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November 28, 2010

Uproar over sale of South African seed company

by Bobby Jordan

The proposed sale of a majority stake in Greytown-based Pannar Seed to US-based Pioneer Hi-Bred is now before the South African Competition Commission, which will conduct public hearings on the matter.

Some of the submissions to the commission are highly critical of the proposed deal, and claim it would result in a seed cartel that could affect local agriculture negatively. However, the companies are adamant that the deal would help keep farmers in touch with global advances in seed technology.

Both Pannar Seed and Pioneer Hi-bred are world leaders in hybrid and genetically modified (GM) seed technology that includes several white and yellow maize varieties. GM maize makes up about 70% of SA's commercial maize crop.

Pioneer Hi-Bred is a subsidiary of Iowa-based DuPont, the world's leading developer and supplier of high-tech plant genetics.

In a written submission by the African Centre for Biosafety (ACB), the sale of Pannar Seed would give Pioneer Hi-Bred over 50% control of all SA GM maize varieties.

"If the adoption trends of the last few years for GM maize continue, it is not unreasonable to speculate that in the future SA could be faced with a situation where its staple food could be 'owned' by two multi-national corporations," the ACB submission said.

The sale therefore had huge implications for agricultural input costs and food security, the report said

"Such approval would in our view be disastrous for both local farmers and consumers alike; it would promote a huge monopoly to do as it pleases in regard to prices, stifling and discouraging new entrants into the market and encourage cartels and its associated negative propensities," the ACB submission said.

However, Pannar Seed managing director Deon van Rooyen said foreign investment in South African biotechnology would increase food security by ensuring higher yields and better use of available resources.

"There has been a technological revolution in the seed industry. If we don't do this type of deal, then you really will be sitting with a (agricultural) resource that declines in value. We want to increase the value for the region," he said.

He said Pannar needed an investment partner to make the most of its home-grown seed technology - both GM and non-GM.

"We're sitting on a lot of good South African genetics developed specifically in maize over the last 52 years - genetics that offer very good disease- resistance and that were developed specifically for use in SA and for countries to the north of us in which we operate. A lot of these new technologies take a lot of money (to develop) and you have to have substantial scale to be able to develop and utilise these and bring the products to market," Van Rooyen said. A partner such as Pioneer Hi-bred, which was already heavily invested in Africa, could help bring about the long-awaited African ''green revolution." he said.

Pioneer spokesman Jeff van Niekerk denied the sale would translate into higher seed prices: "Pioneer prices seed based on value delivered to farmers, and that model has remained consistent for the 80+ years we've been in business. Wherever you go in the world, farmers are interested in being more productive - greater yield equals greater profitability for farmers."


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