Dutch company sows seeds of success in South-East Asia (Feature)

By Peter Janssen Jun 24, 2009, 5:28 GMT

   Chiang Mai, Thailand - Bitter gourds, super-hot rat-shit chilli peppers and sticky-rice corn don't seem the typical fruits of Dutch technology.

   But order a bowl of 'keng juet ma-ra yat sai' or 'bitter gourd stuffed with minced pork soup' in Thailand and chances are you will sample the handiwork of East-West Seed Company, a Dutch-Thai joint venture that has been pioneering hybrid seed technology in the kingdom for the past 25 years.

   East-West set up its Chiang Mai research farm in 1984, two years after it had established a similar operation in the Philippines.

   The group now has joint ventures in Indonesia, the Philippines, Thailand and Vietnam, with an annual regional revenue from seed sales of 65 million dollars. It has recently launched operations in southern China and India.

   In Thailand, East-West claims 28 per cent of the 1.5-billion-baht (44-million-dollar) vegetable seed market, making it the market leader, said East-West vice president of research and development Simon Jan de Hoop.

   Sources at Chia Tai Company, part of Thailand's giant agro-conglomerate Charoen Pokphand, which once dominated the domestic seed trade, acknowledged that East-West was their main rival in the seed business.

   East-West founder Simon Groot's family had been in the vegetable seed business in Holland for six generations.

    In 1981 he decided to pioneer hybrid seed production in South-East Asia after his family firm, Sluis & Groot, was bought up by Sandoz, which later became Novartis International AG and Syngenta AG.

   While other larger European and US seed firms have concentrated on the emerging markets of China and India, East-West has focused on South-East Asia, with good results.

   'It took 10 years to break even but now we are making good money, with 15 per cent growth in sales a year,' de Hoop said.

   Three decades ago the concept of hybrid seeds was still new to Thai farmers, who were used to selecting their own seeds for replanting.

   Hybrid seeds are made by cross-breeding distinctly different parent plants to produce a new variety with characteristics from both parents that provide obvious benefits such as greater yields, disease resistance, better taste and longer shelf life.

   Like mules, the offspring of a horse and donkey, hybrids can generally not be replicated in nature as they lose their unique characteristics in the process, and therefore need to be purchased anew for each crop, which is good news for seed suppliers.

   It took East-West three years to persuade Thai farmers to buy their hybrid bitter gourd seeds, even though the new seeds produced bigger, tastier gourds and increased production 50 per cent.

   In 1987, the use of hybrid bitter gourds accounted for only 5 per cent of the Thai market. By 2000 it was 60 per cent and in 2008, 90 per cent.

   'Thai farmers are quite progressive, so they adopt new technologies quickly,' de Hoop said. 'In the Philippines they are more conservative but once you are in the market you are very strong.'

   East-West claims to have 60 per cent of the seed market in the Philippines.

   In Thailand, the market is more competitive. Farmers quickly switch from East-West to other companies' hybrid seeds if the new seeds produce more and cost less.

   Past Thai success stories have included East-West's super hot rat-shit chillies, that are bigger, spicier and have a longer shelf life than the non-hybrid local varieties, and sticky-rice corn, a popular snack in Thailand.

   But these hybrid seeds have been imitated by competitors.

   To stay ahead, East-West this year invested 60 million baht (1.7 million dollars) in new research and development (R&D) facilities in Chiang Mai, including a molecular lab that allows the group to study the DNA of plants and speed up its cross-breeding and plant culture procedures.

   The Chiang Mai staff now includes 20 Thai scientists, recruited from Thai universities.

   Similar investments have been made in the Philippines, but Chiang Mai still boasts the group's only molecular lab.

   East-West is already playing a role in preparing South-East Asian farmers for global warming through its development of hybrid seeds for more heat-tolerant vegetables, such as tomatoes that do well in the hotter lowlands of Indonesia and the Philippines.

   'If temperatures go up one to two degrees [because of global warming], these seeds will be suitable for farmers everywhere,' de Hoop said. 'Before people were talking about global warming we were already breeding seeds for off-season vegetables.'