Peter Einarsson
This fall a major merger will become effective in the Swedish seed business scheme. Two major Swedish breeding operations, Svalöf and Weibull, became Svalöf-Weibull AB, with the new 100% owner being Svenska Lantmännen AB, which is the central holding company of the Swedish farmers ' cooperatives. The merger puts the new company high in the top ranking of seed corporations worldwide. It responds to the business logic of "Big is Beautiful", but what might be lost in the process is the unique public service that both Svalöf and Weibull provided to Swedish farmers over the past 100 years. Peter Einarsson followed the process from close by and reports for Seedling.
The merger between Sweden's two major breeders Svalöf and Weibull was negotiated last December and becomes effective this fall. It results in a formidable monopoly on the national seed market, and in a breeding operation ranking among the runners-up on the transnational toplist. But there is also a symbolic significance to this deal between two companies that can boast each a history of more than 100 years. Svalöf was an originally non-profit, and for a long time quasi-public institution doing not only commercial breeding, but also a great deal of basic genetic research. Weibull was a classic example of the family seed business, started up by a farmer in 1870. In several respects, the new Svalöf-Weibull AB is not a continuation of either tradition, but a definitive endpoint to both.
Combined, Svalöf and Weibull have a yearly turnover of more than $US 400 million. Before the merger they employed close to 1400 persons, but drastic cuts are already under way. The new corporation will no doubt be managed entirely according to crass business principles, something that has not been true for either of its precursors until very recently. Both conserved for a long time something of the public service character common also among commercial breeders in the earlier part of the century.
It is an old idea that is realised with the merger between the two companies, physically neighbours on the Öresund coast in southwestern Sweden. Last time a deal was close was in 1984, but some date first merger discussions all the way back to 1907. New 100% owner of Svalöf-Weibull is Svenska Lantmännen AB, the central holding company of the Swedish farmers ' cooperatives. No price has been disclosed, but informed guesses say it should be in the neighbourhood of $ US 30 million for all of Weibull plus the remaining half of Svalöf. Lantmännen already had a 50 % share in Svalöf, the other half being held directly by the state. In somewhat varying forms, Svalöf has been controlled by these two interests throughout most of its history.
The ownership of Weibull, on the other hand, has shifted several times since the Weibull family sold out to the investment company Cardo in the 70 's. The Cardo group in turn sold all its industrial activities to Volvo's food products subsidiary Provendor in 1986, including both Weibull and biotech-profiled breeder Hilleshög. Provendor attempted for a while to coordinate Weibull and Hilleshög activities under one umbrella, but very soon offered its seed interests for sale when Volvo decided to leave the seeds business altogether. Hilleshög was swallowed up by Sandoz in 1989 but Weibull suffered lack of interested buyers at that time. Late in 1990, however, most of Provendor, including Weibull, landed in the hands of a state holding company, Procordia.
Thus, negotiating the Svalöf Weibull merger was now a fairly straightforward business, the state being the only seller and the buyer, Lantmännen, already owning half of Svalöf. The deal also fit very nicely into the bold privatisation plans of the new Conservative Swedish government, which include most state-owned industries, from mines and steel to telecommunications. And with Swedish anti-trust laws still considerably weaker than in the Common Market, competition-watching authorities had to accept even this practically total monopoly in the national seed trade.
For Lantmännen, complete control over national seed production and sales is probably the main reason for the take-over. Lantmännen already had a near-monopoly in seed distribution in Sweden, in close cooperation with Svalöf. But Lantmännen have also shown, in later years, a growing taste for attacking international markets, and their formal function as a cooperative service company to Swedish farmers will probably not discourage them from aggressively pursuing the transnational expansion that both Svalöf and Weibull have entered into during the past 15 years. To the new company, Svalöf brings subsidiaries in the US and New Zealand, and substantial international sales especially in grains and rapeseed, with testing stations of their own in Spain, France and the UK. Weibull brings in subsidiaries in several European countries, most notably the recently acquired Semundo in Germany. (Weibull-owned Suttons in the UK, however, is not part of the deal, and will probably be offered for sale in Britain.)
Weibull: the family company
Weibull was the typical family business. Founder Walfrid Weibull began in 1870 to sell beet and other root crop seed. The seed import and seed growing business expanded into breeding activities. In 1907 Weibull hired their first scientifically trained breeder, and gradually the product line was broadened into other kinds of agricultural seed, vegetables and flowers.
From the 1920 's, some breeding work at Weibull was done in cooperation with the Swedish government, and as long as the company remained in the family it supported a margin of activities clearly outside the purely commercial interest.
Most notable is the famous collection of pea landraces accumulated and maintained by Weibull over a long period. When Volvo took over in 1986, however, its economy did not permit continued responsibility, and the collection was transferred to the Nordic Genebank - along with its curator, Stig Blixt, who is today the genebank director.
Svalöf: the public/private hybrid
Svalöf's history is more complicated and unusual. It was, as it were, a hybrid all the way from the beginning. Its origins go back to the formation, in 1886, of a non-profit association for plant breeding and seed production in southern Sweden, sponsored by a number of progressive larger farmers. Early efforts concentrated on cereals, working first with simple mass selection, later on with pedigree seed, and after the turn of the century also with Mendelian cross-breeding. Already in the 1890 's, the association created a commercial branch to handle seed multiplication and sales of its new varieties. But the emphasis was not on business.
To the contrary, Svalöf evolved in the early years of the century into a remarkable centre for basic research in genetics. When Sweden's first genetics institute was established at nearby Lund University in 1917, this was a direct result of the work done at Svalöf under legendary Professor Nilsson-Ehle, who also became its first director.
For a long time to come, leading universities recruited their genetics and plant breeding professors from Svalöf. Several institutions also had part of their activities located there, and sometimes subsidised by Svalöf. Still today, there is close cooperation between the company and the Swedish Agricultural University. Thus, for a number of years, Svalöf's non-commercial branch - the Swedish Seed Association - was for all practical purposes regarded as a university institution in itself, and to a large extent financed by the government.
Another aspect of Svalöf's non-commercial activities has been the involvement in development assistance projects. From 1960 on, post-graduate courses for Third World plant breeders were arranged at Svalöf in cooperation with FAO and SIDA, the Swedish International Development Authority. One of the young trainees, who claims he benefitted greatly, was Melaku Worede, well-known to many Seedling readers as director of the Ethiopian Genebank and chair of the FAO Commission for Plant Genetic Resources. Later, in the 1980 's, Svalöf assisted the Zambian government in establishing the Zambia Seed Company, which was set up much after the Svalöf model with the state and farmers ' coops as partners with equal shares. (Svalöf also, at the request of the Zambian government, became a 20 % shareholder.)
But also during the 1980 's, the public service character of Svalöf began to erode. Government support to plant breeding has dwindled, and may be discontinued altogether. As a consequence, Svalöf has cut down on the number of regional testing stations in Sweden, and breeding for Northern Swedish climate - pretty Arctic - has shrunk to a fraction of what it once was. The same week that the merger was announced last December, plans to close still another testing station were revealed. In the long run, this would impede among other things the development of new red clover varieties for harsh climates. The funny thing is, one Svalöf employee has said, that everybody talks about how valuable legumes are for our soils, but no one wants to pay the cost of getting out good varieties.
Farmers to lose out?
The Svalöf-Weibull merger is by and large a parallel to the Thatcher government's sale of the Plant Breeding Institute to Unilever in 1987, only a little less obvious. Svalöf in effect has been the official Swedish plant breeding institution. Now the government pulls out altogether and assists in the setup of a completely commercial corporation with transnational aspirations. That the new owner is not Sandoz or Unilever, but the united farmers ' coops, makes the deal more politically palatable, but in reality will make a marginal difference at best. There is simply no money in regional breeding. A breeding company without public support must cater to a global market, or go bust. Or in the words of Göran Kuylenstjerna, the new company's president: "internationalization is a question of survival"
And maybe Svalöf-Weibull will be able to survive at least a while in competition with the global giants. A fairly strong market position in certain crops, including cereals and rapeseed, may testify to that. On the Swedish market, both companies have been offering a full line both of agricultural and garden seeds. Simple business logic says their coordination will inevitably lead to a shrinking range of choices for farmers and gardeners. Already, uniformity is striking, especially in the main crops, with for example Weibull winter wheat Kosack being planted on 91 % of the winter wheat area.
What certainly will not survive, however, is the public service spirit, the regional attachment, the disinterested scientific curiosity, and the commitment to national agricultural development, that once animated the founders of Svalöf and Weibull. Is it an irony of history that this accomplishment can be the pride of a Conservative government?