Vilmorin & Cie - Annual report 2017-2018

1 ANNUAL REPORT Vilmorin & Cie 41 2017-2018 1.6.2.2. North America: a major market A leading region for vegetable and corn seeds In the United States, Vilmorin & Cie holds strong positions and is in the top three players that share more than two thirds of the market for corn and for vegetable seeds (Internal source) . Since it covers the territory efficiently, Vilmorin & Cie holds all the assets it needs to pursue its growth on this major market, even though the market for vegetable seeds went through a temporarily difficult period. This information is presented in detail on page 23. Representing 44% of the global market for seeds, North America is the largest seed market in the world in value. (Source: Phillips McDougall 2018) . A long-term growth zone for wheat Average wheat yields today in the United States stand at 3 tonnes per hectare while they stand at almost 6 tonnes per hectare in Europe. Dominated, particularly in certain southern states, by low yield farm seeds, the North American market is lacking in any major innovation, whereas in Europe, seed companies are very active in wheat breeding, proposing varieties that continue to improve their performances. Faced with the inevitable evolution of the North American market towards seeds guaranteeing a better performance, especially in yield, Vilmorin & Cie has a major opportunity to exploit its expertise in this crop and contribute to converting the market. In this respect, Canada represents a zone of great potential for Vilmorin & Cie, following the evolution of Canadian legislation, which in the coming years will result in the application of royalties* on wheat seeds. Vilmorin & Cie is actively structuring its wheat research program dedicated to this country, through its joint venture Limagrain Cereals Research Canada, set up in July 2015 with the Canadian company Canterra Seeds. 1.6.2.3. Asia and South America: two priority areas for investment in the short term Asia and South America have been defined as two priority areas for development, considering the current size of their markets and their growth potential. Asia: an essential development area With the continuous growth in population and the evolution of consumption habits, the Asian market is growing regularly and today represents almost 15% of the world market in value (Source: Phillips McDougall 2018) . Asia represented about 8% of Vilmorin & Cie’s sales in 2017-2018, achieved mainly in Japan, India and China. Besides the two countries initially targeted – India and China – Vilmorin & Cie has expanded its presence in Southeast Asia in recent years, with the acquisition of the Thai company Seed Asia (Field Seeds) in 2014, and the Vietnamese company Tropdicorp (Vegetable Seeds) in 2015. For Vilmorin & Cie, development in this zone is a clear strategic objective, both in vegetable seeds and field seeds, with an approach combining respect for cultural specificities and protection of intellectual property. In a long-term perspective, Vilmorin & Cie’s ambition is to make 15% of its consolidated sales on this continent. South America: No. 2 world market for seeds With average annual growth of almost 5% over the past 5 years, the South American market represented more than 20% of the world market for seeds in 2017 (Source: Phillips McDougall 2018) and offers very significant potential for development. However, after making strong progress during fiscal year 2016-2017, particularly in Brazil, the market environment proved particularly difficult this year for corn seeds. This information is presented in detail on page 29. In this context, Vilmorin & Cie made sales of more than 110 million euros on this continent (1) , as opposed to more than 120 million euros the previous fiscal year and more than 80 million euros in 2015-2016. Historically, South America has provided Vilmorin & Cie with the opportunity to reinforce its capacity to produce counter-season seeds. For Vilmorin & Cie this has, for several years, also become a zone for commercial development, with field seeds as a priority. 1.6.2.4. Africa: a market with potential Even though the market for seeds in Africa today represents less than one billion USD (Sources: Phillips McDougall and ISAAA 2018) , it is assured of considerable development in the long-term, especially because of extremely dynamic population growth. Africa will hold almost one quarter of the world’s population by 2050 (Source: United Nations Food and Agriculture Organization/FAO) . Already present with vegetable seeds, in particular in North Africa and South Africa, Vilmorin & Cie set up business at the beginning of 2013 on the market for corn seeds, the most widely grown crop in Africa, by acquiring Link Seed in South Africa. Vilmorin & Cie has also held a minority stake since fiscal year 2013-2014 in Seed Co, the top seed company in Africa. On June 30, 2018, this stake stood at 29.45% of Seed Co’s capital stock. (1) Mexico excluded. 1.6. Strategy and perspectives PRESENTATION of Vilmorin & Cie