The largest cotton seed company in the world is Bayer.
The second largest? A seemingly tiny Hyderabad-based agri-biotech company that recently bought the Indian cotton businesses of two agricultural giants — Monsanto and DuPont Pioneer.
Today, Tierra Agrotech Private Limited owns Asia’s largest collection of cotton germplasm.
That’s decades of research. Hundreds of crores of investment. Seven truckloads of seed that arrived in air-conditioned tractor-trailers at Tierra’s headquarters in the village of Jabalpur, on the outskirts of Hyderabad, earlier this year. This instantly vaulted the company into India’s top 10 list. Thanks to its seed wealth, six-year-old Tierra now has the power to shape Indian agriculture.
In Tierra’s modest Hyderabad headquarters, an assistant brings hot water in a pint glass to Suresh Atluri, CEO and co-founder. He’s wearing dad jeans, a white shirt, self-tinting glasses, and a grin. “It’s not Budweiser beer,” he kids.
“Beer cannot be clear,” says Parthasarathi Bhattacharya, research director, and co-founder, quite seriously.
“We don’t know, somebody will manufacture white beer, like white wine.” Atluri cracks up.
These are heady times. The company is on track this year to earn Rs 111 crore ($15.5 million) in revenue, primarily from selling Monsanto’s cotton seed inventory, according to Atluri. If true, that’d be 10x Tierra’s Rs 11 crore ($1.5 million) revenue last year. Plus, it had Rs 3 crore ($417,630) in losses, according to financial statements. Then, in August 2017, it was acquired by Grandeur Products Ltd., a Hyderabad-based listed company that pivoted suddenly from selling coffee products to selling seeds. Grandeur paid an unspecified sum for Monsanto’s cotton business and $1.84 million (Rs 13 crore) for DuPont’s, according to stock exchange filings. (The promoters of Grandeur are affiliated with CCL Products (India) Pvt. Ltd.—one of the world’s largest instant coffee manufacturers, which made a Rs 168 crore profit in 2017).
“The MNCs were doing research but they had a disconnect between research and marketing. They have so many products in the pipeline, but they are not in the market.”
PARTHASARATHI BHATTACHARYA, RESEARCH DIRECTOR, TIERRA (LEFT; SURESH ATLURI IS ON THE RIGHT)
The Monsanto purchase made Tierra the target of anti-GMO activists, who believe that genetically altered crops can have disastrous health and ecological effects. Vandana Shiva, an environmental activist, wrote to Indian regulators this year, “Monsanto is pretending to have ‘sold’ business to a four-year-old company Tierra Agrotech… This asset sale needs urgent investigation.”
The acquisitions are fallout from global dealmaking (read our previous story here). Since 2016, six global agricultural giants have merged into three: Bayer-Monsanto, DowDuPont (its agriculture division is now called Corteva Agriscience) and ChemChina-Syngenta. They own 61% of the global seed and pesticide market. “Streamlined, efficient, built-for-purpose” is the new mantra. The companies are ruthlessly culling business units, shutting down research centers, letting go of people. In another month, DowDuPont will close its agriculture research centre in Hyderabad, which opened to much fanfare in 2014 and employed 120 scientists.
Tierra has been fishing in the chum bucket.
“What these people [Tierra] have acquired is something on which Monsanto and [DuPont] Pioneer have worked really hard on,” says Ram Kaundinya, a board member at Advanta Ltd., a Hyderabad-based seed company owned by United Phosphorus Ltd. “The programs are very rich, with a rich pipeline of products. In terms of the potential of those programs to bring new products, I’d place Tierra on the list of best companies in India.”
That’s an elite list. There are 400-plus seed companies in India, but only a handful, maybe 10, have serious breeding programs that give them a robust pipeline of proprietary seeds to propel future growth. More than half of them are multinationals like Bayer-Monsanto and DowDuPont; some others are Indian. The rest are deadwood.
The first thing to know about seeds is that the sector is booming. It was a $2.2 billion market in 2015, growing at a rate of 12% annually. It is expected to reach $14.6 billion by 2030, according to Sunidhi Securities & Finance Ltd, a research firm. Only a quarter of Indian farmers buy seeds—most still save or exchange their seeds informally—which makes companies extremely bullish about reaching into untapped wallets. Farmers are increasingly going the branded route, preferring guaranteed high yields and improved pest resistance.