved seed of protected varieties without the

permission of the variety owner (Fuglie et al., 1996, p.

35). In addition, the amendment extends protection to

tuber-reproduced plants (such as potatoes). The

amendment’s introduction of an “essentially derived”

plant variety category, which entitles such varieties to

protection, is specifically designed to address technological advances made in biochemistry and genetic

engineering that enable breeders to develop varieties

that may differ on the basis of a single gene or micromolecule within the DNA structure. The category

extends the definition of distinctness to include varieties of GE plants for which the uniqueness exists at

miniscule levels, thereby providing property rights to

plant breeders over even the smallest of genetic manipulations of their varieties (USITC, 1995, p. 16; USC,

1970, § 2401, 2541). 

The PVPA affords IPR to plant varieties that are

demonstrably “new, distinct from other varieties, and

genetically uniform and stable through successive

generations” and includes protection for both nonhybrid and hybrid seeds (USDA, AMS, 2000a).3

According to the PVPA, distinctness, a key determinant of a variety’s potential for protection, may be

based on “one or more identifiable morphological,

physiological, or other characteristics (including any

characteristics evidenced by processing or product

characteristics, such as milling and baking characteristics in the case of wheat) with respect to which a

difference in genealogy may contribute evidence”

(USDA, AMS, 2001a).

The PVPA is administered by USDA’s Plant Variety

Protection Office (PVPO). The PVPO is responsible

for scrutinizing applications for Certificates of Protection, including information on the variety’s lineage,

genealogy, and breeding methodology, as well as seed

or cell-culture samples and other proof of the variety’s

distinctness, uniformity, and stability. Plant breeders

applying for protection of new wheat varieties must

also submit information on the milling and baking

characteristics of the variety (USDA, AMS, 2000a).

Applications may be submitted by both domestic and

foreign breeders seeking protection for their variety in

the U.S. marketplace. 

Breeders’ rights were strengthened by the U.S.

Supreme Court’s 1980 decision in Diamond v.

Chakrabarty, which extends patent rights to genetically engineered microorganisms, an important tool

and product of biotechnology. In the case brought

before the Supreme Court, the underlying question

was whether a genetically engineered bacterium

designed to digest and break down crude oil was a

“product of nature” that was not covered by the Patent

Act or whether it was a new invention for which a

patent could be awarded. Among the arguments

brought before the Court was the fact that patents had

been previously awarded for compositions containing

living organisms, such as microbial spores, vaccines,

yeast compositions, and certain dairy products. Ultimately, the Supreme Court determined that GE

microorganisms were, in fact, patentable (Schor, 1994,

pp. 60-61). A series of rulings by the PTO’s Board of

Appeals and Interferences widened the scope of patent

protection for genetically engineered organisms by

including plants and nonhuman animals. These rulings

extend IPR to a wide range of new biotechnology

products in the form of utility patents awarded under

the PA. Products protected under the rulings include

seeds, plants, plant parts, genes, traits, and biotechnology processes (Fuglie et al., 1996, p. 35; USITC,

1995, p. 16). 

Breeder’s rights were extended further with the

Supreme Court’s 1995 decision in Asgrow v. Winterboer, which precluded farmers from selling protected

seed without a license from the variety’s owner for

varieties developed before April 1995 and not covered

by the PVPA’s 1994 amendment. This decision, along

with the PVPA amendment, addressed the issue of

appropriability in terms of the threat posed to plant

breeders not by competing firms but by farmers who

save and reproduce nonhybrid seed from their own

crops for resale purposes (Fuglie et al., 1996, p. 35).4

A more recent case involving Pioneer Hi-Bred brought

before the U.S. Federal Court of Appeals in 2000 reinforced plant breeders’ intellectual property protection

through protection certificates issued under the PVPA

3 This does not apply to open-pollinated corn because it would not

be “genetically uniform and stable through successive generations.”

4 This case is particularly relevant to the issue of genetically engineered nonhybrids such as herbicide tolerant “Roundup Ready” soybeans. Monsanto, the largest producer of these varieties, required

farmers purchasing the soybean seed to enter into contracts that

specifically prevented them from saving seed for future planting. 
22 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

or through utility patents awarded under the PA

(AgBiotech Reporter, 2000). This ruling extended the

options available to plant breeders seeking to assert

property rights over their innovations.

Both legislative and judicial action have contributed to

an IPR regime in the United States that provides an

extensive set of incentives to developing new plant

varieties: plant patents for asexually or vegetatively

propagated varieties under the PPA; certificates of

protection for sexually or tuber-propagated varieties

under the PVPA; and utility patents under the PA.

Although the number of plant patents issued under the

PPA exceeds all other types of property protection

awarded to plant innovators, the number of protection

certificates and utility patents has increased significantly in recent years (Fuglie et al., 1996, pp. 36-37).

IPR in the International Context

Although the U.S. IPR regime provides a comprehensive framework to protect plant breeders’ rights and

create incentives for plant breeding R&D, the relevance of the U.S. regime is better understood within

an international context because the expansion of U.S.

IPR has implications for genetic resource conservation

worldwide. Historically, the United States and several

other countries have facilitated the free exchange of

plant genetic resources for research purposes as a

means of increasing worldwide agricultural production

and food security. However, the role of intellectual

property rights in this context remains unclear and has

been the subject of much international debate (USDA,

ERS, 2000, p. 14).

A key institution in the free global exchange of plant

genetic materials is the Consultative Group on International Agricultural Research (CGIAR), an international

network of agricultural research centers established in

1971. CGIAR receives funding from multilateral agencies, governments of both industrialized and developing

countries, and private foundations. Included within

CGIAR’s charter is the coordination of efforts to

preserve plant genetic material and distribute these

resources to research institutions in member countries.

Historically, the free exchange of plant genetic resources

has been important to the United States, not only

because of its membership in CGIAR but also because

of its need for access to genetic materials beyond U.S.

borders. The relative lack of genetic diversity among

indigenous plants makes the United States a

“germplasm-deficient” country, and free exchange

ensures the United States continued access to genetic

resources from other countries to support its extensive

work in agricultural R&D (Day-Rubenstein and Heisey,

2001, p. 22). In fact, as a result of collection and

breeding activities, the United States is currently a net

supplier of plant germplasm to the rest of the world

(Day-Rubenstein and Heisey, 2001, p. 18).5

The United States, however, is also committed to

supporting plant breeders and private sector investment

in plant breeding R&D, a commitment that is shared

with many other countries. As a result, the United

States is party to a number of international agreements

and conventions designed to protect the rights of plant

breeders. One such agreement, the Paris Convention

for the Protection of Industrial Property (1883), seeks

to harmonize patent regimes among its 100 signatory

countries. However, the Paris convention provides only

limited property rights protection for plant varieties

and biological processes for plant production (Van

Wijk, 1993, p. 17). The UPOV provides for a more

explicit IPR regime to its 52 member states by

extending protection to distinct, uniform, and stable

plant varieties for a minimum of 15 years.6 The 1991

Act of the UPOV convention attempts to expand

protection to address new issues in agricultural

biotechnology. For instance, the 1991 Act eliminates

an exemption for essentially derived varieties, under

which breeders who created new varieties by incorporating single genes into an existing protected variety

did not require permission from the variety owner

(Van Wijk, 1993, pp. 6-7). Out of 52 member states,

only 23, including the United States, have become a

party to the 1991 Act (UPOV, 2003). 

The difficulty of balancing free access to plant genetic

materials with protecting breeders’ rights was apparent

in 1983, when member countries of the United Nations

Food and Agriculture Organization (FAO) passed Resolution 8/83, the International Undertaking on Plant

Genetic Resources (the Undertaking), seeking to ensure

free access to genetic material, whether existing in the

5 For some quantitative results, see Smale and Day-Rubenstein

(2002).

6 UPOV is an intergovernmental organization headquartered in

Geneva, Switzerland. UPOV was established by the International

Convention for the Protection of New Varieties of Plants with the

objective of protecting new varieties of plants through intellectual

property rights. The Convention was adopted in Paris in 1961, and

it was revised in 1972, 1978, and 1991. These revisions, or amendments, are referred to as the “1972 Act,” “1978 Act,” and “1991

Act” (UPOV, 2003). 
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 23

public domain or developed commercially. As a result

of objections from the United States and other FAO

member countries, compliance with the resolution was

deemed nonbinding on members. Disagreements arose

during subsequent rounds of discussion on key issues

related to plant breeding, such as compensating farmers,

particularly in developing countries, for their contribution to past plant genetic improvements; protecting the

rights of plant breeders over their inventions, ideas, and

products; ensuring free and equitable access to genetic

materials; and establishing programs to preserve diverse

genetic resources for future use. Members approved an

International Treaty on Plant Genetic Resource for Food

and Agriculture growing out of the Undertaking in

November 2001, although it is subject to ratification by

member states (FAO, 2001). 

The UN Convention on Biological Diversity (1992)

also addressed issues relevant to plant breeding, such

as the equitable use and preservation of plant genetic

resources, although the convention’s provisions

relating to IPRs were found wanting by the United

States and other members (Day-Rubenstein and

Heisey, 2001, pp. 20-21; Van Wijk, 1993, pp. 26-27).

The convention was signed by the United States in

1993 but has not been ratified by the U.S. Senate

(Day-Rubenstein and Heisey, 2001, p. 22).

While FAO, the UN, and CGIAR efforts focus on

preserving genetic diversity and, to the extent possible,

making plant genetic material available worldwide, a

new international regulatory regime is poised to establish a much stricter international IPR regime. The 1986

Uruguay Round of the General Agreement on Tariffs

and Trade (GATT) established the framework for an

initiative on trade-related aspects of intellectual property

rights (TRIP). Under TRIP, member countries of the

World Trade Organization (WTO) are required to

update their IPR legislation to meet new international

standards. These new standards include the protection of

seed and plant varieties with patents or similar property

rights (Day-Rubenstein and Heisey, 2001, p. 22). Moreover, the WTO’s authority to sanction members for

noncompliance with TRIP would enable the organization to more effectively enforce the initiative, resulting

in a stronger international IPR regime that will reflect

and support the present IPR regime in the United States.

Regulation To Ensure Seed Quality

Along with the comprehensive framework designed to

protect plant breeders’ rights, the United States also

offers protections to farmers who purchase seed,

directly or indirectly, from plant breeders. Because the

quality of most seed cannot be determined by visual

inspection, the risks associated with seed choice are

high. U.S. farmers are protected by a comprehensive

system to ensure seed quality. 

Varietal registration, a key protection for farmers who

purchase seed, provides a system for establishing a

variety’s genetic identity and its performance characteristics, such as yield or disease resistance. In the United

States, plant breeders register varieties with Federal

agencies responsible for awarding plant patents or

protection certificates. These agencies can provide

farmers with information on the characteristics of

different varieties that might otherwise be overly

complicated or difficult to obtain in the marketplace.

U.S. plant breeders are not required to provide information on a variety’s performance characteristics, which is

typically ascertained through field tests (Tripp, 1998, p.

160). Field testing is mandatory, however, in cases

involving the introduction of GE organisms.

Seed certification and quality testing also offer protection to farmers. Seed certification establishes the

genetic purity of a seed, while quality testing ascertains such information as germination rates, moisture

content, or seed size. Individual States oversee the

process of seed certification through State agencies,

such as agricultural extension services; State agricultural departments; or independent bodies, such as crop

improvement associations. The certification system is

not a rigorous process of mandatory testing; rather,

seed companies are required to adhere to truthful

labeling provisions that permit companies to sell seed

as long as seed quality information is completely

disclosed on the packaging. This labeling provision is

considered highly effective (Tripp, 1998, p. 164). 

Environmental and 

Consumer Protection

Much like the laws that protect plant breeders’ property rights and the interests of farmers, a regulatory

framework provides protection for the environment

and for consumers of agricultural commodities. These

laws are particularly relevant in light of the expanding

role of biotechnology in U.S. agriculture.

The Animal and Plant Health Inspection Service

(APHIS) of the U.S. Department of Agriculture plays a

central role in regulating the release of agricultural
24 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

biotechnology products into the environment. Such

products, which include genetically engineered plants,

microorganisms, and invertebrates, are considered

“regulated articles.” Private firms and public institutions

wishing to move or release these organisms must

receive authorization from APHIS through either a notification or permit procedure. APHIS requires that the

notifications and permit applications contain specific

details about the organism’s genetic makeup and

lineage, as well as the testing and safety measures

designed to prevent the organisms from being disseminated from the test site or persisting beyond the duration

of the test. In the case of permits, APHIS often imposes

additional conditions to ensure confinement. APHIS

determines whether to authorize the test, based on

whether the release will pose a risk to agriculture or the

environment. APHIS and State authorities maintain a

continuing right to inspect test sites at any time (USDA,

2000b). After years of field tests, an applicant may petition APHIS for a determination of nonregulated status

in order to facilitate commercialization of the product.

If, after extensive review, APHIS determines that the

unconfined release does not pose a significant risk to

agriculture or the environment, then the organism is

“de-regulated.” At this point, the organism is no longer

considered a regulated article and can be moved and

planted without APHIS authorization.

APHIS is also responsible for plant quarantines, a

function that is crucial to protecting the environment

from the spread of disease or pests. APHIS enforces

regulations that govern the import and export of plants

and seeds and are designed to ensure that sanitary and

phytosanitary threats do not affect U.S. agriculture or

the agriculture sectors of U.S. trading partners. The

agency is also responsible for imposing quarantines on

areas within the United States where disease or pests

pose a threat. APHIS authority to impose quarantines

is particularly important with the increase in adoption

of bioengineered crops and concerns over genetic

exchanges among these crops, weeds, and other crops

(Tripp, 1998, p. 171).

If a plant is engineered to produce a substance that

“prevents, destroys, repels, or mitigates a pest,” then

such substance is considered to be a pesticide and is

subject to regulation by the U.S. Environmental

Protection Agency (EPA) (Federal Register, November

23, 1994). The U.S. Food and Drug Administration

(FDA) maintains regulatory control over all food

applications of crops, including those crops that are

developed through the use of biotechnology. Shoemaker et al. (2001, pp. 31-32) describe the EPA and

FDA regulation of agricultural biotechnology products.
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 25

From the first ventures into the commercial production

of hybrid corn seed in the 1930s, to the recent mergers

and acquisitions, the seed industry has experienced

extensive structural change and transition. 

Early Industry Structure: 1920-1970

Until the late 19th century, most U.S. farmers

depended on seed saved from their own crops cultivated in the previous year and did not purchase

significant quantities of seed from commercial

sources. It was not uncommon for farmers to share

surplus seed with friends and neighbors. The advent

and expansion of seed certification programs between

1915 and 1930 brought about large increases in the

number of farmers who purchased seed from

commercial traders instead of producing it themselves or obtaining it locally from neighbors. Seed

certification programs provided quality assurances to

farmers, leading to a rise in the role of commercial

seed markets. 

Most commercial seed suppliers at that time were

small, family-owned private businesses lacking the

financial resources necessary to pursue their own

R&D activities. The primary role of seed businesses

at the time was to multiply and sell seeds of varieties

developed in the public domain, as R&D of improved

plant varieties was carried out almost exclusively by

land-grant colleges and universities, State agricultural

experimental stations, and other public agencies

(Duvick, 1998; McMullen, 1987). 

At the end of the 19th century, the seed used in corn

(the dominant field crop in U.S. agriculture) was

almost entirely based on open-pollinated varieties

(OPV) that farmers saved from prior crops and subsequently planted (Schor, 1994, p. 35). In the early part

of the 20th century, public researchers developed highyielding hybrid corn varieties that consistently outperformed OPVs. Capitalizing on these breakthroughs

and the growing demand for hybrid seeds (and given

the implicit form of proprietary rights enjoyed by

hybrid corn breeders over their innovations), the

private sector’s role in the commercial market for

hybrid corn seed increased significantly beginning in

the 1930s (Duvick, 1998, pp. 198-200).

The development and diffusion of hybrid corn varieties, with their inherent capacity to protect returns to

private investment, transformed the U.S. seed industry.

Beginning in 1930, approximately 150 companies

formed to produce hybrid corn seed and some 40

existing seed companies expanded their businesses to

include production of hybrid corn seed. While most

firms were established to produce and sell seed, some

also instituted inhouse research and breeding programs

to improve existing hybrids. As long as the lineage of

a company’s hybrid remained unknown to competitors

or farmers, the company continued to hold a unique

and marketable product until an even better hybrid was

developed. By 1944, U.S. sales in the seed corn market

had expanded to over $70 million, establishing corn

seed as the core business of the U.S. seed industry

(Duvick, 1998, p. 199). 

The early growth of the seed industry shifted corn

production to hybrids swiftly and extensively; by

1965, over 95 percent of American corn acreage was

planted with hybrid seed. Industry expansion also

generated profits sufficient to support reinvestment in

plant breeding R&D, leading to continual increases in

corn seed productivity and crop yields (McMullen,

1987, p. 89). By constantly improving their products

through new research, private seed firms were able to

maintain the corn seed market’s longrun viability. The

seed industry reshaped itself primarily around large

firms highly vested in the corn seed industry. The

smaller firms in the industry tended to be family-run,

regionally oriented firms active only in producing,

distributing, and marketing varieties developed by the

public sector or larger private companies (Kimle and

Hayenga, 1993, pp. 19-20). The ability of farmers to

save nonhybrid seeds limited the expansion of the seed

industry into other agricultural seed markets, establishing corn as the historical force behind the growth

of the seed industry. 

Modern Industry Structure:

1970-Present

With the exception of hybrid seed firms, few companies had proprietary rights over the plant varieties

Seed Industry Structure Is Characterized by Growth 

and Consolidation
26 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

they sold as seed until the early 1970s.7 Most private

seed firms focused primarily on cleaning, handling,

storing, packaging, and selling seed developed in the

public domain. The 1970 PVPA, subsequent amendments and rulings, and other actions strengthened

property rights by providing proprietary rights over

sexually- and tuber-propagated new plant varieties,

creating an incentive for private firms to enter the

seed market. 

Over the past three decades, the U.S. seed industry has

been marked by transition. As recently as 1970, most

seed firms were independent. During the 1970s, most

small seed firms vanished, as mergers and acquisitions

created a new seed industry structure dominated by

large companies with primary investments in related

sectors. For example, more than 50 seed companies

were acquired by pharmaceutical, petrochemical, and

food firms following the passage of the 1970 PVPA

(Lesser, 1998). The acquiring companies were drawn

to the potential profits available through the purchase

of strong, well-developed seed companies. Those large

corporations, many of them multinational conglomerates, possessed the resources needed to achieve scale

economies in research and development. Many chemical firms entered the U.S. seed market because the

agricultural chemicals market had reached maturity

and profits in that sector were declining (Kimle and

Hayenga, 1993, pp. 20-21).8 Pursuing new, highgrowth opportunities, large multinational corporations

specializing in chemicals and pharmaceuticals, such as

Ciba-Geigy, Sandoz, Royal Dutch/Shell, Upjohn, and

Celanese, entered the seed industry in the mid-1970s

(Kimle and Hayenga, 1993, pp. 19-20). As a result,

private sector acquisitions expanded rapidly, and, by

the early 1980s, several international firms were

among the top seed sellers worldwide (table 12).

In the early 1980s, developments in biotechnology

created an additional incentive for firms to increase their

R&D capacity and expand further into seed production.

As the first products of crop biotechnology began largescale extensive testing in the 1980s, the seed industry’s

structure underwent additional transformation. The

industry again reorganized through extensive mergers,

acquisitions, and joint ventures as companies sought to

achieve economies of scale to offset the high costs of

biotechnology R&D. Strong demand complementarities

provide the rationale for joint ventures between chemical and seed businesses (Just and Hueth, 1993). An

example is the case of the herbicide glyphosate and

soybeans tolerant to glyphosate.

Despite these incentives, many large chemical and industrial manufacturing companies that invested heavily in

the seed industry during the early 1980s are no longer in

the seed business. Royal Dutch/Shell, a market leader in

1983 with seed sales topping $650 million, sold its seed

unit and had exited the seed industry completely by

1989. Other large players in the market, such as Occidental Petroleum, Upjohn, Lubrizol, and Celanese, similarly shed their seed subsidiaries. Of the 14 companies

that led industry sales in 1983, only 7 occupied top

global sales positions by 1989. Pioneer Hi-Bred main7 Apart from corn, the only other field crops that have been successfully hybridized are sorghum and sunflower. Breeders also successfully hybridized a number of vegetable crops, such as onions,

tomatoes, broccoli, cabbage, melons, and spinach, but the market

shares of these crops are marginal, compared with those of corn

(McMullen, 1987, p. 89; Leibenluft, 1981, p. 95). Until recently,

farmers growing other major field crops remained dependent on

saved seed, thus limiting the growth of seed industries for those

crops: only 55 percent of the soybean acreage, 50 percent of cotton

acreage, and 10 percent of wheat acreage was cultivated with purchased seed as late as 1982 (McMullen, 1987, pp. 86-87). 

8 The chemical industry experienced its most marked growth—15

percent or more annually—during the late 1960s and 1970s. Since

then, market growth has been under 10 percent and was predicted to

slow in the late 1990s (Storck, 1987).

Table 12—-Global seed sales of top international

seed companies

Company 1983 1989 1983 1989

Million Million

current dollars 1989 dollars1

Royal Dutch/Shell 650 784

Pioneer Hi-Bred 557 840 672 840

Sandoz 319 471 385 471

Cardo 285 344

Asgrow 270 270

DeKalb/Pfizer 187 205 226 205

ICI 250 250

SICA France Mais 170 170

Takii 170 170

Clause 159 159

Claeys-Luck 155 187

Sakata 152 152

Upjohn 139 168

Limagrain 130 268 157 268

Ciba-Geigy 107 148 129 148

Suiker Unie 100 121

K.W.S. 80 97

Cebeco 65 78

Svalof 55 66

Cargill 50 241 60 241

1 Calculated using the U.S. GDP deflator.

Source: McMullen (1983), p. 94; Kimle and Hayenga (1989), p. 21.
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 27

tained the leadership position in the market in 1989,

followed by Sandoz, Asgrow, and Limagrain.

Mergers and acquisitions, along with increased private

sector R&D expenditures, continued to grow through the

1990s. According to some industry experts, the acceleration in seed company acquisitions stemmed from efforts

by acquiring companies to raise their market share in a

market with rich profit potential (Kidd, 1989). Some

businesses active in mergers and acquisitions may also

have been attempting to consolidate market share and

distribution infrastructure/capacity in selected species in

anticipation of new biotechnology product developments. In addition, companies may seek to acquire

others to facilitate access to protected intellectual property, particularly when licensing is costly (Blonigen and

Taylor, 2000).

Some firms evolved toward developing “life sciences”

complexes organized around the development of such

products as agricultural chemicals, seeds, foods and

food ingredients, and pharmaceuticals based on applications of related research in biotechnology and

genetics. Monsanto, Novartis, and AgrEvo gained a

significant share of the market through such strategic

behavior (Begemann, 1997) (table 13). Most of those

life sciences companies, however, divested their agricultural operations over the past 3 years (King, 2001;

Fulton and Giannakas, 2002).

The changing nature of the seed industry following the

entry of large firms has been the subject of much debate.

Many large firms enjoy economies of scale in R&D and

have been able to subsidize seed research with resources

and revenues from other corporate divisions (Butler and

Marion, 1985, p. 51). The development of biotechnology

has also generated opportunities for economies of scope

(i.e., producing several products together at a cost less

than producing them separately). According to Fulton

and Giannakas (2002), once a specific gene has been

isolated (e.g., a gene that confers resistance to a particular herbicide) this gene can be used in a number of

crops. Furthermore, the entry of large multinational firms

in the industry also expands markets, from domestic or

regional to global, increasing sales volume and profits

supporting R&D.

The entry of multinational firms in the seed industry

may also have drawbacks. First, the relatively small

size of the commercial seed market—$5.7 billion in

the United States and $25 billion worldwide (table

2)—means that seed divisions in large firms are less

likely to exert influence on corporate decisions than

those divisions involved in larger markets, such as

pharmaceuticals and chemicals (FIS/ASSINSEL,

2000). Second, the time-consuming nature of seed

R&D requires a long-term perspective on R&D investments, which may not appeal to a firm’s shareholders

(Butler and Marion, 1985, p. 51). Third, and most

importantly, the presence of large firms in the industry

raises concerns about increasing market concentration

and oligopolistic competition among and between

firms (see, for instance, Leibenluft, 1981; Begemann,

1997; Kalaitzandonakes and Hayenga, 1999).

The seed market is still somewhat small in size,

compared with other agricultural input markets, such as

Table 13—Estimated seed sales and shares of U.S.

market for major field crops, 1997

Total Corn Soybean Cotton

Total market market market market

Company sales share1 share share share

Million ———— Percent –———

dollars

Pioneer Hi-Bred 1,178 33.6 42 19 0

Monsanto2 541 15.4 14 19 11

Novartis 262 7.5 9 5 0

Delta & Pine Land3 79 2.3 0 073

Dow Agrosciences / 

Mycogen 136 3.9 44 0

Golden Harvest 93 2.64 0 0

AgrEvo/Cargill 93 2.64 0 0

Others 1,121 32.0 23 53 16

Total 3,503 100.0 100 100 100

1 Total market shares in this table include only corn, soybeans,

and cotton. 2 Monsanto acquired Dekalb in 1997 and Asgrow in 1998. 3 The merger between Monsanto and Delta & Pine Land in 1998

was called off in December 1999.

Sources: Market shares for corn and soybeans: Hayenga (1998);

cotton: USDA, AMS. Total crop sales calculated from acreages

and seed cost per acre: USDA's Agricultural Resource Management

Survey data (1998) and Agricultural Statistics (USDA, 1998).

Table 14—Global seed and pesticide sales of

major multinational firms, 1999

Company Seeds Pesticides

Million dollars

Syngenta (Novartis/AstraZeneca) 1,173 7,030

Aventis (Hoechst & Rhone Poulenc)1 135 4,582

Dupont (inc. Pioneer) 1,835 2,309

Monsanto/Pharmacia 600 3,230

Dow Agrosciences 220 2,132

1 Recently acquired by Bayer.

Source: Merrill Lynch (2000).
28 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

the pesticide market (table 14). Still, the total market

value of purchased seed in the United States grew

substantially in the past three decades. This growth has

been particularly rapid in the seed markets for major

field crops—corn, soybeans, wheat, and cotton—which

constituted 70 percent of the overall seed market in

1982. These markets are dominated by a few large firms

which, through strategic corporate behavior, have come

to play a central role in some or all of these markets.

Together, their seed sales amounted to approximately 

$4 billion in 1999 (table 14). 

Before discussing firm- and crop-specific details of the

modern seed industry and its structure, it is useful to

review the workings of the seed market, or how seeds

are developed, manufactured, and distributed to farmers.

Though different types of seed have very distinct

production processes and markets, a fairly general

description of the process is applicable across all types

(see box on the process of seed production).

Different types of seed have very distinct production

processes and markets, but a general description of the

overall process is applicable across most seed types. The

seed firm can be viewed in terms of four separate functions: (1) Plant breeding R&D, (2) seed production, (3)

seed conditioning, and (4) seed marketing and distribution. 

Plant breeding. Plant breeding constitutes the foundation

of the modern seed industry in that it creates a unique and

marketable product through the application of science.

Plant breeders develop seeds embodying such improvements as high yields, resistance to disease and pests, or

traits specific to regional agroclimatic conditions. A seed’s

success in the market depends primarily on its improved

traits, which embody the R&D effort. 

The high costs associated with large-scale R&D limit it to a

relatively small number of large companies and to Federal

Government agencies and land-grant colleges and universities. High R&D costs require private sector varieties to be

commercially viable, highly competitive, and well protected

by intellectual property rights (IPR). Where each breeder

holds the exclusive rights to produce and distribute his or her

variety, competition tends to be based more on product

performance—yield, disease resistance, quality—than price

(Leibenluft, 1981, p. 107). Given the size of their R&D

investments, these plant breeders play a central role in

managing the entire production, distribution, and marketing

processes in the seed industry, resulting in extensive vertical

integration of the industry (Butler and Marion, 1985, pp. 18-

19). Moreover, there are economies of scale in R&D,

marketing, and distribution, but there are not many economies

of scale in seed conditioning (Morris, 1998).

Seed production. Seed firms with a marketable seed product

typically contract out the production and multiplication

processes to farmers, farmers’ associations, and private firms.

Breeders provide contract growers the foundation seed

(parent seed stock produced from the original seed developed by plant breeders) to produce either more foundation

seed for continued R&D purposes, or registered seed for

large-scale production purposes. Registered seed is

contracted out in a similar manner to produce certified seed,

sold to farmers conforming to standards of genetic purity and

quality established by State agencies (Agrawal et al., 1998,

pp. 104-105, Butler and Marion, 1985, p. 16). The production of certified seed requires strategic planning to ensure

that market demand is adequately met. This planning may

include determining the quantities of each variety to be

produced; determining inventories necessary to produce in

excess of forecasted demand to avoid immediate or future

shortages; and reducing the risks associated with the unpredictable effects of weather conditions, disease, and pests.

Production may also require estimating the quantity of saved

seeds farmers will use instead of purchased seed, and the

differences in quantity and type of seed demanded in

different geographic markets (Leibenluft, 1981, p. 109;

Butler and Marion, 1985, pp. 18-19). Corn seed firms, for

example, disperse seed-growing contracts throughout the

United States (and to countries of the Southern Hemisphere

as well) to minimize disease and weather risks and often

intentionally overproduce by 25 percent of forecasted

demand for the coming season to ensure adequate supply.

The production of both registered and certified seed

through contract growers is closely managed by seed firms

to ensure that the desirable plant characteristics are carried

through to subsequent generations, and to prevent open

pollination, disease or pest infestation, or other types of

problems that could affect product quality. Contract

growers are carefully selected by seed firms and are

provided with technical assistance or supervision. Seed

firms closely control all stages, from seedbed preparation

and planting densities to the timing of input application

(Agrawal et al., 1998, pp. 106-107).

Seed conditioning. Once harvested, certified seed is conditioned for sale to farmers, a process that typically includes 

The Process of Seed Production, Marketing, and Distribution

Continued on page 29
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 29

drying, cleaning, and sorting the seed; treating the seed

with insecticides and fungicides; and packaging the seed

for distribution and sale (Krull et al., 1998, p. 133; Seed

World, 1999, p. 41). Seed is also subject to inspection

under various State programs to ensure that the final

product meets certain quality standards. This inspection

may include tests for purity, germination, presence of

noxious weed seeds, and moisture content.

Seed marketing and distribution. Large seed firms play a

direct role in marketing and distributing their end product

to regional, national, and international markets. Many firms

also license or outsource marketing and distribution to

private firms and individuals to improve access to local

markets (Butler and Marion, 1985, 16). Local distribution

is typically run by independent agents, such as farmerdealers, farmers’ associations, company salespeople, and

private wholesalers and retailers. Different distribution

channels are used in different regions and markets. In the

Midwest, for example, most corn seed is sold to farmers by

part-time farmer-dealers who have received training

directly from the seed firm. In the South, corn seed sales

are channeled through agricultural supply stores. On large

farms throughout the country, seed company salespeople

sell straight to farmers (Leibenluft, 1981, p. 109). 

Seed pricing. The market price of seed incorporates the

costs associated with development, production, marketing,

and distribution. In the long run, the price must be responsive to the farmers’ willingness to purchase while at the

same time ensuring a profit margin that provides an attractive return on capital to investors. Furthermore, the price

depends on the competitiveness of the particular seed

market, and the pricing behavior of those firms that hold

large shares of the market. 

R&D costs account for an important portion of the market

price for seed, particularly for hybrids or transgenic seeds

over which private firms own exclusive proprietary rights.

In recent decades, private sector R&D costs have been

rising with the application of new technologies, and much

of the increase in seed prices has been associated with this

trend (Krull et al., 1998, pp. 133-134). R&D costs vary

among the different seed markets. For example, the corn

seed market depends extensively on private sector R&D

and passes these costs on to farmers, while the wheat seed

market depends largely on public sector research, which is

almost cost-free to farmers. 

Seed production is another major cost, contributing up to

about a quarter of the seed price, but the share of these

production costs varies as the marketing and distribution

costs change. Production costs include paying farmers to

grow seed for exclusive resale to the seed firm. Contract

growing typically requires that the seed firm pay a margin

above the commodity market price for the seed to ensure

that optimal growing conditions are maintained to produce

a good quality product (Agrawal et al., 1998, p. 115). For

example, for corn, a contract payment formula may be

R=1.1(Pch – 0.08)[2(y-yav)+185], where Pch is the expected

price of the commodity, such as a futures price, y is the

farm corn yield (given a certain nitrogen application and

weather) and yav is the regional average yield (also given

nitrogen application). Thus, the grower payment is based

on an adjusted yield that is equal to a typical yield of 185

bushels per acre plus twice the difference between the farm

yield and regional average yields. The grower receives an

additional bonus of 10 percent to make the contract desirable (Preckel et al., 1997).

Seed conditioning and treatment may account for around

15 percent of the seed price. This process benefits from

scale economies arising from the relatively intensive use of

capital equipment. 

Advertising, promotion, and distribution are other major

costs. These costs vary with the stage of the product cycle

and their share may account for more than 20 percent of

the seed price. Advertising and promotion are necessary to

distinguish a seed firm’s product from other firms’ products

on the market, to educate dealers on the best crop management practices to ensure high seed productivity, and to

induce farmers to adopt the firm’s particular seed. Distribution costs include costs of transportation and communication between production facility, wholesalers, retailers, and

farmers, as well as storage costs (including financial costs)

if seed is held as inventory between seasons (Krull et al.,

1998, pp. 133-134; Agrawal, 1998, p. 120).

Continued from page 28
30 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

In the present seed industry structure, large private

firms play a central role in developing and marketing

seed for major field crops, such as corn, soybeans,

cotton, and wheat. Moreover, the evolution of those

firms provides insights into the dynamics of the

modern seed industry (see box on evolution of the

major seed companies). 

In discussing market concentration in the seed industry,

it should be noted first that the number of firms participating in the seed industry increases through each step of

the production process. Plant breeding is a concentrated

stage of the industry, while the production and distribution of certified seed is carried out by hundreds of

companies operating in different volumes and markets. A

larger numbers of firms are involved in the production

and distribution of public varieties: the absence of exclusive property rights means that, in these cases, any individual or firm may produce the seed without permission

and may distribute it without licenses (Butler and

Marion, 1985, pp. 16-17). Market concentration is

usually measured using the four- or eight-firm concentration ratio (CR4 or CR8), which is the share of total

industry sales of the four or eight largest firms. Alternatively, market concentration may be measured by the

Herfindahl-Hirschmann Index (HHI), which is the sum

of squared market shares (in percentage terms) of each

firm in the industry. Although it is difficult to precisely

determine market size and concentration for the overall

seed industry, estimates can be made of individual seed

markets for major field crops.

Corn. Since its inception, the corn seed industry has

included many small firms—105 of the original 190

companies operating in the 1930s were still in existence in the 1990s—together with larger market

leaders, such as Hi-Bred Corn Company (which later

became Pioneer), Funk Brothers Seed Company,

DeKalb Agricultural Association, and Pfister Hybrid

Corn (Duvick, 1998, p. 198). The size and success of

the corn seed market is reflected by the fact that nearly

all acreage planted in 1997 used seed purchased from

the private sector.

Until the 1970s, the corn seed market was characterized by small firms controlling approximately 30

percent of the industry and larger market leaders

controlling 70 percent. Between 1973 and 1983, the

four largest firms in the U.S. corn seed industry are

estimated to have held (CR4) between 50 and 60

percent of the market (fig. 11, table 15). 

By the mid-1980s, Pioneer had expanded its market

share to 38 percent while most other large firms,

including Pioneer’s largest competitor, DeKalb, experienced sharp declines in their market shares. The

decline of other large firms, and the concurrent expansion of market share held by smaller firms, is reflected

in a decrease in the CR4 ratio between 1973 and 1983

from 60 to 55 percent. In the 1990s, market concentration in corn seed had grown with the strategic entry

into the industry of multinational firms. By 1997, the

CR4 ratio had risen to 69 percent, as Pioneer

continued to control 42 percent of the market,

followed by Monsanto with 14 percent and

Novartis/Syngenta with 9 percent (table 16). Smaller

firms still control over 20 percent of the market.9

Mergers and Acquisitions Rose in the Past Three Decades

Figure 11

Market shares of four largest firms,

U.S. corn seed industry

Source: Data sources provided in tables 15 and 16.

Market share (%)

0

20

40

60

80

100

1970 1975 1980 1985 1990 1995 2000

9 For comparison, the market structure of the seed industry is

much more concentrated than the market for pesticides, another

key agricultural input (Ollinger and Fernandez-Cornejo, 1995). In

the seed and pesticide markets for corn and cotton, where both

inputs are primarily purchased from the private sector, the CR4

ratio is higher in seed markets than in pesticide markets. From

1972 to 1989, the estimated CR4 ratio for the pesticide market

averaged 45 percent, compared with 60 percent for the cotton seed

market and 58 percent in the corn seed market, both of which have

increased in recent periods. Recent data for corn, soybeans, and

cotton, which represent a large share of the market, suggest that the

seed industry is more concentrated than the pesticide industry.
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 31

Table 15—-U.S. market shares of corn seed by company1

Company 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

Percent

Pioneer 23.8 25.5 24.6 27.3 30.9 26.2 32.9 36.9 34.8 38.8 38.1

DeKalb2 21.0 18.8 18.8 19.5 15.8 17.9 13.3 13.0 15.9 12.2 10.3

Asgrow 0 0 0 0 0 0 0 0 0 0 0

Funk3 8.8 9.4 8.9 9.2 6.4 8.1 6.7 5.7 5.4 5.2 3.9

Trojan4 5.9 5.1 6.8 5.6 4.2 5.4 3.8 2.0 0 00

Northrup-King5 6.1 4.5 4.7 3.4 3.8 3.3 3.8 4.9 3.4 2.6 2.5

Zeneca/ICI 0 0 0 0 0 0 0 0 0 0 0

Cargill/PAG6 4.8 6.8 3.9 3.5 4.1 4.6 3.3 4.7 5.6 5.4 4.2

Golden Harvest 0 01.8 2.4 2.5 3.1 2.9 1.3 3.2 2.3 2.6

Dow/Mycogen 0 0 0 0 0 0 0 0 0 00

Jacques/Agrigenetics7 0 1.3 1.7 21.9 2.1 2.7 2.2 0 00

Other 29.6 28.6 29.8 27.1 30.4 29.3 30.6 29.3 31.7 33.6 38.4

Largest 8 firms 72.5 70.7 69.8 71.2 68.1 67.0 69.7 69.4 70.0 68.3 64.0

Largest 4 firms 59.7 58.8 59.1 61.6 57.3 55.6 56.7 60.5 59.5 59.1 54.9

Herfindahl index 0.1171 0.1159 0.112 0.1269 0.1049 0.1138 0.1354 0.1609 0.1501 0.1723 0.1604

Note: Due to the sample size of the surveys, the shares are estimates that may vary plus or minus two percentage points. 1 Market shares are based on percentage of acres sown with respective firm's seed. 2 Merged with Pfizer in 1982. 3 Aquired by Ciba-Geigy in 1974. 4 Aquired by Pfizer in 1975. 5 Aquired by Sandoz in 1976. 6 Acquired by Cargill in 1971. 7 Acquired by Agrigenetics in 1980.

Sources: 1973-80: Butler & Marion (1985), p. 90; 1981-83: McMullen (1987), p. 96.

Table 16—-U.S. market shares of corn seed by company

Company 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Percent

Dupont/ 

Pioneer Hi-Bred 34.5 32.0 33.4 35.8 39.6 42.7 44.9 45.0 41.0 42.0 39.0

Monsanto1 14.0 15.0

DeKalb 9.0 8.5 9.0 8.0 8.2 8.2 8.6 9.8 10.1 10.0 11.0

Asgrow 2.0 4.0 4.0

Novartis2 9.0 9.0

Northrup-King /

Sandoz3 4.0 4.0 3.5 4.4 4.6 4.3 4.2 4.1 5.0

Dow Agro/Mycogen4 4.3 4.0 4.0

AgrEvo/Cargill5 3.0 3.0 3.0 3.5 3.7 3.8 3.9 4.0 3.3 4.0 4.0

Ciba 3.1

ICI/Zeneca/Advanta6 2.9 3.0 3.0

Golden Harvest 2.0 2.0 2.0 2.9 3.0 3.0 3.0 3.3 2.3 4.0 3.0

Others 39.7 42.7 41.7 36.7 33.1 31.3 28.6 28.4 25.6 20.0 23.08

Largest 8 firms7 52.5 49.5 50.9 54.6 59.1 62.0 64.6 66.2 72.0 80.0 77.0

Largest 4 firms 50.5 44.5 45.9 48.2 52.4 55.2 57.7 58.9 60.4 69.0 67.0

Herfindahl index 0.1300 0.1125 0.1222 0.1386 0.1679 0.1932 0.2132 0.2165 0.1864 0.2098 0.1877 1 Monsanto acquired DeKalb in 1997 and Asgrow in 1998. 2 Result of the merger between Ciba and Sandoz in 1996. 3 Northrup-King is Sandoz’s American seed subsidiary. 4 Mycogen was bought by Dow Agrosciences in 1998. 5 AgrEvo acquired Cargill’s domestic seed business in 1998. 6 ICI split in 1993 and Zeneca, the pharmaceutical spinoff, was left in control of the company’s seed operations. Later in 1996,

Zeneca became a part of the Advanta Seed Group. 7 In 1997 and 1998, market shares of only seven companies were available. 8 Market share amount adjusted from reported figure in Kalaitzandonakes and Hayenga to make the market add up to one.

Source: 1988-95: Merrill Lynch (various years); 1996: Kalaitzandonakes (1997); 1997: Hayenga (1998); 1998: Kalaitzandonakes

and Hayenga (1999).
32 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

The evolutionary paths of four major seed companies—

Pioneer/Dupont, Novartis/Syngenta, Monsanto, and Advanta

Seed Group—provide some insight into the modern structure

of the seed industry (figs. A-1-A-4). In each figure, the horizontal arrows pointing to a company indicate an acquisition,

vertical arrows pointing down represent a merger, and a line

with arrowheads at both ends indicates a joint venture.

Where possible, the nationality of the company is given in

parentheses next to the company’s name, along with the cost

and date of acquisition. 

Novartis/Syngenta. Novartis was formed in 1996 by the

merger of two Swiss life science giants, Ciba-Geigy and

Sandoz. Sandoz brought to the merger Northrup-King, a

brand name company acquired in 1976 that was well established in field crops, especially hybrid corn and sorghum.

Northrup-King’s own position in the market was the result

of its past acquisitions of field seed companies, including

Pride Seed Company, Stauffer Seeds, and Coker Pedigreed

Seed. Ciba-Geigy also contributed to the merger with a

long list of previously acquired seed companies, including

Funk Brothers Seeds and its extensive U.S. distribution

network. The 1996 merger gave rise to a new seed division

called Novartis Seeds, which controlled 7 percent of the

seed market for major crops in 1997. In 1999, after operating as a complete life sciences company for only 3.5

years, Novartis announced plans to merge its agricultural

business with the Swedish/English pharmaceutical giant

AstraZeneca which had been formed only 6 months earlier.

The agricultural spinoff, Syngenta, became a global leader

in both seed and pesticide sales. According to the most

recent sales figures from Merrill Lynch, Syngenta is only

second to Pioneer with $1.2 billion in annual seed sales,

and first in pesticide sales with more than $7.0 billion in

annual sales (fig. A-1). 

Pioneer/Dupont. Pioneer was one of the first four firms

active in the emerging corn seed market in the early 1930s.

Its modern achievements can be partly attributed to its

success as the largest player in the corn seed market for about

40 years (Pioneer, 2001). Between 1973 and 1980, Pioneer

made a series of acquisitions that further strengthened its

The Evolution of the Major Seed Companies

Continued on page 33

 

1The merger created the agribusiness spinoff company, Syngenta. The deal did not include Zeneca’s 

stake in Advanta Seed group.

2Merger of Novartis's crop protection and seed businesses with AstraZeneca PLC’s agrochemicals business.

AstraZeneca PLC1

(UK/Swe.)

April 1999

(See Advanta)

Syngenta2

(Winter 2000)

Ciba (CH) Sandoz (CH)

Novartis Seeds (CH)

1996

Funk

1974

Shissler

Peterson-Biddick

Columbiana

Farm Seeds

Germain’s

Louisiana Seed

Company

Hoffman

Stewart Seeds

New Farm Crops (UK)

1987

Northrup-King

1976

Rogers Brothers

1974

Pride Seed Co.

1965

National N-K

McNair Seeds

1979

Ladner Beta

Gallatin Valley

Seed Company

Woodside Seed

Growers 1969

Stauffer Seeds

1987

Productores de Semillas (Sp.)

1989

1987

Misser Seeds

1987

Hilleshoeg

(Swe.)

Benoist (Fr.)

1998

Maisadour (Fr.)

1998

Astra (Swe.) Zeneca (UK)

Coker Pedigreed

Seed 1989

Figure A-1

Evolution of Syngenta AG

Sources: Fox, 1990, p. 39-40; Joly and Lemarie, 1999; Leibenluft, 1981, p. 115-116; Northrup-King Co., 2000; Schor, 1984; and Shields, 1999.

 CH = Switzerland.
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 33

overall position in the seed market: The purchase of Lankhart

and Lockett in 1975 allowed Pioneer to expand its activities

in the cotton seed (used for planting and not cotton seed sold

for oil or other uses ) market, while its 1973 purchase of

Peterson seeds gave it a larger presence in a soybean market

otherwise dominated by public varieties. Bought by the

chemicals giant DuPont in 1999, Pioneer continues to operate

from its headquarters in Des Moines, Iowa, under the wellestablished Pioneer name as a part of the DuPont conglomerate. Dupont is the world’s leader in production of

low-use-rate herbicides, and its acquisition of Pioneer is an

important element of its life sciences strategy focusing on the

commercialization of a new generation of food, feed, and

nutrition products developed with new biotechnology applications (fig. A-2) 

Monsanto. Barely active in the seed industry until the mid1990s, Monsanto, originally considered a chemical, then a

pharmaceutical, company, acquired major players in the

seed industry in a short period. In 1997, Monsanto bought

Asgrow from a Mexican firm, ELM, and Calgene; in 1998,

it bought out DeKalb and Cargill’s international seed business. Through the acquisition of biotechnology research

companies, including Ecogen, Agracetus, and the Plant

Breeding Institute, Monsanto also acquired the rights to

recently developed seed technologies (fig. A-3). Monsanto

also attempted to acquire more than 70 percent of the U.S.

cotton seed industry with the acquisition of Delta & Pine

Land in 1998. Although Monsanto sold its other cotton

subsidiary, Stoneville Pedigreed, to make way for the Delta

& Pine Land acquisition, the deal was called off in 1999,

ultimately leaving Monsanto with no market share in cotton

seed. In March 2000, Monsanto merged with Pharmacia &

Upjohn, a multinational pharmaceuticals giant. The agricultural side of the merger retained the Monsanto name while

the pharmaceutical and related side operates under the

name of Pharmacia Corporation. After a partial initial

public offering of Monsanto was launched in October 2000,

Pharmacia retained 84 percent ownership. Then, on August

13, 2002, Pharmacia Corporation distributed its 84-percent

stake in Monsanto Company to Pharmacia shareowners via

a special stock dividend. This distribution completed PharContinued from page 32

Figure A-2

Evolution of Pioneer/Dupont

Sources: Butler and Marion, 1985, p. 87; Joly and Lemarie, 1999; Leibenluft, 1981, p. 116; and Seedquest, 1999.

 bn = billion.

1Dupont bought 20 percent of Pioneer in August 1997 and bought the remaining 80 percent in October 1999. As a DuPont company, Pioneer continues to 

operate under the Pioneer name from its headquarters in Des Moines, Iowa.

Pioneer Hi-Bred Int’l1 $9.4 bn 

1999 DuPont

Arnold Thomas Seed Co.

1975

Peterson

1973

Lockett

1975

Lankhart

1975

Agri-Con of Idaho 

1975

Garst & Thomas Hybrid

1980

Green Meadows Ltd.

Continued on page 34
34 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

macia’s spinoff of Monsanto and established Monsanto as a

100-percent publicly traded company (PR Newswire,

2002). 

In terms of sales, Monsanto is thus the third largest player

in the seed industry worldwide and the fourth largest player

in the pesticide market (Monsanto, 2000). However, in

terms of agricultural biotech products, Monsanto has the

largest market share. 

Advanta Seed Group. Advanta Seed Group similarly

emerged from numerous acquisitions and joint ventures. In

1993, Imperial Chemical Industries (ICI), a British chemical

manufacturing giant, split its company into ICI and Zeneca.

Zeneca took over ICI’s production of agrochemicals and

seeds. In the deal, the ownership of Garst Seed Company, an

American seed firm bought by ICI in 1985, was transferred

over to Zeneca, thereby securing Zeneca’s position in the

U.S. market. In 1996, Zeneca merged its seed business with

Royal VanderHave, the international seeds business of Dutch

food manufacturer Cosun. Together with Royal VanderHave,

Zeneca Seeds forms the backbone of the international seed

group Advanta (box fig. A-4).

Continued from page 33

Figure A-3

Evolution of Monsanto/Asgrow

Sources: Asgrow, 2000; Fox, 1999, p. 39; Joly and Lemarie, 1999; Merrill Lynch; Monsanto website; Pharmacia, 2000; PR Newswire,

1999; Schor, 59; Seedquest, 1998; Shimoda, 1999; Wall Street Journal Interactive, 1998.

 

1 Monsanto Company became an agricultural subsidiary of Pharmacia Corporation in April 2000. Monsanto became completely 

separate and independent from Pharmacia on August 13, 2002. 

2 In late December 1999, Monsanto called off its $1.9-bn deal with Delta & Pine Land (D&P). With D&P Land, Monsanto would 

have acquired more than a 70 percent market share in the cotton seed market since it sold Stoneville Pedigreed in mid-1999 to 

make way for its acquisition of D&P Land.

3 Formed in November 1995 by the merger of Pharmacia Aktiebolag and the Upjohn Company, prior to this point, Upjohn had 

owned Asgrow solely since 1968.

. Pharmacia 20001

 Monsanto 2002

 .

Monsanto2

Upjohn &

Pharmacia3

Farmcraft

1965

O’s Gold

1983

Farmer’s Hybrid

1974

DeKalb

$3.7 bn 1998

Hybritech

1982

Monsoy (Br.)

1996

Holden’s Foundation Seed

Asgrow $1.2 bn 1997

1968

Calgene

$.06 bn 1997

Corn State’s Hybrid

1997 Farmer’s Hybrid

1983

Asgrow

1995

Empressas La

Moderna (ELM)

(Mex.) Asgrow

$.22 bn 1997

Cargill (int’l)

$1.4 bn 1998

Stoneville Pedigreed

1987

Plant Genetics

1989

Bioseeds International

1990

Desert Cotton Research

and Development 1988

Plant Breeding Institute

(UK) $.525bn 1998

Agracetus

$.15 bn 1996

Agroceres (Br.)

1997

Ecogen

1996 Associated Seeds

1972

Jacob Hartz Seed

Company 1983

Jacob Hartz Seed

Company 1996

Stoneville Pedigreed

$.092 bn 1999

Emergent Genetics

1999

bn = billion. Br. = Brazil.

Continued on page 35
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 35

Continued from page 34

Figure A-4

Evolution of Advanta Seed Group

Zeneca (UK)1

1993

Royal VanderHave (NL)3

Advanta Seed Group4

1996

AgriPro

1998

AgriPro

Wheat

(1998) Interstate Seed

Company

PSA Genetics

1999

Gutwein Seeds

2000

Garst Seed Company

1985

Societe Europeene de

Semenses (SES) (B) 1987

Sinclair McGill (UK)

1985

MMG (UK)

 1987

ContiSeed

 1989

Mogen Intl. (NL)

$.07 bn 1997

AgriPro Seeds

1998

Imperial Chemical

Industries (UK)

ICI (UK)

Zeneca Seeds2

Cosun (NL)

 1On June 1, 1993, ICI split, creating a separately quoted company called Zeneca. Zeneca's industrial pursuits encompass ICI's drugs, agrochemicals 

and seeds, and specialties businesses. 

2Zeneca Seeds is a part of Zeneca Agrochemicals. In 1999, Astra (Swe) merged with Zeneca (UK) to form AstraZeneca PLC. The agribusiness merger 

of Novartis AG and AstraZeneca, called Syngenta, will not change the ownership of Garst Seed Company and its subsidiaries because Advanta was not 

included in the deal. 

 3Royal VanderHave group is Cosun's international seeds business. 

 450:50 joint venture between Zeneca Seeds and Cosun.

Sources: Abrahams, 1993; Clark, 1997; Garst Seed Co., 2000; Zeneca, 2000; Shields, 1998; Fox, 1990, p.40, 85; and Seedquest, 1999.

bn = billion. B = Belgium. NL = Netherlands.
36 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

Soybeans. The development of soybean seed varieties

was dominated by the public sector until the 1980s

(table 17). However, the transformation from public to

private was fairly rapid, relative to the transformation

in the corn sector. In 1980, over 70 percent of soybean

acres harvested in the United States were planted with

publicly developed varieties, but by the mid-1990s, the

public share had decreased to as low as 10 percent of

the market. The increasing role of the private sector

appears to have been largely due to the strengthening

of intellectual property rights. The private sector’s

expansion into soybean seed led to a fairly concentrated industry: In the late 1980s, the four largest firms

controlled about 40 percent of the soybean seed

market, a relatively smaller share than in the corn seed

market (table 18) (Knudson and Hansen, 1991).

However, it is difficult to discern a clear leader among

these large firms in the soybean seed market. Pioneer

may have held a strong position in this market, but

with Monsanto’s acquisitions of Asgrow and DeKalb,

and with the expansion of Novartis into the market, no

single firm seems to consistently outsell the others. In

fact, figures may indicate that the soybean market is

becoming less concentrated over time: The absence of

a clear market leader, the presence of a large number

of small firms, and a decrease in the HHI between

1994 and 1998 from 0.1115 to 0.0915 all point to

decreasing market concentration. Such conclusions,

however, depend on the number of small firms categorized as “Others” in tables 18 and 19. 

Cotton. Until the early 1980s, private firms and some

public institutions maintained a strong presence in the

development of cotton seed varieties (table 20). The

two largest private firms, Delta & Pine Land and

Stoneville, together controlled roughly 40 percent of

the varieties planted. Smaller public and private

breeders, such as Coker Pedigreed, Lankart, and

University of New Mexico AES, each held between 5

and 15 percent. 

In the 1980s, the cotton seed market expanded as new

developments in cotton breeding brought improved seed

varieties to producers, and producers recognized that the

traditional practice of cleaning and separating out saved

seed was less economical than purchasing seed. Between

1982 and 1997, the use of purchased seed increased

from 50 to 75 percent, and large private firms rapidly

replaced smaller firms and public institutions as

suppliers of seed varieties. Delta & Pine Land continued

Table 17—U.S. shares of soybean varieties,

public versus private

Varieties

Public Private from leading

sector sector Unknown four private

Year varieties varieties varieties firms

Percent of area planted

1980 70 8 22 7

1997* 10-30 70-90 -- 37-47

-- = not applicable.

* Estimated figures. Smaller figure for public sector (and larger figure

for private sector) assumes planted areas are roughly proportional

to seed sales. Larger figure for public sector (and smaller figure for

private sector) assumes most farmer-saved seed is from public sector varieties. About 25 percent of soybean seed in 1997 was estimated to be farmer saved.

Source: Heisey (1999a).

Table 18—U.S. market shares of soybean seed 

varieties

Institution/Company 1980 1988

Share of Share of

acreage harvested market

with varieties sales

from given breeder

Percent

Major public breeders:

University of Illinois 20.5 NA

Mississippi AES 16.6 NA

Iowa State University 8.4 NA

University of Florida 6.2 NA

Purdue AES 4.9 NA

Arkansas AES 4.3 NA

Virginia AES 3.4 NA

Minnesota AES 3.2 NA

North Carolina State AES 2.7 NA

Total major public 70.2 30.5

Major private breeders:

Northrup-King (Sandoz) 2.0 7.6

Asgrow (Upjohn) 1.8 14.9

Pioneer/Peterson 1.4 13.7

Monsanto 0.0 3.4

DeKalb 0.0 5.5

FS 0.0 2.2

Stine 0.0 3.4

North American Plant

Breeders (Shell/Olin) 1.4 0.0

Ring Around Products

(Occidental Petroleum) 1.0 0.0

Others 22.2 18.8

Total private and public 100.0 100.0

Largest 4 firms 6.6 42.0

Herfindahl index 0.1216 0.0526

NA = not available.

AES = Agricultural Experiment Station.

Sources: 1980: Butler and Marion (1985), p. 91; 1988: Kimle and

Hayenga (1992).
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 37

to lead the market, a position that was strengthened by

its acquisition of Paymaster in 1994 and Sure-Grow in

1996, resulting in a 76-percent share of the market by

1999. The second largest firm in the market, Stoneville,

controlled only 13 percent of the market in 1999. Of the

19 small breeders (public and private) operating in 1990

with at least a 1-percent share of the market, only 7 still

exist. In effect, the cotton market has become highly

concentrated, a fact reflected by a CR4 ratio in 1999 of

96 percent (table 20) (fig. 12). 

Wheat. Most U.S. wheat is cultivated from saved seed,

implying that the incentives to private firm entry,

research and development, and strategic behavior in the

wheat seed industry are fairly limited (table 21).

Furthermore, limited development of viable hybrid

alternatives to self-pollinated varieties during the 1970s

further constrained private sector interest in the market

(Fuglie et al., 1996, p. 54-55). See also Knudson (1990)

and Hansen and Knudson (1996).

As late as 1997, purchased seed accounted for only 37

percent of all acreage planted with wheat. Moreover, the

public sector still plays a central role in the wheat seed

market, despite more recent increases in private sector

participation (table 22) (Heisey et al., 2001). In 1980,

public breeders accounted for 72 percent of sales of hard

red spring wheat seed, 80 percent for soft red winter

wheat, and 85 percent for hard red winter wheat. Within

the public sector, several key institutions were particularly active in providing wheat seed varieties: together

the University of Minnesota and University of California

at Davis provided 56 percent of the seed varieties for

hard red spring wheat in 1980; Purdue University

provided 65 percent of the seed varieties for soft red

winter wheat; and Kansas State University and University of Nebraska provided a combined 60 percent of the

seed varieties for hard red winter wheat. In the private

sector, Northrup-King provided 14 percent of the seed

varieties for hard red spring wheat in 1980. The total

share for the private firms was 18 percent. Coker

provided 7 percent of the market for soft red winter

wheat, and North American Plant Breeders supplied 5

percent of the market for hard red winter wheat, with

smaller firms providing the rest (Butler and Marion,

1985, p. 93). 

The Effects of Concentration

The increase in seed industry concentration has

raised concerns about its potential impact on market

power.10 However, concentration may result in tradeTable 19—U.S. market shares of soybean seed,

by company

Company 1994 1997 1998

Percent

Dupont/Pioneer Hi-Bred1 22.0 19.0 17.0

Monsanto2 19.0 24.0

Asgrow 15.0 11.0 16.0

DeKalb 19.0 8.0 8.0

Novartis 5.0 5.0

Dow Agrosciences/Mycogen3 3.7 4.0 3.0

Stine 4.0 4.0 4.0

FS 3.9

Jacques

Others 41.2 39.0 39.0

Public 3.2 10.0 10.0

Largest 8 firms4 NA NA NA

Largest 4 firms 60.0 47.0 50.0

Herfindahl index5 0.1115 0.0779 0.0915

NA = not available. 1 Pioneer Hi-Bred was fully bought by Dupont in 1999. 2 Monsanto acquired Asgrow in 1997 and DeKalb in 1998. 3 Mycogen was acquired by Dow Agro in 1998. 4 The market shares of only six companies were available in 1994,

and only five in 1997/8. 5 The "others" category was not included in calculation of the

Herfindahl index because the category is very large and the

number of companies in the others category is also unknown.

Public varieties were also not included in this figure.

Sources: 1994: Kalaitzandonakes (1997); Hayenga (1998); 1998:

Kalaitzandonakes and Hayenga (1999).

Figure 12

Market shares of four largest firms, 

U.S. cotton seed industry 

Source: Data source provided in table 20.

Market share of cotton varieties (%)

1970 75 80 85 90 95

0

20

40

60

80

100

10 For example, it was reported that in 1999, after learning that

the U.S. Department of Justice intended to sue over concerns

about the anticompetitive effects in the cotton seed market, Monsanto abandoned its proposed acquisition of Delta & Pine Land

Co., which could have combined the Nation’s two largest cottonseed firms (Ross, 2001). 
38 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA Table 20—Share of cotton varieties planted in the United States, by firm or institution

Firm / Institution 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984

Percent

Public:

Arkansas

AES (Rex variety) 1 1 2 1 -- -- -- -- -- -- -- * * * *

Mississippi FAES1 (Dixie King & DE

S varieties) 2 2 2 1 1 1 1 1 -- -- 1 -- 1 1 1

Oklahoma

AES (Westburn variety) -- -- -- -- --- -- -- 1 2 1 1 1 1 -- --

Texas

AES (Blightmaster & Tamcot varieties) 1 1 -- 2 2 2 6 6 7 8 8 10 9 10 8

University of New Mexico 

AES (

Acala variety) 15 11 11 15 14 10 10 10 13 13 10 13 14 13 11

Private:All-Tex * * * * * * * * * * * * ** *

Brownfield Seed & Delinting (Quapaw variety) * * * * * * 1 1 1 2 1 2 1 1 1

California Planting Cotton Seed Distributors (CPC

SD) * * * * * * * * * * * * * * *

Coker Pedigreed Seed 6 8 8 6 85 6 4 3 4 3 3 33 3

Custo

m Agricultural Service (Cascot variety) * * * * * * * * 1 2 2 2 2 4 3

Delta & Pine Land2 (DES, Lankart, Paymaster & 

Sure-Grow varieties) 28 26 29 24 23 17 20 18 18 15 14 16 16 13 16

Dunn Seed Farms 1 1 -- -- 2 2 1 1 2 2 2 3 24 4

G & P Seed Co

mpany * * * * * * * * * 1 1 1 21 2

Germain's (

Acala variety) * * * * * * * * * * * * * * *

Growers Seed Association (GSA) * * * * *1 3 4 7 7 7 7 25 6

Hyperformer * * * * * * * * * * * * ** *

Lankart 10 9 8 10 12 14 12 12 14 13 10 10 10 9 6

Lockett 2 2 2 2 3 4 2 1 2 2 2 2 1 1 --

McNair 1 1 -- 1 -- 1 1 1 1 1 1 1 2 1 3

Monsanto Co

mpany3 * * * * * * * * * * * * ** *

Paymaster 6 5 2 5 68 8 9 78 7 9 8 9 10

Pioneer (PR 80, Rosebud 80 varieties) * * * * * * * * * * * * *1

Rilcot Seed Co

mpany (

Stripper & Rilcot varieties) 24 3 2 5 6 4 4 2 2 2 1 1 -- --

Stoneville Pedigreed4 (Stoneville, Coker & McNair varieties) 21 21 25 24 19 19 23 23 18 15 15 16 18 16 16

Summit (Deltapine variety) * * * * * * * * * * * * * * *

Sure-Grow5 * * * * * * * * * * * * ** *

All other 4 8 8 7 5 10 2 4 2 4 13 3 7 8 10

Largest 8 firms6 90 86 88 88 90 83 89 86 87 83 74 84 80 79 77

Largest 4 firms 74 67 73 73 68 60 65 63 63 56 49 55 58 52 53

Herfindahl Index 0.1648 0.1474 0.1778 0.158 0.139 0.1152 0.1345 0.1278 0.1197 0.1014 0.0982 0.105 0.11040.0992 0.0762See footnotes

at end of table. --Continued
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 39 Table 20—Share of cotton varieties planted in the United States, by firm or institution–Continued

Firm / Institution 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Percent

Public:

Arkansas

AES (Rex variety) * * * * * * * * * * * * * * *

Mississippi AFE

S1 (Dixie King & DE

S varieties) -- 1 1 2 3 3 -- -- -- -- -- -- -- -- --

Oklahoma

AES (Westburn variety) -- -- * * * * * * * * * * * * *

Texas

AES (Blightmaster & Tamcot varieties) 9 76 5 7 3 4 1 1 1 1 1 11 1

University of New Mexico 

AES (

Acala variety) 10 8 7 5 6 5 3 -- -- -- -- -- -- -- --

Private:All-Tex -- -- 1 1 3 1 2 11 2 2 3 22 2

Brownfield Seed & Delinting (Quapaw variety) 1 1 -- -- * * * * * * * * * * *

California Planting Cotton Seed Distributors (CPC

SD) * * * * * * * 5 7 6 5 7 6 5 5

Coker Pedigreed Seed 5 3 1 2 1 1 -- -- -- -- -- -- -- -- --

Custo

m Agricultural Service (Cascot variety) 2 2 3 2 1 1 -- 1 -- -- -- -- -- -- --

Delta & Pine Land2 (DES, Lankart, Paymaster & 

Sure-Grow varieties) 23 27 24 30 33 38 43 54 40 71 61 71 73 72 76

Dunn Seed Farms 4 2 2 1 1 1 -- -- -- -- -- -- -- -- --G & P Seed Co

mpany 2 1 2 1 1 1 -- -- -- -- -- -- -- -- --

Germain's (

Acala variety) 2 4 4 5 5 5 4 3 1 1 1 1 -- -- --

Growers Seed Association (GSA) 44 3 3 11 1 * * * * * ** *

Hyperformer * * * * * * 1 2 2 2 2 2 1 -- --

Lankart 7 84 4 4 3 -- -- -- -- -- -- -- -- --

Lockett -- * * * * * * * * * * * * * *McNair 3 2 1 1 11 * * * * * * ** *

Monsanto Co

mpany3 * * * * * * * * * * * * 11 16 *

Paymaster 9 11 13 14 12 16 22 16 29 **   **  ** **

Pioneer (PR 80, Rosebud 80 varieties) 1 1 2 1 1 1 1 1 -- 1 * * * *

Rilcot Seed Co

mpany (

Stripper & Rilcot varieties) * * * * * * * * * * * * ** *

Stoneville Pedigreed4 (Stoneville, Coker & McNair varieties) 18 16 13 11 9 7 6 88 8 9 9 ** ** 13

Summit (Delta Pine & Land variety) * * 4 3 3 2 * * * * * * ** *

Sure-Grow5 * * * * * -- -- -- 1 2 8 **   ** 

All other 1 2 10 8 8 10 13 8 9 7 10 6 6 4 3

Largest 8 firms6 85 85 74 77 79 80 86 90 89 93 89 95 96 98 100

Largest 4 firms 60 62 57 60 61 66 75 83 84 87 83 90 92 95 96

Herfindahl Index 0.1244 0.1342 0.1272 0.141 0.1538 0.192 0.2564 0.3328 0.2628 0.5288 0.3984 0.5212 0.5510.5476 0.5978

* indicates that a co

mpany left the cotton seed industry or prior to that had presumably not been involved in the industry.

** indicates co

mpany was acquired by another co

mpany.

-- indicates less than a 0.5-percent market share.

AES

Stands for Agricultural Experiment Station. These are public research facilities that also release seed varieties. 1 Mississippi Agricultural and Forestry Experiment Station.

2 Delta Pine & Land acquired Paymaster varieties in 1994. 3 Monsanto's bid for Delta Pine & Land in 1998 fell through in December 1999 when Monsanto called off the merger. 4 Stoneville was acquired by Monsanto in 1997 when Monsanto purchased

Stoneville's parent co

mpany, Calgene. However,

Stoneville was then sold by Monsanto in 1999. 5 Sure-Grow varieties were purchased by Delta & Pine Land in 1996.

6 For 1994, 1998, and 1999, there were only seven co

mpanies listed with 

more than 0.5-percent share of the cotton seed market.

Sources:

U

S

DA,

A

M

S (2000); U

S

DA,

A

R

S (2000).
40 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

offs between increased market power and the

economies resulting from the increased concentration

(arising from mergers or other combinations)

(Williamson, 1968). In the case of the seed industry,

if market power dominates, concentration may raise

industry profits and margins, and farmers may pay

higher-than-competitive prices for seeds. On the other

hand, if the efficiency (or cost-reducing) effects

outweigh the market power effects, concentration

may be beneficial to society. 

A growing body of literature presents model-based

estimates of the degree of noncompetitive behavior in

other industries (Appelbaum, 1979, 1982; Iwata,

1974; Gollop and Roberts, 1979; Azzam and

Schroeter, 1995; Azzam, 1997). ERS examined the

effects of industry concentration on market power

and costs (including R&D) in the U.S. cottonseed

and corn seed industries, using an econometric model

to measure the relative strengths of these effects over

the past 30 years (Fernandez-Cornejo et al., 2002;

Fernandez-Cornejo and Spielman, 2002). The model

assumes that the profit-maximizing seed firm buys its

inputs, including the material input—seed purchased

from contract growers—in a competitive market, and

sells the seed to cotton (or corn) growers in a

noncompetitive market. Most data were collected

from USDA and other government sources for the

period covering 1970-98. Preliminary empirical

results for U.S. cotton and corn seed industries over

the past 30 years suggest that increased concentration

resulted in a cost-reducing effect that prevailed over

the effect of enhanced market power.

Table 21—Share of wheat seed sales by principal

private and public breeders in the United States,

1980-81

Sector, institution/ Hard Soft Hard

company red spring red winter red winter

Percentage of total sales

Public sector:

University of Minnesota 34

University of California

(Davis) 22

North Dakota University 16

Purdue University 65

Ohio State University 5

University of Missouri 5

University of Arkansas 5

Kansas State University 35

University of Nebraska 25

Texas A&M University 10

Colorado University 10

Oklahoma State

University 5

Subtotal 72 80 85

Private sector:

Northrup-King/McNair

(Sandoz) 14 2

North American Plant 

Breeders (Shell/Olin) 45

Pioneer Hi-Bred 3 1

Coker (KWS) 7

Agrigenetics 1

Western Plant Breeders 1

World Seeds 2

Subtotal 18 16 7

Other seeds 10 4 8

Total 100 100 100

Source: Butler and Marion (1985), p. 93.

Table 22—U.S. wheat market shares, public and

private varieties, 1981 and 1997

Public Private

sector sector

Unknown varieties varieties

Percent of area planted

Hard red winter wheat:

1981 36 58 6

1997 85 15

Hard red spring wheat:

1981 37 57 7

1997 85 15

Soft red spring wheat:

1981 37 63

1997 35 65

Source: Heisey (1999a).
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 41

A prominent change in the seed industry over the last

century has been the increasing role of private sector

efforts in R&D. Not only have private R&D expenditures increased dramatically in absolute levels, but they

have also increased relative to public levels. As private

sector R&D expenditures have risen, the types of R&D

activity pursued and the choice of crops for research

have also changed. With the shift of more R&D activity

to the private sector, the process by which the seed

industry changes has itself transformed. 

Returns to R&D Spending on 

Plant Breeding

Annual returns to R&D spending on plant breeding

exceed 30 percent according to most estimates,

although estimates vary widely. Griliches (1958) estimates the returns to public agricultural research for

hybrid corn to be 35-40 percent during the period

1940-55. Sundquist et al. (1981) estimate those returns

to be 115 percent in 1977. Griliches also finds returns

to R&D on hybrid sorghum to be 20 percent during

1940-57. Other studies show returns to cash grains

range from 31 to 85 percent (Fuglie et al., pp. 30-31).

However, Huffman and Evenson (1993, pp. 245-46)

report that returns to public sector crop research (45-

62 percent) during 1950-82 are lower than returns to

private sector research (90 percent) (table 23). 

These estimates of returns to R&D investment may fail

to incorporate the positive externalities generated by

plant breeding research among and between countries.

Foreign research in plant breeding benefits from positive spillovers arising from U.S. agricultural research

just as U.S. researchers benefit from transfers of genetically diverse materials from research institutions and

firms abroad. As a result, consumers in the United

States and foreign countries frequently benefit from

the increased quality and lower prices offered by new

varieties cultivated, imported, or exported in the international economy (Fuglie et al., 1996, p. 28;

Fernandez-Cornejo and Shumway, 1997; Maredia and

Byerlee, 1999; Schimmelpfennig and Thirtle, 1999;

Schimmelpfennig et al., 2000).

Public R&D 

Historically in the United States, the public sector has

maintained a central role in agricultural R&D. The

establishment of the U.S. Department of Agriculture

(1862) and the passage of key legislation, such as the

Morill Land-Grant College Act (1862), the Hatch Act

(1887), and the Smith-Lever Act (1914), expanded this

role. The Morill Act established colleges and universities in U.S. States and territories that were dedicated to

instruction in agriculture and engineering sciences,

and, in 1890, were given further support with Federal

funding under the second Morill Act. The Hatch Act

provided further support to State-level research by

establishing State agricultural experiment stations

(SAES) to collaborate with land-grant institutions and

to strengthen scientific research in agriculture. The

Roles of Private and Public Sector R&D in Crop Seed Have Shifted

Table 23—Estimated returns to crop research in U.S. agriculture, various years

Commodity Period Annual return Study

Percent

Hybrid corn 1940-55 35-40 Griliches, 1958

Hybrid sorghum 1940-57 20 Griliches, 1958

Cash grains 1969 47 Bredahl and Peterson, 1976

Crops 1959-64 110 Huffman, 1977

Crops 1964 55 Evenson and Welch, 1979

Cash grains 1969 31-57 Norton, 1981

Cash grains 1974 44-85 Norton, 1981

Maize 1977 115 Sundquist, Cheng, and Norton, 1981

Wheat 1977 97 Sundquist, Cheng, and Norton, 1981

Soybeans 1977 118 Sundquist, Cheng, and Norton, 1981

Crops - public sector, applied R&D 1950-82 45 Huffman and Evenson, 1993

Crops - public sector, pre-tech R&D 1950-82 62 Huffman and Evenson, 1993

Crops - private sector R&D 1950-82 90 Huffman and Evenson, 1993

Sources: Huffman and Evenson (1993), pp. 245-246; Fuglie et al. (1996), p. 30; Alston and Pardey (1996), pp. 204-206.
42 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

Smith-Lever Act extended this collaboration to include

Federal, State, and county agencies through the establishment of the Cooperative Agricultural Extension

Service (Fuglie et al., 1996, p. 2). Combined with

resources from the USDA and other cooperating

government agencies, these legislative acts supported a

wide range of public initiatives in agricultural R&D.

One rationale for public investment in agricultural R&D

is to address specific market failures. R&D can enhance

yields, lower costs, and provide other benefits to both

producers and consumers. The incentive for firms to

undertake R&D arises from the ability of firms to

capture some of the value created from successful innovation. However, the ease of replicating successful R&D

undermines the ability of firms to appropriate the returns

to their R&D investments (King, 2001). When a

competitor can replicate R&D results without incurring

the R&D costs, the competitive advantage to firms

investing in R&D is not sustainable. The inability of

firms to appropriate the returns to their R&D investments results in a market failure, in that productivityand wealth-enhancing improvements are not attempted. 

Other market failures include negative externalities

and risk aversion or financial market failures (Beach

and Fernandez-Cornejo, 1994). Negative externalities

may arise where the social marginal costs of agricultural R&D exceed the private marginal benefits; for

instance, when the broad social desire to improve a

certain agricultural process is greater than firms’

ability to generate such improvements profitably,

resulting in underproduction and deadweight losses to

society. Risk aversion and financial market failures

may occur when private returns from R&D investments over the long term are discounted by investors

at a rate higher than the desirable social rate of return. 

Modern agricultural R&D includes large amounts of

investment from both the public and private sectors

(Alston and Pardey, 1996, pp. 29-30). Total public

sector expenditure on agricultural R&D, which

includes both Federal and State spending, was $3.1

billion in 1996 (table 24). Private sector R&D

exceeded $4 billion in the same period (table 25). 

Private Sector R&D

The development of commercially viable hybrid corn in

the 1930s, the PVPA and subsequent rulings, and other

forms of property rights protection led to significant

changes in research expenditure patterns and played a

key role in the development of new plant varieties. These

technological and institutional changes over the past

century improved appropriability, increasing incentives

for private investment in agricultural R&D, resulting in a

larger role in research for private firms. 

Real private sector expenditure in agricultural R&D

increased by 224 percent from 1960 to 1996 (table

25). Over the same period, real public sector agricultural R&D increased by 97 percent. In addition to the

higher relative increase, annual private sector R&D

expenditures have exceeded public expenditures every

year since 1982. Whereas private sector efforts

accounted for slightly less than half of total R&D

expenditures from 1960 to 1970, they accounted for

58.7 percent of the total in 1996. 

Expenditures on plant breeding and agricultural chemicals were the main areas of increased private sector

R&D. From 1960 to 1995, real plant breeding expenditures increased by $514 million (1996 dollars), while

R&D on agricultural chemicals increased by $1.392

billion. The growth of R&D in agricultural chemicals

primarily reflects the increasing use of herbicides

(USDA, 1997, p. 117) and compliance with regulations (Ollinger and Fernandez-Cornejo, 1995). 

The dramatic increase in private sector plant breeding

R&D expenditures came while public expenditure in

that area changed very little in real terms. On the

whole, private spending on plant breeding has steadily

increased since 1960 as the seed industry increased in

size and extent of commercialization. Private sector

R&D expenditure has shifted over this period, in

percentage terms, from farm machinery and food and

kindred products to agricultural chemicals and plant

breeding research.11 These changes in expenditures

have been accompanied by structural change in the

industry. First, intense merger and acquisition activity

in the last three decades led to the formation of large

seed conglomerates that allowed once smaller, individually owned, seed companies to take advantage of the

strategic R&D relationships and economies of scale of

their parent companies. Second, new entrants into the

seed industry between 1982 and 1994 increased the

11 It is worth noting that that the increasing proportion of expenditure on agricultural chemicals greatly exceeds the increase in plant

breeding, as shown in table 25. This is attributed to the fact that

research in agricultural chemicals has long been dominated by the

private sector, while plant breeding was traditionally the domain of

public sector investment and only beginning to attract private investment during the earlier years of this period (Heisey, 1999, p. 19).
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 43 Table 24—Public agricultural research and development Year Biological efficiency expenditure Non-commodity biotech & biometry expenditure Pesticides & herbicides expenditure USDA1 SAES1 Total Total Share of USDA2 SAES2 Total Total Share of USDA3 SAES3 Total Total Share of public R&D public R&D public R&D expenditure expenditure expenditure Million current dollars Mil. 1996 Percent Million current dollars Mil.1996 Percent Million current dollars Mil.1996 Percent dollar dollar dollar 1960 4.79 29.14 33.93 228.17 14.30 NA NA NA NA NA 11.60 16.43 28.02 188.43 11.81 1961 5.22 30.99 36.21 236.44 14.32 NA NA NA NA NA 12.84 17.26 30.10 196.57 11.91 1962 5.69 32.95 38.64 242.75 14.46 NA NA NA NA NA 13.40 18.96 32.37 203.33 12.11 1963 6.20 35.04 41.24 248.68 14.49 NA NA NA NA NA 14.42 20.45 34.87 210.27 12.25 1964 6.76 37.27 44.02 255.85 13.67 NA NA NA NA NA 16.72 23.14 39.86 231.63 12.38 1965 7.37 39.63 47.00 262.28 13.15 NA NA NA NA NA 19.60 25.82 45.42 253.49 12.71 1966 8.03 42.14 50.17 266.73 12.85 NA NA NA NA NA 20.25 30.26 50.51 268.53 12.94 1967 8.75 44.82 53.57 269.43 13.13 NA NA NA NA NA 20.98 32.92 53.90 271.10 13.21 1968 9.77 46.29 56.06 266.00 12.95 NA NA NA NA NA 20.42 38.44 58.87 279.32 13.60 1969 10.26 49.96 60.21 267.74 13.18 NA NA NA NA NA 22.17 40.68 62.85 279.46 13.75 1970 9.69 46.55 56.24 232.26 11.41 6.44 19.70 26.14 107.96 5.30 19.95 37.91 57.86 238.96 11.74 1971 9.74 49.81 59.55 232.37 11.19 7.08 20.41 27.48 107.25 5.16 22.35 40.48 62.83 245.18 11.81 1972 12.69 52.16 64.86 241.62 10.34 9.43 22.67 32.10 119.59 5.12 31.12 43.15 74.27 276.69 11.84 1973 13.64 54.46 68.10 239.10 10.15 10.93 25.27 36.19 127.07 5.40 30.68 48.82 79.51 279.14 11.85 1974 13.96 59.66 73.62 238.94 10.10 11.07 26.70 37.77 122.58 5.18 31.85 56.27 88.12 285.97 12.08 1975 15.60 68.89 84.50 254.80 10.26 12.35 27.74 40.09 120.90 4.87 33.96 63.67 97.62 294.40 11.85 1976 23.85 88.10 111.95 317.96 12.46 18.90 39.66 58.56 166.31 6.52 51.69 89.93 141.62 402.23 15.76 1977 20.96 89.55 110.51 301.77 10.71 17.96 35.59 53.54 146.21 5.19 47.40 79.40 126.80 346.24 12.29 1978 24.44 96.01 120.45 310.43 10.41 27.78 39.23 67.01 172.70 5.79 56.30 88.29 144.58 372.63 12.50 1979 27.49 101.70 129.19 309.61 10.36 26.71 43.20 69.91 167.55 5.61 62.41 98.60 161.01 385.87 12.91 1980 26.58 117.05 143.62 316.38 10.50 33.69 50.75 84.43 186.00 6.18 65.84 114.72 180.56 397.74 13.21 1981 34.02 126.34 160.35 323.09 10.49 37.91 55.45 93.36 188.10 6.11 75.56 132.95 208.50 420.10 13.64 1982 33.38 135.83 169.20 316.40 10.31 36.59 62.36 98.94 185.02 6.03 76.10 144.74 220.84 412.96 13.45 1983 36.68 138.96 175.64 310.66 10.31 39.84 70.64 110.48 195.40 6.48 79.20 150.41 229.61 406.11 13.48 1984 36.64 142.75 179.40 300.50 10.14 38.52 75.53 114.05 191.04 6.45 76.11 161.24 237.36 397.58 13.42 1985 44.55 153.05 197.61 314.03 10.25 47.72 90.03 137.75 218.90 7.14 88.12 173.12 261.24 415.16 13.55 1986 52.14 163.19 215.33 324.88 10.69 43.75 100.43 144.18 217.54 7.16 87.57 184.78 272.34 410.91 13.52 1987 56.84 164.75 221.59 315.19 10.26 38.29 105.58 143.87 204.65 6.66 94.82 193.81 288.63 410.56 13.36 1988 66.92 168.89 235.81 322.90 10.25 44.01 114.17 158.18 216.59 6.87 103.43 201.83 305.26 418.00 13.27 1989 70.58 180.00 250.58 325.41 10.25 33.81 122.18 155.99 202.58 6.38 105.63 216.56 322.19 418.40 13.17 1990 69.98 194.07 264.05 325.71 10.16 24.12 126.96 151.08 186.36 5.81 115.21 228.54 343.75 424.03 13.23 1991 75.70 199.36 275.06 325.74 9.89 27.26 132.69 159.95 189.42 5.75 131.05 244.63 375.68 444.90 13.51 1992 79.26 201.85 281.11 322.47 9.65 24.35 133.00 157.34 180.50 5.40 134.57 259.73 394.30 452.32 13.54 1993 80.16 205.83 286.00 313.97 9.63 25.39 137.58 162.97 178.91 5.49 135.03 270.47 405.50 445.16 13.65 1994 79.98 210.68 290.66 308.87 9.34 25.63 145.42 171.05 181.77 5.50 138.99 277.58 416.56 442.67 13.39 1995 74.21 211.50 285.71 294.59 9.02 22.71 142.47 165.18 170.32 5.21 143.71 295.96 439.67 453.34 13.87 1996 69.09 198.10 267.20 267.20 8.49 16.14 139.05 155.19 155.19 4.93 141.52 303.91 445.42 445.42 14.15 See footnotes at end of table. --Continued
44 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

Table 24—Public agricultural research and development--Continued

Year Production mechanization expenditures Total public agri. R&D expenditures

USDA4 SAES4 Total Total Share of public Total5 Total5 Agric. R&D 

R&D expenditure deflator6

Million current dollars Mil. 1996 Percent Million current Mil. 1996

dollars dollars dollars

1960 NA NA NA NA NA 237.3 1,595.7 0.1487

1961 NA NA NA NA NA 252.8 1,650.6 0.1531

1962 NA NA NA NA NA 267.3 1,679.3 0.1592

1963 NA NA NA NA NA 284.7 1,716.6 0.1658

1964 NA NA NA NA NA 322.0 1,871.5 0.1721

1965 NA NA NA NA NA 357.3 1,994.4 0.1792

1966 NA NA NA NA NA 390.5 2,075.9 0.1881

1967 NA NA NA NA NA 408.1 2,052.4 0.1988

1968 2.37 3.76 6.13 29.09 1.42 432.7 2,053.3 0.2107

1969 2.72 4.33 7.05 31.34 1.54 457.0 2,032.0 0.2249

1970 1.85 4.40 6.24 25.78 1.27 492.8 2,035.3 0.2421

1971 2.97 4.65 7.63 29.76 1.43 532.2 2,076.8 0.2562

1972 3.62 4.47 8.09 30.13 1.29 627.1 2,336.2 0.2684

1973 3.86 4.95 8.81 30.93 1.31 670.7 2,354.9 0.2848

1974 3.93 5.39 9.32 30.26 1.28 729.2 2,366.7 0.3081

1975 4.06 5.67 9.72 29.32 1.18 823.5 2,483.4 0.3316

1976 5.74 7.62 13.36 37.95 1.49 898.4 2,551.6 0.3521

1977 4.82 6.30 11.13 30.38 1.08 1,031.7 2,817.2 0.3662

1978 5.25 7.00 12.25 31.56 1.06 1,157.1 2,982.1 0.3880

1979 5.02 7.27 12.29 29.46 0.99 1,247.2 2,989.1 0.4173

1980 5.48 7.91 13.39 29.49 0.98 1,367.2 3,011.8 0.4540

1981 6.21 7.36 13.57 27.33 0.89 1,528.6 3,079.8 0.4963

1982 5.63 7.97 13.61 25.44 0.83 1,641.6 3,069.6 0.5348

1983 6.22 8.12 14.34 25.36 0.84 1,703.6 3,013.1 0.5654

1984 6.10 7.79 13.89 23.27 0.79 1,769.0 2,963.1 0.5970

1985 6.50 8.96 15.46 24.57 0.80 1,928.0 3,063.9 0.6293

1986 4.32 8.67 12.99 19.60 0.64 2,014.8 3,039.9 0.6628

1987 3.32 9.19 12.51 17.80 0.58 2,160.5 3,073.2 0.7030

1988 3.22 9.77 12.99 17.78 0.56 2,301.2 3,151.0 0.7303

1989 2.67 10.37 13.04 16.93 0.53 2,445.8 3,176.2 0.7700

1990 3.08 10.26 13.35 16.46 0.51 2,598.3 3,205.1 0.8107

1991 3.40 9.56 12.96 15.35 0.47 2,780.5 3,292.8 0.8444

1992 3.24 8.99 12.23 14.03 0.42 2,913.2 3,341.8 0.8717

1993 3.36 9.32 12.68 13.92 0.43 2,970.9 3,261.5 0.9109

1994 3.46 9.98 13.44 14.28 0.43 3,111.5 3,306.6 0.9410

1995 3.24 9.64 12.88 13.28 0.41 3,168.8 3,267.3 0.9698

1996 2.88 9.03 11.91 11.91 0.38 3,148.0 3,148.0 1.0000

NA = not available. SAES = State Agricultural Experiment Station.

1 Research problem area code 304 and 307 in CRIS (USDA, CSREES, CRIS, 1993). Source: "Inventory of Agricultural Research" for fiscal

years 1968-96 (USDA, CSREES, CRIS, various years). For 1960-67, total public expenditures on biological efficiency and 

pesticides/pest management estimated by linear interpolation.

2 Research problem area code 318 in CRIS (USDA, CSREES, CRIS, 1993). Source: "Inventory of Agricultural Research" for fiscal years 

1968-96 (USDA, CSREES, CRIS, various years). For 1960-67, total public expenditures on biological efficiency and pesticides/pest

management are estimated by linear interpolation.

3 Research problem area codes 204-209 in CRIS (USDA, CSREES, CRIS, 1993). Source: 1960-67: USDA and SAES expenditure on 

pesticides and herbicides are linear interpolations of data based on total SAES R&D expenditure derived from the rate of growth of total 

SAES R&D expenditure assumed to be consistent with the annual rate of growth in Alston and Pardey (1996, Table 2-A3, 76); 1968-96:

"Inventory of Agricultural Research" for fiscal years 1968-96 (USDA, CSREES, CRIS, various years).

4 Research problem area code 305 and 308 in CRIS (USDA, CSREES, CRIS, 1993). Source: "Inventory of Agricultural Research" for fiscal

years 1968-96 (USDA, CSREES, CRIS, various years). For 1960-67, total public expenditures on biological efficiency and 

pesticides/pest management are estimated by linear interpolation.

5 Total agri. R&D expenditures are not the sum of the four categories of R&D presented, and includes other categories not shown here.

Source: 1960-69: data are based on rates of change from Alston and Pardey (1986, p. 76), and Huffman & Evenson (1993, pp. 95-96);

1970-96: "Inventory of Agricultural Research” for fiscal years 1970-96 (USDA, CSREES, CRIS, various years).

6 Source: Klotz-Ingram (2000).
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 45 Table 25—Private agricultural research and development Plant breeding Agricultural chemicals Farm machinery Food & kindred products Veterinary pharmaceuticals Total private agric.

expenditure expenditure expenditure expenditure expenditure R&D expenditure

Year Total

1 Total Share of Total

1 Total Share of Total

1 Total Share of Total

1 Total Share of Total

1 Total Percent of Total

1 Total Agric. R&D 

private R&D private R&D private R&D private R&D private R&D deflator2

expenditure expenditure expenditure expenditure

Million Mil. 1996 Percent Million Mil. 1996 Percent Million Mil. 1996 Percent Million Mil. 1996 Percent Million Mil. 1996 Percent Million Mil. 1996

current $ 

dollars current $

dollars current $

dollars current $

dollars current $

dollars current $

dollars

1960 6.00 40.35 2.91 27.00 181.56 13.11 75.00 504.34 36.41 92.00 618.66 44.66 6.00 40.35 2.91 206.00 1,385.26 0.1487

1961 6.00 39.18 2.83 38.00 248.14 17.92 65.00 424.45 30.66 92.00 600.76 43.40 11.00 71.83 5.19 212.00 1,384.36 0.1531

1962 6.00 37.69 2.61 42.00 263.84 18.26 70.00 439.73 30.43 98.00 615.62 42.61 14.00 87.95 6.09 230.00 1,444.82 0.1592

1963 7.00 42.21 2.86 45.00 271.33 18.37 76.00 458.25 31.02 102.00 615.02 41.63 15.00 90.44 6.12 245.00 1,477.24 0.1658

1964 8.00 46.49 2.93 48.00 278.96 17.58 79.00 459.12 28.94 118.00 685.77 43.22 20.00 116.23 7.33 273.00 1,586.57 0.1721

1965 9.00 50.23 2.79 64.00 357.19 19.81 96.00 535.78 29.72 131.00 731.12 40.56 23.00 128.36 7.12 323.00 1,802.68 0.1792

1966 11.00 58.48 3.18 77.00 409.36 22.25 100.00 531.63 28.90 130.00 691.13 37.57 28.00 148.86 8.09 346.00 1,839.46 0.1881

1967 12.00 60.36 3.38 72.00 362.14 20.28 102.00 513.04 28.73 134.00 673.99 37.75 35.00 176.04 9.86 355.00 1,785.57 0.1988

1968 17.00 80.67 4.34 78.00 370.12 19.90 96.00 455.53 24.49 165.00 782.94 42.09 36.00 170.82 9.18 392.00 1,860.07 0.2107

1969 22.00 97.82 5.21 85.00 377.96 20.14 99.00 440.21 23.46 182.00 809.27 43.13 34.00 151.18 8.06 422.00 1,876.44 0.2249

1970 26.00 107.38 5.60 98.00 404.72 21.12 89.00 367.55 19.18 206.00 850.74 44.40 45.00 185.84 9.70 464.00 1,916.23 0.2421

1971 29.00 113.17 5.95 109.00 425.37 22.38 90.00 351.22 18.48 211.00 823.42 43.33 48.00 187.32 9.86 487.00 1,900 4. 9 0.2562

1972 32.00 119.21 6.30 104.00 387.44 20.47 93.00 346.46 18.31 227.00 845.67 44.69 52.00 193.72 10.24 508.00 1,892.51 0.2684

1973 39.00 136.92 6.76 113.00 396.73 19.58 120.00 421.31 20.80 243.00 853.14 42.11 62.00 217.67 10.75 577.00 2,025.78 0.2848

1974 45.00 146.05 6.73 136.00 441.38 20.33 131.00 425.16 19.58 283.00 918.47 42.30 74.00 240.16 11.06 669.00 2,171.22 0.3081

1975 50.00 150.78 7.05 169.00 509.64 23.84 138.00 416.15 19.46 273.00 823.26 38.50 79.00 238.23 11.14 709.00 2,138.06 0.3316

1976 55.00 156.21 6.72 200.00 568.05 24.45 168.00 477.16 20.54 308.00 874.80 37.65 87.00 247.10 10.64 818.00 2,323.32 0.3521

1977 58.00 158.38 6.08 243.00 663.55 25.47 221.00 603.47 23.17 348.00 950.27 36.48 84.00 229.37 8.81 954.00 2,605.04 0.3662

1978 69.00 177 8. 3 6.39 290.00 747.40 26.88 249.00 641.73 23.08 385.00 992.24 35.68 86.00 221.64 7.97 1,079.00 2,780.85 0.3880

1979 81.00 194.13 6.73 312.00 747.74 25.91 295.00 707.00 24.50 420.00 1,006.58 34.88 96.00 230.08 7.97 1 204 , .00 2,885.53 0.4173

1980 97.00 213.68 6.67 395.00 870.14 27.17 363.00 799.65 24.97 488.00 1,075.01 33.56 111.00 244.52 7.63 1,454.00 3,202.99 0.4540

1981 105.00 211.56 7.15 469.00 944.95 31.93 278.00 560.12 18.92 492.00 991.29 33.49 125.00 251.85 8.51 1,469.00 2,959.78 0.4963

1982 118.00 220.65 7.15 527.00 985.45 31.92 281.00 525.45 17.02 596.00 1,114.47 36.10 129.00 241.22 7.81 1,651.00 3,087.24 0.5348

1983 138.00 244.08 7.69 584.00 1,032.93 32.53 290.00 512.93 16.16 636.00 1,124.90 35.43 147.00 260.00 8.19 1,795.00 3,174.85 0.5654

1984 154.00 257.96 7.53 624.00 1,045.22 30.50 311.00 520.94 15.20 803.00 1,345.05 39.25 154.00 257.96 7.53 2,046.00 3,427.13 0.5970

1985 179.00 284.47 8.26 683.00 1,085.42 31.52 304.00 483.11 14.03 842.00 1,338.10 38.86 159.00 252.68 7.34 2,167.00 3,443.78 0.6293

1986 204.00 307.79 8.79 691.00 1,042.57 29.77 307.00 463.20 13.23 940.00 1,418.25 40.50 179.00 270.07 7.71 2,321.00 3,501.88 0.6628

1987 222.00 315.78 9.75 682.00 970.10 29.94 292.00 415.35 12.82 891.00 1,267.39 39.11 191.00 271.69 8.38 2,278.00 3,240.31 0.7030

1988 245.00 335.48 9.53 938.00 1,284.41 36.48 295.00 403.95 11.47 871.00 1,192.67 33.88 221.00 302.62 8.60 2,571.00 3,520.50 0.7303

1989 283.00 367.51 10.31 979.00 1,271.36 35.65 320.00 415.56 11.65 921.00 1,196.04 33.54 243.00 315.57 8.85 2,746.00 3,566.05 0.7700

1990 314.00 387.33 10.57 1,127.00 1,390.21 37.93 360.00 444.08 12.12 925.00 1,141.03 31.13 245.00 302.22 8.25 2,971.00 3,664.86 0.8107

1991 342.00 405.01 10.78 1,228.00 1,454.25 38.69 382.00 452.38 12.04 946.00 1,120.30 29.80 276.00 326.85 8.70 3,174.00 3,758.80 0.8444

1992 400.00 458.86 12.47 1,062.00 1,218.28 33.10 394.00 451.98 12.28 1021.00 1,171.24 31.83 331.00 379.71 10.32 3,208.00 3,680.07 0.8717

1993 453.00 497.31 13.04 1,389.00 1,524.86 39.99 369.00 405.09 10 62 . 995.00 1,092.32 28.65 267.00 293.12 7.69 3,473.00 3,812.71 0.9109

1994 470.00 499.46 13.10 1,356.00 1,440.99 37.80 377.00 400.63 10.51 1084.00 1,151.94 30.22 300.00 318.80 8.36 3,587.00 3,811.82 0.9410

1995 524.00 540.29 13.64 1,419.00 1,463.12 36.94 436.00 449.56 11.35 1146.00 1,181.63 29.84 316.00 325.82 8.23 3,841.00 3,960.41 0.9698

1996 554.00 554.00 12.35 NA NA NA 487.00 487.00 10.86 NA NA NA 359.00 359.00 8.00 4,486.00 4,486.00 1.0000

NA = not available. 1 Source: 1960-92: Klotz, Fuglie, and Pray (1995, p. 26); 1993-1997: Klotz, Fuglie and Pray (1995, updated July 1998). 2 Klotz-Ingram, Private Communication (2000).
46 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

number of firms engaged in private plant breeding

throughout the United States from 269 to 329 (table

26). This trend in the private sector resulted in a 1,300-

percent real increase in private R&D plant breeding

expenditures between 1960 and 1996. 

As the emphasis of R&D shifted, the share of public

sector R&D expenditures on plant breeding research

remained relatively unchanged at about 10 percent

between 1970 and 1990, but the share declined in the

1990s (fig. 13). Public spending on biological efficiency (used as a proxy for public spending on plant

breeding) decreased as a share of total public agricultural R&D expenditures, reaching 9 percent ($291

million) of total public sector agricultural R&D in

1994 (figs. 13-14).12 This decrease occurred despite

evidence suggesting that the rate of return on public

research remains positive, and that such areas as precommercial agricultural research continue to require

government support (Fuglie et al., 1996, pp. 29-31).

On the other hand, the share of private sector research

spent on plant breeding increased, reaching 13 percent

($470 million) of total expenditures on private agricultural R&D in 1994 (table 25) (Klotz et al.).

Table 26—Private sector firms engaged in plant breeding, major field crops

1982 1989 1994

Crop Number of Share of Number of Share of Number of Share of 

companies companies companies companies companies companies

Percent Percent Percent

Corn 66 24.5 75 27.6 91 27.7

Soybeans 26 9.7 34 12.5 38 11.6

Cotton 13 4.8 11 4.0 35 10.6

Wheat 21 7.8 11 4.0 27 8.2

Others 143 53.2 141 51.8 138 41.9

Total 269 100.0 272 100.0 329 100.0

Source: Companies and expenditures for 1994: Frey (1996, p.19); companies and expenditures for 1982 and 1989: Kalton et al. (1990, p. 24).

12 We approximate public sector spending on plant breeding

with USDA and SAES expenditures on improving biological efficiency for fruits and vegetables and field crops. Improvement of

biological efficiency research is described in research problem

areas 304 and 307 of the Manual of Classification of Agricultural

and Forestry Research, as research on “the ability of agriculture to

meet the feed, food, and fiber needs of the American people and

provide vital amounts of these commodities for exports” (USDA,

1993, p. 71). The specific areas of research contained in this category of the Manual relevant to plant breeding are (i) the identification of superior germplasm and breeding and selection of improved

varieties, and (ii) the genetic and biological determinants of biological efficiency. These research areas are adequate to examine

trends in public sector expenditure on plant breeding, and to make

comparisons with private sector expenditures.

Figure 13

Plant breeding as a share of total agricultural 

R&D expenditures

Source: Data source provided in tables 24 and 25.

Percent

Private

1960 65 70 75 80 85 90 95

0

2

4

6

8

10

12

14

16

Public

Figure 14

Public and private research expenditures on 

plant breeding

"Biological efficiency" includes breeding and selection of 

improved plant varieties.

Million 1996 dollars

Private research on plant breeding

Public research on "Biological efficiency"

1960 65 70 75 80 85 90 95

0

100

200

300

400

500

600

Source: Data source provided in tables 24 and 25.
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 47

Private and public research do not always emphasize the

same areas. The emphasis of the private sector on pure

line field crops (fig. 15, table 26) suggests that one role

for the public sector is to carry out research in otherwise

neglected crops. Private sector research has expanded to

include cultivar development on hybrid crops and prebreeding activities; meanwhile, public plant breeding

research has focused on basic germplasm and applied

plant genetics. (Heisey et al., 2001). So even as private

firms engage in R&D that once was performed mostly

by the public sector, important roles still exist for both

public and private R&D.

A breakdown of expenditures on plant breeding R&D

by specific private firms provides additional insight

into the magnitude and growth of private sector

research (table 27). Large firms, such as ICI, Sandoz,

and Pioneer, each spent between $38 million and $57

million on plant breeding in 1988. As a share of seed

sales, these figures range from 6.3 percent (Pioneer)

to 23.2 percent (ICI). The seed industry considers 5 to

7 percent of sales to be the minimum requisite investment in R&D to maintain competitiveness (James,

1997, p. 6). Other large firms, such as Ciba-Geigy,

DeKalb, Limagrain, KWS, and Upjohn, spent

between $16 million and $27 million each on plant

breeding R&D in 1988, and, when measured as a

share of sales, each of these firms also exceeded the

minimum requisite investment levels in R&D. By

1996, after new rounds of mergers and acquisitions,

the upper bounds of R&D expenditures by large firms

had increased significantly: Pioneer spent $133

million on seed R&D, a 2.5-fold increase relative to

1988, followed closely by Novartis with $122 million.

Even Cargill, a smaller player in the market in terms

of annual seed revenue, spent $37 million on seed

R&D in 1996. As a share of sales, these expenditure

levels again exceeded the industry estimates of

minimum spending necessary to sustain competitiveness in the seed market.

Plant Breeding Research 

Patterns by Crop

The changing focus of public and private sector R&D

expenditures in plant breeding has also been associated

with changes in research expenditure on specific crops.

Historically, public sector expenditures on plant

breeding have been allocated to basic and applied

research on new varieties of field crops, while private

sector expenditures have focused on the development

of new plant varieties for home garden and horticultural crops (Fuglie et al., 1996, p. 53). 

With the development of commercially viable hybrids

in the 1930s, corn was the first crop subject to the

rapid shift from public to private R&D sector expenditures in plant breeding. Private seed companies

accounted for 40 percent of total R&D spent on corn

in 1960 and more than 60 percent in 1984 (table 28).

The shift of R&D expenditures from the public to the

private sector occurred more recently with soybeans,

and may be partly credited to the PVPA (Fuglie et al.,

1996, p. 53). In 1960, less than 1 percent of R&D

expenditures on soybean improvement came from the

private sector (table 29). By 1984, this share had risen

to almost a quarter of the total (public and private)

R&D spent on soybeans. Among private R&D expenFigure 15

Research effort by crop, 1994

A--Public sector research effort (staff years) in 

biological efficiency

Source: Calculated from the number of SY given in 

table 32 first column.

Corn (5%)

Soybeans (8%)

Cotton (4%)

Wheat (11%)

Other field crops (15%)

Fruits & vegetables (7%)

Other 

crops (50%)

Corn (34%)

Soybeans (7%)

Cotton (7%) Wheat (4%)

Other field crops (11%)

Fruits & 

vegetables (11%)

Other crops (26%)

B--Private industry research effort (staff years) in 

plant breeding 

Source: Data source provided in table 31. 
48

● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

Table 27—Plant breeding R&D expenditures by company

1986 1988-89 1996

Plant breeding Plant breeding Seed

Company Conventional Plant Total plant Conventional Plant Total plant Seed sales R&D as share Seed Annual R&D as

breeding R&D biotechnology breeding R&D breeding biotechnology breeding R&D (fiscal 1989) of seed sales R&D revenue share of 

R&D R&D R&D revenue

Million current dollars Million current dollars Percent Mil. current dollars Percent

Aventis Cropscience

Rhone-Poulenc 2 3 5 125

AgrEvo

Novartis 122 970 12.6

Zeneca

Advanta 53 470 11.3

ICI 11 15 26 21 17 38 164 23.2

Sandoz 16 7 23 41 16 57 473 12.1

Ciba-Geigy 9 13 22 9 17 26 125 20.8

DowElanco

Dow AgroSciences

DuPont 0 20 20

Pioneer 30 5 35 46 7 53 840 6.3 133 1,600 8.3

Monsanto 1 15 16 1 15 16

DeKalb/Pfizer 19 6 25 16 6 22 205 10.7 41 387 10.6

Cargill1 250 37 250 14.8

Limagrain 22 5 27 335 8.1 60 660 9.1KWS 18 5 23 151 15.2 47 350 13.4

Enimont 0 15 15

Seminis 47 380 12.4

Shell 9 3 12 19 3 22

Upjohn 24 3 27 270 10.01 Cargill's international seed business was purchased by Monsanto, while its U.S. seed business was purchased by AgrEvo.

Sources: 1986: Grossman et al. (1988, p. 13), 1988-89: Fox (1990, p. 42-43), 1996: James (1997, p. 6).
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 49

ditures on major crops, the share of R&D spent on

soybeans by the 14 largest seed firms grew the fastest,

from 1 percent in 1970 to 11 percent in 1980 (table

30). Public varieties of wheat and, to a lesser degree,

cotton have been important sources of new seed for

farmers. In addition, the public sector has continued to

be the primary source of R&D investment and variety

development for many small grains, such as oats,

barley, and other minor field crops (Fuglie et al., 1996,

pp. 53-55; Heisey, 1999, p. 19). 

Research Patterns in Terms 

of Scientist Years

Measuring the number of scientist years (SY) and

funding per scientist (holding Ph.D. or M.S. degrees)

allocated to specific areas of research offers additional

insights into the public and private R&D effort on

plant breeding. Across all crop varieties, the number of

SY engaged in private plant breeding of major crops

increased by 114 percent (from 701 to 1,498) between

1982 and 1994, while funding per scientist year had an

apparent increase of 38 percent from $164,000 to

$226,000 in current dollars over the same period (table

31), a 28-percent decrease in real terms. The distribution of SY between different crops has closely

followed the allocation of R&D expenditures in dollar

terms for both the public and private sectors (fig. 15).

For instance, the private sector provided 94 percent of

the total 545 SY allocated to corn breeding research in

1994, a fact that reflects the private sector’s dominance

in corn research. For such crops as cotton and

soybeans, for which the public sector still plays a role

in plant breeding and germplasm research, the private

sector provided 77 percent (cotton) and 65 percent

(soybeans) of the total SY allocated to plant breeding

research in 1994 (table 32). Private sector research on

wheat is even more limited: 41 percent of the total SY

allocated to wheat breeding research came from the

private sector in 1994. 

A cost comparison of public and private R&D on plant

breeding per scientist year for 1994 shows that, on

average, expenditures in plant breeding were higher in

the public sector ($286,840 per SY) than in the private

sector ($225,898 per SY) (table 33). However, public

R&D expenditures were lower than expenditures of the

larger private firms ($290,000 per SY), likely due to

Table 28—Research expenditures on crop improvement for corn, public and private

Expenditure type

sector/type 1960 1965 1970 1975 1979 1984

Million 1984 dollars

Research expenditures - breeding:

Private sector 11.0 13.4 18.8 28.9 43.6 59.2

Public sector 16.5 18.5 21.2 26.0 27.5 36.8

Total public and

private 27.5 31.9 40 54.9 71.1 96

Percent

Share of total:

Private 40.0 42.0 47.0 52.6 61.3 61.7

Public 60.0 58.0 53.0 47.4 38.7 38.3

Source: Huffman and Evenson (1993, p. 159).

Table 29—Research expenditures on crop improvement for soybeans, public and private 

Expenditure type

sector/type 1960 1965 1970 1975 1979 1984

Million 1984 dollars

Research expenditures - breeding:

Private sector 0.01 0.2 1.0 5.9 9.5 13.2

Public sector 9.79 10.9 14.7 23.9 40.6 41.9

Total public and

private 9.80 11.1 15.7 29.8 50.1 55.1

Percent

Share of total:

Private 0.10 1.8 6.4 19.8 19.0 24.0

Public 99.90 98.2 93.6 80.2 81.0 76.0

Source: Huffman and Evenson (1993, p. 165).

Table 30—Private research and development expenditures of the 14 largest seed firms, by year and crop

Year Expenditures Corn Soybeans Alfalfa Wheat Cotton

Million current dollars –––––––—––—––———————Percent——————––––————–––––

1970 3.40 79 1 9 7 4

1972 3.94 77 2 8 9 5

1974 5.59 75 6 7 8 4

1976 8.39 73 7 6 11 3

1978 10.26 71 10 6 9 4

1980 12.13 71 11 7 9 3

Source: Butler and Marion (1985), p. 31.
50 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

the more complex nature of plant breeding R&D

(including the use of biotechnology techniques, which

is expensive, Kalton el al., 1989) carried out by both

public sector and large firms. Overall, the private sector

employed more than twice as many SY as the public

sector (1,498 versus 743), and total private sector

expenditures in plant breeding ($338 million) exceeded

those of the public sector ($213 million) in 1994.

Table 31—Number of firms and scientist years (SY) engaged in private plant breeding for major field crops 

1982 1989* 1994

Crop Number Share Scientist Share Number Share Scientist Share Number Share Scientist Share

of firms of firms years of SY of firms of firms years of SY of firms of firms years of SY

Percent Percent Percent Percent Percent Percent

Corn 66 24.54 255 36.38 75 27.57 371 34.77 91 27.66 510 34.05

Soybeans 26 9.67 52 7.42 34 12.50 86 8.06 38 11.55 101 6.74

Cotton 13 4.83 28 3.99 11 4.04 17 1.59 35 10.64 103 6.88

Wheat 21 7.81 42 5.99 11 4.04 47 4.40 27 8.21 54 3.60

Others 143 53.16 324 46.22 141 51.84 546 51.17 138 41.95 730 48.73

Total 269 701 272 1,067 329 1,498

Dollars ($Mil.) 114.95 272 338.462

Dollars ($)/SY163,980 306,306 225,898

* 1989 figures for million dollars per SY are based on the average of figures for 1988 and 1990.

Source: Companies and Expenditures for 1994: Frey (1996), p. 19; SY by crop, Frey (1996), pp. 36-38; Companies and expenditures

for 1982 and 1989: Kalton et al. (1990), p. 24.

Table 32—Number of scientist years (SY) devoted to plant breeding, public and private, by crop, 1994

Public sector Private sector Total

Crop/Crop category Number of Share of total Number of Share of total Number of Share of 

SY employed for the crop SY employed for the crop SY employed total SY

Percent Percent Percent 

Corn 35 6.48 510 93.52 545 24.72

Soybeans 55 35.01 101 64.99 156 7.07

Cotton 31 22.94 103 77.06 134 6.09

Wheat 76 58.63 54 41.37 130 5.91

Other cereal crops 77 35.48 139 64.06 217 9.84

Other grain legumes 26 50.98 25 49.02 51 2.31

Other fiber crops 2 100.00 0 0.00 2 0.09

Forage 71 58.20 51 41.80 122 5.53

Fruit vegetable 46 21.60 167 78.40 213 9.66

Other crops 287 45.27 348 54.89 634 28.75

Total 706 1,499 2,205

Source: Frey (1996), pp. 6-11.

Table 33—Public and private research in plant breeding, scientist years (SY), and cost, 1994

Sector/Institution Number of Total number of SY Cost per SY Dollar input per

companies sector/institution

Dollars Million current dollars

Private 329 1,498 225,898 338.5

Public NA 743 286,840 213.2

ARS/USDA NA 177 300,000 53.1

SAES NA 530 293,500 155.5

Plant materials center NA 36 125,000 4.5

Total NA 2,241 551.6

* Average cost. Cost varies with company size, ranging from $148,000 for the smallest firm size category to $290,000 for the

larger firms (Frey, 1996, p.19)

NA = not available. SAES = State Agricultural Experiment Station.

Source: Frey (1996, p. 19).
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 51

The emergence of the private sector marks a significant shift in agricultural R&D. Decisions about R&D

made in a competitive environment are likely to differ

from those made in a public sector setting, where most

R&D traditionally has taken place. Therefore, the

amount of R&D, the emphasis of research, and other

aspects of R&D are likely to change. In addition,

public research priorities may change in response to

R&D efforts undertaken by private firms: Public institutions may pursue initiatives that complement private

efforts as well as research areas that the private sector

neglects. Measures of plant breeding research output

further highlight the shift in emphasis from public to

private R&D. 

PVP Certificates

Plant variety protection certificates approved by

USDA’s PVPO are similar to patents issued for crop

varieties. PVP certificates are intended to benefit both

consumers and producers of improved crop varieties.

Individual and corporate consumers benefit from the

improved quality of agricultural goods that they use

directly for consumption purposes or as inputs to the

production of goods, such as livestock and medicine.

And to the extent that new varieties increase productivity and supply, consumers also stand to gain from

decreases in price. Seed producers, on the other hand,

benefit from the exclusive rights they secure over the

purity, breeding, marketing, distribution, and sales of

improved varieties, allowing them to obtain a return on

their investment of research and development

resources (USDA, AMS, 2000). 

Estimates of the time involved in producing new varieties in a breeding program range from 10 to 15 years

to produce a marketable product (tables 34-35).13 On

an annual basis, a small breeding program was estimated to cost approximately $250,000 in the late

1980s, a sum adequate to cover the costs of a chief

breeder, a staff of three or four, equipment, facilities

and land (McMullen, 1987, p. 58). Even where larger

firms realize economies of scale and scope in

producing multiple varieties, the estimated development costs of a new variety range between $2.0

million and $2.5 million for the same period

(McMullen, 1987, pp. 58-60). Given the magnitude of

these investments, it is unlikely that plant breeders

would have made this type of R&D investment

without property rights protection. 

The number of PVP certificates issued by the PVPO

provides a useful indicator of the results of plant

breeding research efforts. Research findings differ in

showing the PVPA’s effect on creating private sector

incentives in research. Butler and Marion (1985, p. 79)

conclude that during the 1970s, the PVPA resulted in

“modest private and public benefits at modest private

and public costs.” Perrin et al. (1983), on the other

hand, conclude that the act led to increased private

investment in plant breeding for soybeans and other

nonhybrid seed crops. These competing conclusions

highlight the significance of time lags between R&D

investment and the release of a new variety. For many

varieties, this lag is often more than 10 years (table

35), implying that the economic returns to new R&D

investments in plant breeding made in the 1970s were

Introductions and Trials of New Varieties Are Increasing 

Over Time

13 Amount of time depends on availability of source germplasm.

Time can also be reduced when breeders can use more than one

cycle per year (e.g., through Southern Hemisphere shuttle breeding).

Table 34—Stages and time required in plant 

breeding

Stage Hybrid Open-pollinated

Years

Recognition 0 0

Parent-line preparation 4-5 0-2

Initial crosses 5-6 0-3

Progeny selection 6-10 3-11

Crop evaluation 7-12 5-12

Testing the variety 7-15 6-15

Determination of a

new variety 8-12 7-13

Market evaluation 8-13 8-14

Application for plan

variety protetection 8-14 9-14

Multiplication from

individual plants or ears 9-14 9-15

Certification 9-14 9-15

Market introduction 10-15 10-17

Market acceptance 12-18 12-19

Market growth 13-19 13-20

Obsolescence 20-25 20-25

Source: McMullen (1987b), p. 58.
52 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

not fully captured in the studies by Butler and Marion

and Perrin et al. (Fuglie et al., 1996, p. 38).

The number of PVP certificates issued by the PVPO

has grown rapidly since the 1970 PVPA after

accounting for the time lag in plant breeding R&D

(tables 36-37). This growth indicates the PVPA’s positive effect on generating private sector incentives for

plant breeding R&D. The increases were most marked

for soybeans and corn, which together account for

more than half of all certificates issued for field crops.

By the end of 2002, 2,584 certificates were issued for

varieties of U.S. origin for the four major field crops,

including 1,078 for soybeans, 648 for corn, 568 for

wheat, and 290 for cotton (table 37).

The majority of PVP certificates—about 84

percent—are held by the private sector. Among PVPs

for major crops, the private sector owns close to 100

percent of corn certificates, 87 percent of cotton

certificates, 84 percent of soybean certificates, and 68

percent of wheat certificates. Figure 16 captures the

growth in PVP certificates issued for U.S. private and

public entities for corn, soybeans, cotton, and wheat

between 1970 and 2002. 

Agricultural Biotechnology R&D

A driving force behind some of the increase in private

sector R&D has been the introduction of modern

biotechnology to agriculture. Biotechnology, broadly

defined, is the application of biological science to

affect living things. Under this broad definition, the

entire endeavor of agricultural experimentation over

thousands of years of human history might be considered “biotechnology.” But the 20th century discovery

of DNA and subsequent scientific advances have

ushered in a new period of biological research. The

application of genetic science to plants and animals in

light of these discoveries is the sense in which this

report employs the word “biotechnology.”

The emergence of modern biotechnology is consistent

with the more recent focus on plant breeding in private

sector agricultural R&D (tables 25-26; figs. 13-14). In

addition to techniques of modern biotechnology, the

creation of new plant varieties with useful agronomic

properties requires significant knowledge of plant

breeding. In this sense, plant breeding and biotechnology are complementary. Moreover, the commercial

success of GE crop varieties typically requires that

biotechnology-derived trait enhancements are incorpoTable 35—Research time required for developing new seed varieties, major field crops

Time required Number of varieties1

Crop From date of From date of Total Cross to date Date of 

cross to date determination to of determination to 

of determination application date determination application

——————————Years——————————

Corn 5.5 2.0 7.54 6

Soybean 6.2 3.0 9.2 64 75

Cotton 8.0 4.2 12.2 27 57

Wheat 8.0 2.8 10.8 36 56

Rice 6.0 2.8 8.8 5 12

Average/total

2 7.9 3.2 11.1 253 391

1 Applicants are required to list the date of variety determination and date of application when submitting protection applications

but they are not required to list the date the cross was made. For this reason, there are fewer varieties listed in the "Cross to date

of determination" column. 2 Average and total include other field crops and vegetables not shown here.

Source: McMullen (1987), p. 60, using data from Asgrow Seed Company.

Figure 16

Number of PVP certificates issued for corn, 

soybeans, cotton, and wheat

Number

Source: Data source provided in table 37.

1970 75 80 85 90 95 2000

0

50

100

150

200

250

300

350
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 53

rated into successful cultivars. Acquisition of firms

with established varieties by companies with the

ability to improve varieties using biotechnology is one

possible rationale for recent consolidation in the U.S.

seed industry.

The rapid commercial success of GE varieties provides

a preliminary measure of the technical success of the

R&D efforts.14 The number of field releases of plant

varieties for testing purposes provides an ex-ante

measure of R&D output.15

Field Releases

The process by which new GE varieties of organisms

are released into the environment is regulated and monitored by USDA’s Animal and Plant Health Inspection

Service (APHIS). Private companies and public institutions proposing tests of such organisms in the environment either notify APHIS of their intent, in accordance

with APHIS’s field release notification procedures, or

submit an application for a field release permit (referred

to here as an application). If an APHIS review of the

application (notification or permit application) establishes that there are no significant environmental risks

associated with a release, a notification is acknowledged

or a field permit is issued (referred to here as an

“approval”), thereby allowing the breeder to pursue

testing. Between 1987 and June 2001, APHIS received

over 7,600 applications for field releases of GE varieties. Of these applications, APHIS approved the field

release of more than 6,700 new varieties (table 38). Also

significant is the annual growth of field release applications during this period: applications received annually

by APHIS increased from just 9 in 1987 to a high of

1,206 in 1998 (fig. 17). Although some applications

were denied or withdrawn, a significant

majority—almost 90 percent—were approved by

APHIS (table 39, fig. 18). 

The majority of applications for field releases

received from private companies and public institutions are for testing improved varieties of major crops.

By mid-2001, applications received included more

Table 36—Plant variety protection certificates issued for new crop varieties, field crops

Share of certificate

Number of certificates issued ownership

Crop 1971-74 1975-78 1979-82 1983-86 1987-90 1991-94 Total Private Public

Percent

Soybeans 34 69 132 150 114 162 661 0.84 0.16

Corn 0 1 6 50 104 161 322 1.00 0.00

Wheat 12 52 59 30 74 87 314 0.68 0.32

Cotton1 24 35 41 38 34 39 211 0.87 0.13

Subtotal for major crops 70 157 238 268 326 449 1,508 0.85 0.15

Barley 0 12 2 22 6 35 77 0.82 0.18

Beans, field 0 1 5 18 10 28 62 0.77 0.23

Oats 0 10 6 0 9 8 33 0.36 0.64

Rice 0 8 4 2 5 15 34 1.00 0.00

Sorghum 0 0 0 02 31 33 1.00 0.00

Canola 0 0 0 2 8 15 25 0.72 0.28

Safflower 0 3 2 1 5 6 17 0.88 0.12

Other field crops 0 16 15 13 18 13 75 0.85 0.15

Subtotal for other crops 0 50 34 58 63 151 356 0.80 0.20

Total field crops 70 207 272 326 389 600 1,864 0.84 0.16

1 Figures for PVP certificates issued for cotton varieties given here may vary from figures presented elsewhere in this report due

to PVPO revisions and updates to PVP certificate listings.

Source: Fuglie (1996), p. 38.

14 Ex-ante, two important factors suggested a profitable market,

justifying the time and expense of improving seed through biotechnology R&D. First, the seed market for U.S. field crops is very

large. Second, genetically engineered seeds, selling at a price premium over conventional seeds, are not substantially more expensive

to produce after R&D and regulatory approval are complete. 

15 Another measure of research output is the number of patents,

which can also provide an indication of concentration of research

assets (Brennan et al., 2000). Considering the two major crops,

corn and soybeans, the three top firms, DuPont/Pioneer, Monsanto/DeKalb and Novartis/Syngenta, held 46 percent of the

biotech patents or patent applications as of 1996-97 (table 51).
54 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

Table 37—PVP certificates issued for major field crops1

All major

Corn Soybeans Cotton Wheat field crops

Calendar Private Public Total Foreign Private Public Total Foreign Total Total

year issued origin origin U.S. origin Total origin origin U.S. origin Total U.S. U.S. Total

Number

1970 0 0 0 0 0 0 0 0 0 0 0 0 0

1971 0 0 0 0 0 0 0 0 0 0 0 0 0

1972 0 0 0 0 0 0 0 0 0 0 0 0 0

1973 0 0 0 0 0 10 3 13 0 13 0 1 14

1974 0 0 0 0 0 21 1 22 0 22 24 11 57

1975 0 0 0 0 0 8 5 13 0 13 14 16 43

1976 0 0 0 0 0 14 0 14 0 14 7 11 32

1977 3 0 3 0 3 21 1 22 0 22 5 17 47

1978 0 0 0 0 0 20 2 22 0 22 9 12 43

1979 0 0 00019 2 21 0 21 11 10 42

1980 6 0 6 0 6 30 13 43 0 43 12 6 67

1981 1 0 1 0 1 30 2 32 0 32 10 10 53

1982 2 0 2 0 2 32 7 39 0 39 10 33 84

1983 3 0 3 0 3 33 1 34 0 34 11 0 48

1984 11 0 11 0 11 23 4 27 0 27 7 0 45

1985 8 0 8 0 8 37 11 48 0 48 8 14 78

1986 29 0 29 0 29 42 2 44 0 44 13 16 102

1987 15 0 15 1 16 36 5 41 0 41 11 2 70

1988 33 0 33 0 33 34 14 48 0 48 8 42 131

1989 19 0 19 0 19 12 3 15 0 15 0 28 62

1990 37 0 37 0 37 10 0 10 0 10 15 6 68

1991 35 0 35 0 35 33 4 37 0 37 14 1 87

1992 54 0 54 1 55 47 17 64 1 65 1 9 130

1993 36 0 36 5 41 6 0 6 0 6 4 48 99

1994 29 0 29 0 29 42 12 54 0 54 20 32 135

1995 22 0 22 0 22 58 15 73 0 73 6 26 127

1996 35 0 35 5 40 33 5 38 0 38 7 34 119

1997 30 0 30 10 40 24 4 28 0 28 4 13 85

1998 22 0 22 0 22 13 1 14 0 14 0 3 39

1999 26 0 26 0 26 16 4 20 0 20 0 30 76

2000 18 1 19 0 19 43 9 52 0 52 0 27 98

2001 88 4 92 3 95 124 10 134 0134 10 64 303

2002 79 2 81 0 81 43 7 50 2 52 49 46 228

Total 641 7 648 25 673 914 164 1,078 3 1,081 290 568 2,612

1 Figures for PVP certificates issued may vary from figures presented elsewhere due to PVPO revisions and updates to 

PVP listings.

Source: Strachan (2003).

Table 38—Applications for field releases received by APHIS, by crop and year1

Crop 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Total 

(1987-

2001)1

Number

Corn 0 00 3 15 44 134 262 348 279 406 563 385 420 468 3,327

Soybeans 0 04 5 6 36 68 69 62 52 55 85 68 51 40 601

Cotton 0 1 5 11 17 4 23 43 63 33 50 47 53 79 52 481

Wheat 0 00 0 0 0 0 3 4 12 16 20 39 65 50 209

Other 9 17 29 39 69 77 149 231 229 278 281 491 516 397 246 3,058

Total 9 18 38 58 107 161 374 608 706 654 808 1,206 1,061 1,012 856 7,676

1 Includes field release notifications received by APHIS, and field release permits either issued, withdrawn, or denied

by APHIS, between June 16, 1987, and July 9, 2001.

Source: Virginia Polytechnic Institute (2001).
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 55

than 3,327 for corn varieties, 761 for potatoes, 601 for

soybeans, 532 for tomatoes, 481 for cotton, and 209

for wheat (table 40). APHIS classifies each variety

according to the variety’s unique genetic characteristic, or phenotype, which distinguishes it from other

varieties. Field release applications received by

APHIS between 1987 and 2000 included varieties

with such characteristics as herbicide tolerance (27

percent), insect resistance (25 percent), product

quality usually associated with added value output

traits (17 percent), virus resistance (9 percent), and

agronomic properties (6 percent) (table 41). A small

share of the applications for field releases also contain

multiple or “stacked” traits, such as herbicide tolerance and insect resistance.

The breakdown of the number of applications for field

releases by company is provided in table 42. Much

more detail, by year and for each of the major crops

—corn, soybeans, cotton, and wheat—is shown in 

tables 43-47. 

Figure 17

Total number of field release applications, 

by year

Number of applications

Source: Data source provided in table 38.

1987 89 91 93 95 97 99

0

200

400

600

800

1,000

1,200

1,400

9 18 38 58 107

161

374

608

706 654

808

1,206

1,061

1,012

Figure 18

Total number of field release approvals, 

by year

Number of approvals

Source: Data source provided in table 39.

1987 89 91 93 95 97 99

0

200

400

600

800

1,000

1,200

5 12 24 37 69

122

277

555

666

590

730

1,061

961

899

Table 39—Status of field release notifications and permits1

Year Received Approved Delayed approval Denied Withdrawn Void Pending Total

Number

1987 9 5 4 0 0 0 0 18

1988 18 12 6 0 0 0 0 36

1989 38 24 14 0 0 0 0 76

1990 58 37 21 0 0 0 0 116

1991 107 69 38 0 0 0 0 214

1992 161 122 28 0 11 0 0 322

1993 374 277 29 0 68 0 0 748

1994 608 555 38 6 9 0 01,216

1995 706 666 14 2 18 5 0 1,411

1996 654 590 35 8 20 0 0 1,307

1997 808 730 13 33 28 3 0 1,615

1998 1,206 1,061 25 108 10 2 0 2,412

1999 1,061 961 25 46 22 6 0 2,121

2000 1,012 899 36 57 16 1 2 2,023

2001 856 777 0 25 13 1 39 1,711

Total

2 7,676 6,785 326 285 215 18 41 15,346

1 From June 16, 1987, to July 9, 2001. 2 The total number of field releases approved by APHIS includes 961 permits issued and 6,156 notifications acknowledged.

Acknowledgments are given under the APHIS notification procedure, while issued refers to release permits issued by APHIS.

For most purposes, there is no difference in these two categories, and together, they equal the number of field releases approved by APHIS.

Source: Virginia Polytechnic Institute (2001).
56 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

Table 40—Number of applications for field

releases, by crop1

Crop 2000 1987-2001

Number Percent Number Percent

Corn 420 41.5 3,327 43.3

Potatoes 70 6.9 761 9.9

Soybeans 51 5.0 601 7.8

Tomatoes 25 2.5 532 6.9

Cotton 79 7.8 481 6.3

Wheat 65 6.4 209 2.7

Tobacco 15 1.5 202 2.6

Rapeseed 16 1.6 177 2.3

Rice 19 1.9 134 1.7

Beet 22 2.2 121 1.6

Melons 13 1.3 140 1.8

Other 217 21.4 991 12.9

Total 1,012 100.0 7,676 100.0

1 From June 16, 1987, to July 9, 2001. Includes field release notifications received by APHIS, and field release permits either issued, withdrawn, or denied by APHIS between June 16, 1987, and July 9, 2001.

Source: Virginia Polytechnic Institute (2001).

Table 41—Share of applications for field releases

received by APHIS, by trait

Trait 2000 1987-20011

Percent

Agronomic properties 6.5 6.0

Bacterial resistance 1.3 1.2

Fungal resistance 5.5 5.5

Herbicide tolerance 30.1 27.4

Insect resistance 26.0 25.3

Marker gene 5.4 3.8

Nematode resistance 0.2 0.2

Product quality 11.5 17.3

Virus resistance 6.1 9.1

Other 7.3 4.4

Total

1 100.0 100.0

1 From June 16, 1987, to June 25, 2001. Note that certain products

contain multiple or "stacked" traits and are thus included separately

under each appropriate trait.

Source: Virginia Polytechnic Institute (2001).

Table 42—Status of notifications and field release permits by company, 1987-20011

Company/ institution Acknowledged2 Issued2 Pending Denied Withdrawn Void Total

Number

Monsanto 2,142 155 11 68 47 6 2,429

Pioneer 535 55 2 31 22 1 646

AgrEvo 312 14 14 4 344

DuPont 305 15 1 321

ARS 130 42 1 12 8 3 196

DeKalb 172 9 8 3 192

Calgene 90 74 2 8 1 175

Semnis Vegetable Seed 144 18 2 3 1 168

DNA Plant Tech 74 15 2 91

Northrup-King 69 11 3 5 88

University of Idaho 66 14 6 1 1 88

Upjohn 10 63 12 85

Aventis 72 4 1 8 85

Iowa State University 69 5 72 83

Asgrow 49 26 1 5 81

Novartis Seeds 74 3 2 79

ProdiGene 50 22 2 1 1 76

Stine Biotechnology 71 4 75

Rutgers University 59 12 4 75

Cargill 54 11 1 5 71

Dow 56 2 4 62

Agracetus 57 3 1 61

Agritope 47 6 6 1 60

Zeneca 47 2 1 7 1 58

Frito Lay 36 18 2 2 58

Other 1,366 362 17 102 76 6 1,929

Total 6,156 961 41 285 215 18 7,676

1 From June 16, 1987, to July 9, 2001. 2 Acknowledgments are given under the APHIS notification procedure, while issued refers to release permits issued by APHIS.

For most purposes, there is no difference in these two categories, and together, they equal the number of field releases approved by APHIS.

Source: Virginia Polytechnic Institute (2001).
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 57

Table 43—Field release approvals for corn, by company1

Crop 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Total

Number

Monsanto 1 7 47 72 63 32 105 94 147 248 816

Pioneer 4 11 20 45 57 78 106 114 54 5 494

DuPont 12 67 63 14 17 19 7 199

AgrEvo 2 2 12 5 131 26 178

DeKalb 2 1 6 6 27 29 41 26 33 1 172

Northrup-King 3 6 10 42 10 71

ProdiGene 2 6 24 24 56

Novartis Seeds 12 22 7 12 53

Iowa State University 1 1 4 15 16 14 51

Stine Biotechnology 3 9 21 14 47

Plant Genetic Systems 4 42 46

Cargill 1 2 3 2 10 6 7 8 2 41

Holdens 2 4 3 5 14 7 2 37

Ciba-Geigy 2 3 4 5 10 12 36

Stanford University 7 4 12 13 36

Garst/ICI 1 2 2 4 3 558 3 33

Mycogen 1 2 1 1 6 8 11 30

Dow 1 1 2 1 6 18 29

Limagrain 1 10 6 6 1 4 28

Asgrow 1 4 6 3 3 17

Agracetus 155 3 1 15

NC+Hybrids 3 6 3 3 15

University of Minnesota 1 2 3 4 5 15

University of Arizona 115 3 4 14

Aventis 13 13

Golden Harvest Seeds 251 3 2 13

Rogers/Rogers NK 1 426 13

Rhone-Poulenc 1 3 6 10

Wyffels Hybrids 6 4 10

Southern Illinois Univ. 221 3 1 9

Upjohn 2 3 2 7

Zeneca 1 2 3 1 7

Other 1 12 3 6 11 16 5 9 5 15 74

Total 000 3 15 43 114 258 337 273 383 507 366 386 2,685

1 From June 16, 1987, to December 31, 2000. Field release approvals are either categorized as notifications acknowledged by APHIS under its

notification procedure, or field release permits issued by APHIS. For most purposes, there is no difference in the two categories, and together,

they equal the number of field releases approved by APHIS.

Source: Virginia Polytechnic Institute (2001).
58 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

Table 44—Field release approvals for soybeans, by company1

Crop 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Total

Number

Monsanto 4 4 3 22 13 12 1 6 20 38 21 144

DuPont 3 15 28 4 19 18 2 2 91

AgrEvo 6 16 16 8 13 59

Pioneer 1 4 11 16 5 3 7 7 2 2 58

Agracetus 1 4 9 13 2 29

Asgrow 1 6 2 9 56 29

Upjohn 1 2 5 7 15

Rhone-Poulenc 2 2 10 14

Aventis 10 10

DeKalb 2 1 21 3 9

Stine Biotechnology 1 1 68

Dairyland Seeds 2 3 1 17

Limagrain 1 1 3 1 6

University of Kentucky 1 2 2 5

AgriPro 12 1 4

Northrup-King 12 1 4

University of Illinois 22 4

Calgene 3 3

Iowa State University 11 1 3

Jacob Hartz 1 2 3

University of Georgia 1 11 3

University of Nebraska 1 2 3

FFR Cooperative 11 2

Ohio State University 2 2

Other 4 15

Total 004 5 6 34 50 68 62 51 52 82 60 46 520

1 From June 16, 1987, to December 31, 2000. Field release approvals are either categorized as notifications acknowledged by APHIS

under its notification procedure, or field release permits issued by APHIS. For most purposes, there is no difference in the two categories,

and together, they equal the number of field releases approved by APHIS.

Source: Virginia Polytechnic Institute ( 2001).
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 59

Table 45—Field release approvals for cotton, by company1

Crop 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Total

Number

Monsanto 2 6 6 9 11 26 12 14 26 39 54 205

Calgene 2 4 9 4 4 4 4 5 11 1 48

Delta & Pine Land 2 11 13 6 4 36

AgrEvo 12 10 4 26

Dupont 1 2 2 8 7 20

Agracetus 1 1 5 7 1 15

Mycogen 2124 3 12

Texas Tech University 5 3 4 12

Aventis 9 9

Dow 8 8

All-Tex 22

ARS 1 12

Boswell 11 2

Jacob Hartz 2 2

Novartis Seeds 2 2

United Agri Products 11 2

American Cyanamid 1 1

Bowdoin College 1 1

Brownfield 1 1

Chembred 1 1

Dunn 1 1

Miles 1 1

Northrup-King 1 1

SeedCo 1 1

Williams Seed 1 1

Other 0

Total 0 1 5 11 17 4 19 43 60 33 45 46 50 78 412

1 From June 16, 1987, to December 31, 2000. Field release approvals are either categorized as notifications acknowledged by APHIS under its

notification procedure, or field release permits issued by APHIS. For most purposes, there is no difference in the two categories, and together,

they equal the number of field releases approved by APHIS.

Source: Virginia Polytechnic Institute (2001).

Table 46—Field release approvals for wheat, by company1

Crop 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Total

Number

Monsanto 2 3 7 613 27 52 110

University of Idaho 1 3 33 3 13

Montana State Univ. 1 4 3 8

Novartis Seeds 2 1 3 1 7

ARS 12 1 15

Applied Phytologics 2 2

AgrEvo 11

Syngenta 1 1

Cargill 1 1

Other 0

Total 0 0 0 0 0 00 3 4 10 11 19 37 64 148

1 From June 16, 1987, to December 31, 2000. Field release approvals are either categorized as notifications acknowledged by APHIS under its

notification procedure, or field release permits issued by APHIS. For most purposes, there is no difference in the two categories, and together,

they equal the number of field releases approved by APHIS.

Source: Virginia Polytechnic Institute (2001).
60 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

Table 47—Field release approvals for corn, soybeans, cotton, and wheat, by company, 1987-20001

Corn Soybeans Cotton Wheat

Company No. Company No. Company No. Company No.

Monsanto 816 Monsanto 144 Monsanto 205 Monsanto 110

Pioneer 494 DuPont 91 Calgene 48 University of Idaho 13

DuPont 199 AgrEvo 59 Delta & Pine Land 36 Montana State Univ. 8

AgrEvo 178 Pioneer 58 AgrEvo 26 Novartis Seeds 7

DeKalb 172 Agracetus 29 DuPont 20 ARS 5

Northrup-King 71 Asgrow 29 Agracetus 15 Applied Phytologics 2

ProdiGene 56 Upjohn 15 Mycogen 12 AgrEvo 1

Novartis Seeds 53 Rhone-Poulenc 14 Texas Tech University 12 Syngenta 1

Iowa State University 51 Aventis 10 Aventis 9 Cargill 1

Stine Biotechnology 47 DeKalb 9 Dow 8 Other 0

Plant Genetic Systems 46 Stine Biotechnology 8 All-Tex 2

Cargill 41 Dairyland Seeds 7 ARS 2

Holdens 37 Limagrain 6 Boswell 2

Ciba-Geigy 36 University of Kentucky 5 Jacob Hartz 2

Stanford University 36 AgriPro 4 Novartis Seeds 2

Garst/ICI 33 Northrup-King 4 United Agri Products 2

Mycogen 30 University of Illinois 4 American Cyanamid 1

Dow 29 Calgene 3 Bowdoin College 1

Limagrain 28 Iowa State University 3 Brownfield 1

Asgrow 17 Jacob Hartz 3 Chembred 1

Agracetus 15 University of Georgia 3 Dunn 1

NC+Hybrids 15 University of Nebraska 3 Miles 1

University of Minnesota 15 FFR Cooperative 2 Northrup-King 1

University of Arizona 14 Ohio State University 2 SeedCo 1

Aventis 13 Other 5 Williams Seed 1

Golden Harvest Seeds 13 Delta Pine & Land 1 Other 0

Rogers/Rogers NK 13 Michigan State University 1

Rhone-Poulenc 10 Midwest Oilseeds 1

WyFFels Hybrids 10 Land O’ Lakes 1

Southern Illinois University 9 Other

Upjohn 7

Zeneca 7

Other 74

Total 2,685 Total 524 Total 412 Total 148

1 From June 16, 1987, to December 31, 2000. Field release approvals are either categorized as notifications acknowledged by APHIS under its

notification procedure, or field release permits issued by APHIS. For most purposes, there is no difference in the two categories, and together,

they equal the number of field releases approved by APHIS.

Source: Virginia Polytechnic Institute (2001).
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 61

Determination of Nonregulated Status

In the United States, once new varieties are successfully

field tested and the research is fully documented,

breeders may apply for a “determination of nonregulated status” from APHIS. This determination, once

approved, allows the variety to be produced and sold

commercially (USDA, APHIS, 2000). Out of the thousands of plant varieties approved for field release,

APHIS had received 79 petitions for deregulation status

as of mid-2001 (table 48). Of these 79 petitions, APHIS

granted nonregulated status to a total of 53. These new

varieties no longer fall under Federal regulation and can

be planted freely throughout the United States. 

Of the varieties granted nonregulated status by APHIS,

18 are corn varieties, 12 are tomatoes, 5 are soybeans,

and 5 are cotton. Thirty-six of percent of these nonregulated varieties have herbicide-tolerance traits, 20

percent have insect-resistance traits, and 19 percent

have traits to improve product quality (table 49). 

Adoption of Crop Biotechnology Products

Successful transfer of a targeted trait to an elite strain

may take plant breeders many crop generations. Superior hybrid corn varieties, for example, were introduced

in the early 1930s after more than 25 years of research.

Once development is complete, adoption of these crops

takes time as well. The share of corn acreage planted

with hybrid corn in the U.S. grew from about 1 percent

of total corn planted in 1933 to more than 95 percent by

1960 (fig. 2). The speed of adoption might depend on

the success of marketing efforts, the ability of growers

to adapt farming practices to take advantage of the new

varieties, and the superiority of the new varieties to

existing varieties. The speed of adoption of corn hybrids

differed by region because plant breeders had to

produce varieties compatible with local growing conditions (Griliches, 1957). 

By comparison, both the development and the adoption of genetically engineered field crop varieties were

even more rapid than the adoption of hybrid corn varieties. The relative speed with which new varieties can

be developed using modern biotechnology gives

biotechnology an advantage over other techniques.

Notwithstanding, first-generation biotechnology products were commercially available for farmers in the

mid-1990s after about 15 years of research and development. Following their release in 1996, U.S. farmers

rapidly adopted GE crops with herbicide-tolerant and

insect-resistant traits (fig. 3). 

Table 48—Crops no longer regulated by USDA,

1987-20011

Crop Petitions Petitions Share of petitions

submitted approved approved

Number Number Percent

Corn 23 18 33.96

Tomato 23 12 22.64

Potato 23 5 9.43

Soybeans 23 5 9.43

Cotton 23 5 9.43

Other 23 8 15.09

Total 79 53 100.00

1 From June 16, 1987, to June 25, 2001.

Source: Virginia Polytechnic Institute (2001).

Table 49—Crops no longer regulated by USDA,

by trait, 1987-20011

Trait Petitioned Approved Share

approved

Number Number Percent

All crops:

Agronomic properties (AP) 8 6 9.38

Herbicide tolerance (HT) 29 23 35.94

Insect resistance (IR) 22 13 20.31

Stacked (HT, IR) 5 4 6.25

Product quality (PQ) 18 12 18.75

Virus resistance (VR) 9 6 9.38

Total 91 64 100.00

Corn:

Agronomic properties (AP) 3 3 16.67

Herbicide tolerance (HT) 8 7 38.89

Insect resistance (IR) 10 5 27.78

Stacked (HT, IR) 5 3 16.67

Total 26 18 100.00

Soybeans:

Herbicide tolerance (HT) 5 4 80.00

Product quality (PQ) 2 1 20.00

Total 7 5 100.00

Cotton:

Herbicide tolerance (HT) 3 3 60.00

Insect resistance (IR) 3 1 20.00

Stacked (HT, IR) 1 1 20.00

Total 7 5 100.00

1 From June 16, 1987, to June 25, 2001.

Source: Virginia Polytechnic Institute (2001).
62 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

Concentration and Private Sector R&D

A relatively small number of firms are active in the

field of crop biotechnology, particularly with respect to

major field crops (tables 43-46). Only a few firms have

secured approval for unregulated release of genetically

modified crops, a number likely affected by recent

merger and acquisition activity.

As Fulton and Giannakas (2002) observe, the relevant

measure of market concentration is not always based

on output markets (sales). To assess the impact of

mergers focusing on innovative activity, the Federal

Trade Commission is using innovation competition. 

To construct a measure of concentration in innovation

activity for the case of crop biotechnology, this report

uses the regulatory approvals of GE varieties. In particular, this section adapts the CR4 measure used to quantify concentration in seed sales. Figures 19-21 show the

percentage of field releases obtained by the leading four

firms during 1988-2000. The top four firms control well

over 50 percent of these approvals, suggesting concentration in R&D as well as potential barriers to entry for

potential competitors. Note that much of the concentration reflects mergers and acquisitions among firms

listed individually in the tables.

Based on the four-firm concentration ratio of

approvals, corn seed remains the least concentrated

industry relative to the other three crops. This finding

is fairly consistent with earlier findings presented on

the four-firm concentration ratio of corn in terms of

sales. Moreover, the level of corn seed R&D concentration has remained relatively constant, at around 72

percent since 1990, which is also consistent with

earlier findings. Soybean seed R&D remains highly

concentrated in terms of field release approvals,

although this concentration generally follows a downward trend. Again, this is fairly consistent with trends

for the four-firm concentration ratio when measured in

more conventional terms earlier. Cottonseed R&D, on

the other hand, shows a trend toward increasing

concentration, from 89 percent in 1993 to 96 percent

in 2000, a finding also consistent with earlier market

concentration measures.16 Finally, the wheat seed

industry remains highly concentrated, although this

16 Note, however, that few firms dominated cotton field release

approvals by APHIS during the first 5 years (1988-92). Hence, the

four-firm concentration ratio during this period was 100 

percent. New firms entered the market and pursued R&D in 

subsequent years.

Figure 21

Four-firm concentration ratio in APHIS field 

release approvals for cotton

Percent

Source: Data source provided in table 45.

1988 90 92 94 96 98 2000

20

40

60

80

100

120

Figure 20

Four-firm concentration ratio in APHIS field 

release approvals for soybeans

Percent

Source: Data source provided in table 44.

1989 91 93 95 97 99

20

40

60

80

100

120

Figure 19

Four-firm concentration ratio in APHIS field 

release approvals for corn

Percent

Source: Data source provided in table 43.

1990 92 94 96 98 2000

0

20

40

60

80

100
Economic Research Service/USDA The Seed Industry in U.S. Agriculture / AIB-786 ● 63

may be due to the limited number of private firms

operating in the sector; only two of the largest four

institutions were private firms.

Between 1988 and 2000, Monsanto received approvals

for over 1,200 new varieties of corn, soybeans, cotton,

and wheat, making it the leader in product development,

followed by other large companies such as DuPont/

Pioneer, and AgrEvo. The majority of the permits issued

to leading companies have been for testing of new corn

varieties, followed by soybeans and cotton (table 47).

Similarly, out of the 53 approvals for nonregulated

status given by APHIS, 28 were for varieties developed

by Monsanto/ Calgene/Asgrow/DeKalb, 10 were for

AgrEvo, and 3 were for DuPont/Pioneer (table 50).

Thus, the largest two firms hold 70 percent of the

nonregulated varieties. 

Patent ownership shows a pattern of concentration

similar to that evident in other R&D measures. Most

of the biotech patents awarded to private sector firms

are held by a small number of large companies. As

of 1996/97, DuPont/Pioneer held the largest number

of patents for corn and soybeans, followed by

Monsanto (table 51) (Brennan et al., 1999, p. 167).

As with regulatory approvals, the leading firms in

the sector have received intellectual property rights

not only through their R&D investment but also

through recent mergers and acquisitions.

Table 50—Status of petitions for deregulation, by company, 1987-20011

Company/institution Approved Incomplete Pending Withdrawn Void Total

Number

Monsanto 16 2 8 26

AgrEvo 10 3 13

Calgene 9 1 10

DeKalb 2 1 3

DuPont2 1 3

DNA Plant Tech 1 1 2

Agritope 1 12

Bejo 1 12

Zeneca 1 12

Cornell University 1 1 2

Asgrow 1 1

Aventis 1 1

Ciba-Geigy 1 1

Dow 1 1

Upjohn 1 1

Syngenta 1 1

University of Saskatchewan 1 1

Zeneca & Petoseed 1 1

Mycogen 1 1

Northrup King 1 1

Novartis Seeds 1 1

Pioneer 1 1

Plant Genetic Systems 1 1

Vector Tobacco 1 1

Total 53 1 3 21 1 79

1 From June 16, 1987, to June 25, 2001.

Source: Virginia Polytechnic Institute (2001).

Table 51—Biotech patent ownership for corn and

soybeans, by company

Corn Soybeans Corn and

(1982-96) (up to 1997) soybeans

Number of patents held

Aventis/RhonePoulenc-Agrochem 3 4 7

AgrEvo /PGS 4 3 7

Novartis/Syngenta 17 2 19

Zeneca 0 3 3

Dow Chemical/Mycogen 3 4 7

DuPont/Pioneer 281 422 70

Monsanto DeKalb 113 23 34

Cyanamid 3 0 3

Others 69 49 118

Total 138 130 268

1 Includes 21 from Pioneer. 2 Includes 27 from Pioneer. 3 Includes 4 from DeKalb.

Source: Derwent Biotechnology Abstracts, as reported in GRAIN

(1996, 1997) and in Brennan et al. (2000).
64 ● The Seed Industry in U.S. Agriculture / AIB-786 Economic Research Service/USDA

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