Posted on Pacific Business News

Hawaii Seed Crop Business Up Sharply
By Charlotte Woolard (November 2, 2007)

The business of growing plants for seed has emerged in the past five years as one of Hawaii's biggest industries as companies spend more money on research and development for new crops.

Seed companies spent nearly $98 million in Hawaii over the past year, up 26 percent from a year ago and more than double what was spent five years ago, according to the Hawaii field office of the National Agricultural Statistics Service.

Those numbers mean that the investment in seed operations, mainly for corn, has grown to rival the sales numbers of sugar, pineapple, coffee and macadamia nuts, food crops that have been emblems of Hawaii agriculture for years.

"The economy looks a lot different from most Hawaii residents' stereotypes of the Hawaii economy," wrote Bank of Hawaii economist Paul Brewbaker in a recent exchange of email with PBN about how dramatically the state's agriculture business, valued at $468 million in 2005, has shifted.

That shift can be seen in the conversion of some former James Campbell Co. land in Central Oahu to seed production.

Since the 1980s, the Kunia area has seen the departure of Amfac Hawaii, Oahu Sugar Co. and most recently pineapple grower Fresh Del Monte. The land now produces the parent seeds, for example, of corn resistant to drought or more efficient in the production of biofuels.

Seed industry heavyweight Pioneer Hi-Bred International Inc. bought about 250 acres in Kunia at the end of 2005. Monsanto Co. purchased another 2,300 acres in April 2006 and is gearing up to begin operations on the land. Syngenta Seeds Inc., in the market for new acreage, also is looking at Kunia, as well as the North Shore of Oahu, said Mark Wall, head of seed operations fo the company's Hawaii operations.

"We're very interested in securing our long-term land interests in the state," he said, referring to expansion plans on Oahu and the west side of Kauai, where the company also has operations. "You'd be hard pressed to find a better continuous nursery environment than Hawaii. It will speed the market."

Hawaii offers something to seed companies that other places do not: three to four growing seasons per year. That frequency allows the companies to produce up to four generations in a single year and move more quickly to market.

The number of possible plantings also creates the potential for a side business for seed companies operating in Hawaii. Molokai Monsanto Hawaii, doing business as Hawaiian Research, for example, conducts trials for universities and private entities that do not want to be slowed by seasonal constraints.

And some research can qualify for the state's high-technology tax credits.

Corn seed made up 96 percent of Hawaii-based research last year, with soybean, sunflowers and other crops contributing to the rest.

"Just about any new corn hybrid sold in the United States would have spent some time in Hawaii during the research and development phase," said Cindy Goldstein, a Pioneer spokeswoman.

Corn plantings on the Mainland surged this year as increased demand for the source of ethanol drove up prices. Biotech seeds made up about 60 percent of the market, and researchers pushed up efforts to produce lines of the crop tailored to meet the demands of ethanol producers.

While increased investment in research and development reflects existing demand and new markets, it also indicates a bullish outlook on the future market for biotech products, especially since the research conducted in Hawaii today won't hit the market for a number of years.

"I would anticipate [growth] because of the value the products have," said Sarah Styan, president of the Hawaii Crop Improvement Association and a Pioneer research scientist. "Our industry is growing, and we have this worldwide demand."

The seed crop industry in 2006 employed about 2,000 people in Hawaii.

Researchers in 2006 estimated the seed industry's impact on the economy at about $144 million, a number based on operational costs of $59 million, with projected capital expenditures of $142 million over 10 years.

Seed production in the state includes the operations of newcomer BASF Plant Science, a German company doing business on Kauai, as well as entities like Pioneer, Monsanto, and Dow AgroScience, a company conducting research on Molokai.

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