Sowing seeds of prosperity

Walailak Keeratipipatpong
Bangkok Post 31/01/2009

Newspaper section: BusinessThe East-West Group is to join the host of companies competing to feed the immense populations of India and China with better-quality seeds.

‘‘Seeing the good yields and high income I obtained this year, my neighbours said they would turn to grow Super Hot chilies,’’ say Mrs Wilaiwan (right) and her husband Piroon.
The East-West Group, which has already expanded from the Philippines to Thailand, aims develop operations in more lucrative markets, where it intends to challenge established players.

East-West is among the market leaders in Thailand and the Philippines. It describes the immense population of countries such as India and China as a great opportunity that will require support from research and development.

But companies such as Namdhari in India, with a dominant national presence in providing seeds for better-yielding crops, could be extremely tough to challenge.

Although India's fast-growing market has already attracted many multinational seed companies, the East-West Group is aiming to be among the top five companies in the country within five years.

The expansion into India and China is part of regional investment plans for the next five to 10 years.

Joost Pekelharing, president of East-West Seed ROH Ltd, a subsidiary of East-West Seed Co in Thailand, said both countries held strong business potential for farm products thanks to huge populations and lower competition in the high-quality seed sector.

The East-West Group, which entered Asia in 1982 by setting up a research farm in the Philippines, opened a 60-million-baht research and development centre in Chiang Mai last week and hopes to use its resources here to enter other markets in the region.

Burma is an interesting country for expanding business, says Mr Pekelteharing.

The company also plans in the very near future to open a US$1-million research and development plant in the Philippines that would help it produce seeds in high volumes for larger markets.

According to the group's research, around 52 million hectares are dedicated to vegetable production globally. About 22 million hectares of these are in China, while India has the second-largest area of vegetable production.

East-West's planned investment involves establishing research farms and seed-production plants in India and China. The group set up research facilities in these countries a few years ago, including research stations in Bangalore and Aurangabad in India and in Nanning in China.

In addition to India and China, the company is looking into more uncharted markets like Burma.

Mr Pekelharing described Burma as an interesting country for expanding business, considering its market size and a population similar to that of Thailand.

The move would also fit the company's goal of gradual geographical expansion to areas in Asia and to tropical regions in other continents such as Tanzania.

He said that having operations in many countries enables East-West to create business synergy between operations to maximise business efficiency. He envisaged companies sharing technological know-how, information and marketing to assist each business.

Simon Jan de Hoop, vice-president for research and development of East-West Seed Co, said the group could select quality seeds from one place and develop them to meet the specific demands of another location. Farmers could also experience farming in other countries. For instance, Indian farmers could learn vegetable cultivation methods from Thai farmers.

Hybrid vegetables normally increase income by 30%, says Mr Sawitr.

But he said the company would continue to base its R&D in Thailand, where it planted its first seed in Chiang Mai 25 years ago, despite increasing its investment in more populated countries.

Thailand has advanced farm technologies and the industry is still moving fast, he said. He added that East-West's latest investment in state-of-the art research facilities in Chiang Mai proves its commitment to developing the seed industry here.

The facility in Chiang Mai, surrounded by over 70 rai of research farms, has become East-West's regional R&D centre. More than 20 researchers and breeders work here to develop high-quality tropical vegetable seeds using DNA markers to select genes from different varieties for higher yields and for properties such drought and pesticide resistance.

Some 25 years ago, the low quality of local seed attracted East-West Group to invest in Thailand, which hosted the company's second operation after a research farm established two year earlier in Lipa, south of Manila in the Philippines, said Mr Jan de Hoop.

Founded by Simon N. Groot, a sixth-generation seedman from Holland, East-West Group has expanded its seed business in many countries. In Southeast Asia its research facilities can be found in the Philippines, Indonesia, Vietnam, India, China and Thailand.

The group now produces 265 varieties of hybrid seeds for 44 different vegetables and flower crops. About 5,000 farmers in the region are contracted to grow seeds. Around 2,000 are in Thailand, where they produce hybrid seeds developed by East-West for a markets of over 100,000 farmers.

Last year, Thailand contributed 420 million baht to the group's consolidated sales of about two billion baht. Top-selling hybrid vegetable seeds in Thailand are still Bittergourd Sae Yid71, introduced in 1988, and Super Hot chili, which won an innovation award in 2003.


The group could select quality seeds from one place and develop them to meet the specific demands of another location, says Mr Jan de Hoop.

Mr Jan de Hoop is confident the current slump will stimulate the seed market as farmers opt for quality seeds for higher yields.

Wilaiwan Noimor, a farmer in San Kamphaeng, grew Super Hot seeds on her six-rai plantation last year and claims handsome returns. She has harvested the peppers six times and so far has earned about 400,000 baht from an average investment of 25,000 baht per rai.

East-West's Super Hot chilies offer a superior hot quality along with disease tolerance and are sold at a high price of 120-130 baht a kilogramme for red chilies and 30 baht for green chilies.

"Seeing the good yields and high income I obtained this year, my neighbours said they would turn to grow Super Hot chilies," said Mrs Wilaiwan.

Sawitr Sangchan, general manager of East-West Seed Co, said hybrid vegetables normally increase income by 30% thanks to higher yields and bigger fruit.

East-West's Thai operation had a market share of about 29% in the 1.5-billion-baht vegetable seed business last year. Its growth was about 8% and it expects to expand 11% in 2009.

It is also moving to develop better breeds of vegetables such as papaya, sweet corn, glutinous corn, sweet pepper and cucumber.

But one of the biggest concerns for the Thai operation is copyright violations of new breeds of seeds. This becomes an issue of concern as seeds sometimes leak from contract farmers, putting years of hard work into competitors' hands.

The firm has therefore urged the government to enforce the protection of new breeds more effectively to encourage investment in research and development.

R&D for a variety of seed takes about five years and has a high investment cost, according to East-West, and the lack of adequate protection has forced some seed companies out of Thailand.

By Bangkok Post On 1 Feb 2009

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