Corn and soybeans represent the two most important crops in the US seed market, with the 2001 corn crop worth US$19 billion and the 2001 soybean crop worth US$12 billion (US Department of Agriculture, 2002). Not surprisingly, a large portion of the private research dollars for seed development is in these seeds, which have been the major crops to receive IPP. Just under one-third of all the PVPCs issued out of the hundreds of crops eligible have been for either corn or soybean varieties.
The corn and soybean markets are dominated by the same two firms, Monsanto and Pioneer/Dupont, which in 199 7 accounted for 56% of corn seed sales and 38% of soybean seed sales (Hayenga, 1998).
Although these two seed products are globally similar, some key differences in corn and soybean agronomics and markets imply different firm strategies with respect to R&D as well as marketing strategy. These key differences imply different values to the possible menu of firm strategies with respect to IPRs. Such differences may lead to different firm strategies and market equilibriums presented in the theoretical model in the following section.
A key agronomic difference between corn and soybeans is that corn hybrids, if replanted the following year with saved seed, will not produce reasonable yields, whereas soybeans will produce approximately the same yield when replanted. Thus, soybeans have more durable good properties than corn, for which new seeds have to be purchased every year. Anecdotal evidence suggests that the soybean seeds sold in the market cover no more than three-quarters of the national acreage with the remainder planted with saved seed. The overall size of the corn market is therefore much larger, and farmers make decisions about seeds each year rather than perhaps every other year.
This yearly demand for hybrid corn seed, as well as the larger overall size of the corn acreage planted, means that more research dollars have been used for corn than for soybean. In addition, greater marketing and advertising efforts as well as brand and variety proliferation are present in corn seed than in soybeans. In part because of these higher levels of technological change, marketing and variety proliferation, farmers tend to change their corn seed variety every 2 years, whereas the turnover in soybeans is for every 4 or 5 years. Thus, the effective life of a soybean variety from a company's point of view is about twice as long as that of a corn seed variety.
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