by Debra Fiakas CFA
Sorghum Bicolor photo by Matt Lavin
The post “Ceres Plants Seeds of Success” featured seed and trait developer Ceres, Inc. (CERE: Nasdaq). This agricultural technology company develops seeds and traits for high-energy, low-cost feedstocks like sorghum. Ceres is not the only player in the sorghum game.
The presence of large agriculture products suppliers like Monsanto Company (MON: NYSE) and Dow AgroSciences of the Dow Chemical Company (DOW: NYSE) provide some validation of sorghum demand even if also triggering competitive concerns. DuPont’s Pioneer HiBred (NYSE:DD) is also interested in the sorghum market. Given the size and diversity of these companies, a position of any kind will not be a play on the renewable fuels sector.
There are a number of smaller privately held companies in the sorghum business. Golden Acres Genetics, Ltd. acquired Syngenta’s sorghum seed inventory in June 2011. Golden Acres is a private, family-owned company with an apparent successful history of market penetration and profitability. Do not expect the door to open for minority investors any time soon.
There are few more small suppliers of sorghum seed. You can find Richardson Seeds in the heart of the Texas sorghum seed country. Richardson has been in business for a number of years and has a good reputation with growers. A lesser known seed supplier, Mycogen Seeds, is not reticent about comparing its product line with competing seeds. Mycogen offers six sorghum varieties. Sustainable Seed Company is perhaps the smallest in the group, offering heirloom seed varieties. Size may not be a factor at this point as even small player could own valuable traits that might be sought after.
Acreage in the U.S. devoted to sorghum has ranged from 15 to 18 million acres per year. Farmers dedicate a bit more of their fields to grain sorghum than acreages for oats and barley, but considerably less than the land planted in corn, wheat and soybeans. The U.S. Agriculture Department indicates nationwide sorghum acreage is expected to grow by 22% in 2013. Some of those new acres are being sown in sorghum for animal field. However, we expect more and more sorghum to end up in renewable fuel plants.
Debra Fiakas is the Managing Director of Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.
Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.