Neil Palmer/CIAT POLICY BRIEF No. 63 The Latin American forage seed market: Developments, trends, and future opportunities Introduction Key messages Because of global population growth, increased purchasing In Latin America, the forage seed market, although having power, environmental degradation, and a growing demand a fluctuating behavior, has grown over time, mainly for meat, cattle farming faces many challenges regarding the explained by increases in the demand for improved promotion of approaches to sustainable intensification. As forages for grazing systems and animal source foods as a part of satisfying this demand, environmental restrictions well as by national policies that promote the sustainable must be considered, making it necessary to intensify intensification of the cattle sector. production systems through the development and adoption of innovative technologies that allow increasing efficiency The dynamics of the Brazilian forage seed market, which and productivity while decreasing the use of land and other is the biggest supplier of tropical forage seeds, have resources. The transformation of the cattle sector not only considerable effects on the market behavior of importing countries, giving rise to speculation with high uncertainty has future implications but also economic, social, and cultural and risk. connotations in the present. The Latin American cattle sector contributes with approximately 30% of the global beef trade Traditional cattle practices and poor access to technical and 46% of the agricultural gross domestic product (GDP) of the information limit further growth of the forage seed region. It also employs a significant part of the rural population market. In this context, it is important to support the and 80% of the producers in the region are smallholder participation of commercialization and extension farmers (FAO, 2016). All these attributes can be understood as institutions in the adoption of good production practices important for the achievement of the Sustainable Development and new technologies as well as in the modernization Goals (SDGs). of cattle farms. This generates a strong demand for improved forage seeds. Given the importance of the sector and the challenges it faces, recent decades have seen an increase in both the cattle The poor articulation of the actors involved in the herd and grassland areas of several countries in the region, forage seed system (e.g., commercialization, research, highlighting the extensive nature and inefficient production extension, regulatory, and political institutions) prevents practices that in the long run translate into low competitiveness. the recognition and supply of the needs of the cattle sector and diminishes growth opportunities, thus The adoption of improved forage technologies has been one explaining why the forage seed market is characterized as of the tools selected for the achievement of the SDGs since being inefficient and rudimentary. November 2021 these technologies have the capacity to contribute to the sustainability of production systems (Peters et al., 2001). The literature has documented a wide range of benefits of forage-based livestock systems in both environmental and socioeconomic terms. Improved forages have the potential to contribute to climate change mitigation and adaptation and help regenerate degraded pastures by improving soil fertility. Additionally, some materials are drought tolerant or support waterlogging conditions, are resistant to biotic stresses, decrease soil nitrification, and help diminish greenhouse gas (GHG) emissions produced by enteric fermentation (Bryan et al., 2013; Gerber et al., 2013). Forages can also thrive on less fertile land, thus supporting the production of food where often nothing else can be cultivated. They also stand out in terms of yield (measured as the amount of biomass produced per hectare), nutritional quality, and their efficiency in the conversion of forage biomass to animal protein. All these attributes allow for the development of a more productive, technified, and competitive cattle sector, with higher production, less environmental impact, and comparative advantages. Despite all these advantages, the processes of production, distribution, and adoption of improved forages in Latin America have undergone intricate development. Multiple factors have been limiting adoption throughout the technology diffusion process, such as a lack of resources for training (Rao et al., 2015) and the limited coordination between institutions, both related to research and development or productive aspects, seed marketing companies, and producer associations and extension Neil Palmer/CIAT agents, among others (Rudel et al., 2015). This study aims at analyzing the forage seed system in Latin America. Precisely, we provide information on the involved players, their access to information and financing, and Data approach the institutional processes by which technology transfer is generated. We include an analysis of limitations and obtainment and bottlenecks as well as future opportunities of the Data were obtained during the period 2020–2021 through forage seed market. Based on that, we provide policy a literature review, secondary data analysis (e.g., analysis recommendations that allow improving the efficiency of of a database on the import and export of forage seeds), the market and supporting sustainable intensification of and in-depth interviews with 13 main forage seed the cattle sector. suppliers in Latin America. Through a descriptive analysis of market behavior, the characteristics and operation Objectives of the forage seed market for various Latin American countries were detailed (i.e., actors involved, market To analyze the behavior and potential of the tropical evolution and expansion limitations, informal market, forage seed market in Latin America. and future perspectives). We included the following To identify limitations and opportunities in the countries in our study: Colombia, Bolivia, Argentina, Costa commercialization of tropical forage seeds. Rica, Guatemala, Mexico, Nicaragua, Ecuador, Paraguay, Honduras, Brazil, and Panama. Because of limitations 2 | POLICY BRIEF regarding data availability, especially data related to (28.8%), Mexico (12.3%), Bolivia (11.6%), and Panama the area sown with forages in each country and forage (10.3%). Bolivia shows a continuous growth in sales of seed prices, we estimated the potential market, but forage seeds because of formalization processes aimed at only for Colombia, Costa Rica, and Bolivia. The market strengthening the adoption of forage technologies. Of the potential was defined from a sustainable intensification total commercialized seed volume in the region, improved perspective, which includes the area currently used for forage varieties make up 89% and hybrid forage varieties cattle production that requires improvement strategies 11%. Regarding improved forage varieties, Brachiaria (productivity increases and environmental impact brizantha cv. Marandú is the most commercialized material: reduction). from 2006 to 2018, 1,687 tons of its seed were sold on average annually. When it comes to forage hybrids, Results and analysis Brachiaria hybrid cv. Mulato II was the most sold material from 2012 to 2020, with approximately 532 tons per year on average (Figures 2 and 3). It is important to highlight Market behavior that, within the hybrid forage portfolio, Camello and Mestizo Blends entered the market only in 2018 and The forage seed market can be divided into the production reached an average annual sales volume of 24 and 48 tons, and marketing of introduced and hybrid varieties. From respectively. 2006 to 2017, the market for forage seeds had a fluctuating but growing behavior, with an average annual growth Brazil and Mexico are the main producers and exporters rate of 2.3% for improved forage varieties (Figure 1) and of forage seeds for the lower tropics in Latin America. 52% for forage hybrids. Fluctuations are usually due to As can be seen in Figure 4, Brazil has high market power regulatory policies, taxes, cultural traditions, behavior over the other countries of the region and is understood of the international market, climatic phenomena, and as a highly influential actor by the other countries for the socio-political variability, among others. These factors determination of both the varieties to be commercialized affect seed marketing, that is, in those countries that and seed prices. receive most of the seed imports, such as Colombia 8,000 7,234 7,143 7,000 6,897 6,158 6,048 6,000 5,000 4,625 4,900 4,000 3,484 3,000 2,000 1,000 472 1,175 391 309 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Figure 1. Behavior of the seed market for improved forage varieties commercialized in Latin America from 2006 to 2017. Source: Own elaboration based on Papalotla (2019) and Burkart (2021). The Latin American forage seed market: Developments, trends, and future opportunities | 3 Tons 3,500 3,000 2,500 Brachiaria brizantha cv. Marandú Brachiaria decumbens cv. 2,000 Basilisk Brachiaria brizantha cv. Toledo 1,500 (CIAT 26110) Panicum maximum cv. 1,000 Mombasa Others 500 0 Figure 2. Sales volumes of the main improved forage varieties in Latin America (2006 to 2018). Source: Own elaboration based on Legiscomex (2020). Mulato, Mulato II Mulato II Mestizo Blend CIAT BRO2/1794 CIAT BRO2/1752 Camello Blend Mulato, Mulato II Mulato II Mestizo Blend CIAT BRO2/1794 CIAT BRO2/1752 Camello Blend Mulato, Mulato II Mulato II Mestizo Blend CIAT BRO2/1794 CIAT BRO2/1752 Camello Blend Mulato, Mulato II Mulato II Mestizo Blend CIAT BRO2/1794 CIAT BRO2/1752 Camello Blend Mulato, Mulato II Mulato II Mestizo Blend CIAT BRO2/1794 CIAT BRO2/1752 Camello Blend 0 50 100 150 200 250 300 350 kg (thousands) Figure 3. Sales volumes of hybrid forage varieties in Latin America (2001 to 2019). Source: Own elaboration based on Burkart (2021). 4 | POLICY BRIEF Argentina Brazil Colombia Mexico Venezuela kg (thousands) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Argentina 207 Venezuela 313 Colombia 341 Cuba 520 United States 2,372 Panama 2,848 Mexico 4,162 Paraguay 4,776 Bolivia 7,583 Colombia 10,437 0 2,000 4,000 6,000 8,000 10,000 12,000 kg (thousands) Figure 4. Forage seed-exporting countries, their destinations, and export volumes (2015 to 2019). Source: Own elaboration based on Legiscomex (2020). In some countries, changes in seed preferences toward new varieties occurred over time, whereas, in others, traditionally marketed varieties maintained their market shares. Regarding hybrid forage seeds, participation is low in the overall forage seed market in each of the countries analyzed, ranging from 1% to 15%. However, market development has been positive since the inception of the first hybrid in 2001, when seed sales volumes in Latin America reached only about 5 tons, whereas, in 2020, volumes already surpassed 728 tons. Brazil is the main destination for forage hybrids, representing 48.95% of the total seed sales, followed by Mexico with 26.61%. Venezuela, Colombia, and Argentina follow with a lower participation, representing 5.00%, 4.83%, and 4.69% of the demand, respectively (Burkart, 2021). Functioning and main limitations of the forage seed system The Latin American forage seed system involves different actors that directly or indirectly influence its development. Limitations persist and include, for example, seed smuggling, dependence on external factors (e.g., climate, cattle prices, market dynamics in Neil Palmer/CIAT The Latin American forage seed market: Developments, trends, and future opportunities | 5 Brazil Mexico Brazil), slow bureaucratic processes, and the decrease in one that entails difficulties. When companies export the local consumption of beef, among others. improved forages to certain countries and observe a low Direct actors comprise the Brazilian and Mexican demand, they stop or diminish their activities, leaving seed-exporting companies, the seed importers and the market to the distributors of traditional materials. distributors in the importing countries (which also carry The limited demand, however, might be the result out training processes), and the research entities that only of knowledge lacking among the end-users. If the develop forage technologies. Indirect actors are extension commercialization processes were supported by research, and technical assistance providers, regulatory entities technical assistance, extension agents, and a normative responsible for the control and regulation of the materials and political framework that encourages the adoption of being imported and commercialized, and governmental new technologies, the market would demand new and institutions (e.g., ministries of agriculture) that establish better materials. For hybrid forage varieties, the high the framework in each country. prices (when compared with those of other improved or traditional forage varieties) and the higher requirements Regarding the limitations of the seed system (i.e., when in terms of management for cattle producers stand it comes to the adoption of forage seeds), cultural out as limiting factors, which is also related to limited aspects, scarce collaboration between actors (research purchasing power and difficulties in obtaining financing. and development institutions, seed producers and The promotion of new materials and associated technical distributors), slow bureaucratic processes, and constant training for producers, however, increase the use of variations in seed prices associated with a dependence improved varieties. on the dynamics of the Brazilian market are observed. Most of the countries emphasized the high seed prices As an example of this, in Nicaragua, we observed that and additional planting and management requirements cattle producers were reluctant to use the information as limitations. Since most cattle producers have limited provided by seed distributors, but changed their attitude purchasing power and difficulties in accessing other once the Agrarian University and the Nicaraguan Institute means of financing, it is difficult for them to adopt more of Agricultural Technology (INTA) were the ones providing costly varieties. the information. In Colombia, when Papalotla carried out farmer training and marketing campaigns, the Cultural factors associated with cattle production dissemination and adoption of forage hybrids increased. are among the constants within the limitations of the seed system since a large proportion of producers are traditionalists and reluctant to adopt technological changes in their production systems. This is due to a deep-rooted tie to the technologies and production methods used in the region for generations. Likewise, many adoption decisions are made based on the observed success or failure neighbors have, without considering the particular conditions of the own farm. In many cases, this is linked to the lack of access to information about the benefits of new forage technologies as well as pertinent training that allows understanding and improving particular farm characteristics. In other cases, it is linked to a lack of financing, which means that, even when a producer identifies a suitable technology for adoption, he does not necessarily have the purchasing power to access it. This leads to another limitation: the poor articulation of the actors in the forage seed system. Each of the involved actors has vital functions for the proper functioning of the system, but they all perform their functions in isolation, generating significant distortions in the system. Seed distributors make their own marketing decisions based mainly on market demand, a logical premise, but José Urrea/Alliance of Bioversity International and CIAT 6 | POLICY BRIEF Forage seed market potential and buyers), influence decisions made on the market. Table 1 presents the estimates of the potential market All the countries included in this study have a high for Colombia, Bolivia, and Costa Rica. In Colombia and market potential for improved forage seeds. This can be Bolivia, the annual market potential amounts to more than explained by direct and indirect factors. Among the direct USD 300,000,000, favored by the possibility of converting factors, the possibilities of cultivating new land properly areas from natural to improved pastures, particularly with stand out, considering the aptitude for cattle production forage hybrids. and the adoption of good animal husbandry practices. Likewise, the still high proportion of traditional or Table 1. Annual market potential for improved forage seeds for Colombia, naturalized pastures in some countries stands out. Among Bolivia, and Costa Rica. the indirect factors, the growth of the beef industry stands out, influenced by global population growth and increasing income, China’s new role as an importer of Country Market potential beef, and the entry and consolidation of some countries (USD/year) in the international market, among others. Likewise, Colombia 364,470,460 the orientation of national policies toward achieving sustainable intensification of cattle systems increases Bolivia 310,052,296 the demand for improved forage seeds. The prospects Costa Rica 15,652,737 for market expansion have effects on other actors, who, although not directly involved (such as seed companies Source: Own elaboration. Policy recommendations To improve the efficiency of the forage seed system in Latin America, the different actors must work together. Research should support commercialization (and vice versa) and be accompanied by extension and technical assistance. Control entities should consider market dynamics. Government agencies should ensure the adoption of new technologies through the creation and execution of public policies and incentives. Research institutions should be encouraged to carry out studies aiming at modernizing the forage seed market. This must go hand in hand with seed commercialization processes and extension efforts so that the research is properly applied and generates the expected results. Both the forage seed market and the cattle industry present opportunities for growth. Taking advantage of these opportunities translates into challenges that must be assumed. The implementation of public policies related to financing and research, support services for cattle producers, and regulatory frameworks that encourage the adoption of improved forage technologies are necessary. The Latin American forage seed market: Developments, trends, and future opportunities | 7 Acknowledgments Peters, M., Horne, P., Schmidt, ... et al. (2001). The role of forages in reducing poverty and degradation of natural resources in tropical production systems. Agricultural Research and Extension Network. No. 117. Retrieved from: This work was carried out as part of the CGIAR Research https://cdn.odi.org/media/documents/5218.pdf Program on Livestock. We thank all donors who globally support our work through their contributions to the CGIAR Rao, I., Peters, M., Castro, A., ... et al. (2015). LivestockPlus – The sustainable intensification of forage-based agricultural systems to improve livelihoods system. The views expressed in this document should not and ecosystem services in the tropics. Tropical Grasslands-Forrajes Tropicales. 3, be taken as the official views of these organizations. pp. 59-82. https://doi.org/10.17138/TGFT(3)59-82 References and Rudel, TK., Paul, B., White, D., ... et al. (2015). LivestockPlus: Forages, sustainable intensification, and food security in the tropics. Ambio. 44, pp. 685-693. further reading https://doi.org/10.1007/s13280-015-0676-2 White, D., Peters, M. Horne, P. (2013). Global impacts from improved tropical forages: A meta-analysis revealing overlooked benefits and costs, evolving Bryan, E., Ringler, C., Okoba, B., ... et al. (2013). Can agriculture support climate values and new priorities. Tropical Grasslands-Forrajes Tropicales. 1, pp. 12-14. change adaptation, greenhouse gas mitigation and rural livelihoods? Insights https://doi.org/10.17138/tgft(1)12-24 from Kenya. Climatic change. (118), pp. 151-165. https://doi.org/10.1007/s10584-012-0640-0 Burkart, S. (2021). Database on the commercialization of Urochloa hybrids in the About the authors global tropics and subtropics, 2001-2020. https://www.slideshare.net/secret/MsaoHQG7cHBQPD Irieleth Gallo-Caro is an economist and independent researcher. FAO. (2016). Ganadería de América Latina y el Caribe puede jugar rol clave en el dgallocaro@gmail.com logro de los Objetivos de Desarrollo Sostenible. Karen Enciso Valencia is an economist and research associate, http://www.fao.org/americas/noticias/ver/es/c/421098/ Tropical Forages Program, Alliance of Bioversity International and CIAT. Gerber, PJ., Steinfeld, H., Henderson, ... et al. (2013). Tackling climate change k.enciso@cgiar.org through livestock – A global assessment of emissions and mitigation opportunities. Food and Agriculture Organization of the United Nations (FAO), Manuel Francisco Díaz is a political scientist, economist, and research Rome. Retrieved from: https://www.fao.org/3/i3437e/i3437e.pdf associate, Tropical Forages Program, Alliance of Bioversity International and CIAT. m.f.diaz@cgiar.org Legiscomex. (2020). Sistema de inteligencia comercial. Estadísticas de comercio exterior [Base de datos]. Retrieved from: https://www.legiscomex.com/ Stefan Burkart is an economist, social scientist, and theme leader, Tropical Forages Program, Alliance of Bioversity International and CIAT. Papalotla. (2019). (Base de datos). Exportaciones de pastos desde Brasil al s.burkart@cgiar.org mundo 2006-2018. Accessed on 4 November 2021. Correct citation Gallo-Caro I; Enciso Valencia K; Díaz MF; Burkart S. 2021. The Latin American forage seed market: Developments, trends, and future opportunities. Policy Brief No. 63. International Center for Tropical Agriculture (CIAT). Cali, Colombia. 8 p. CONTACT Stefan Burkart s.burkart@cgiar.org The Alliance of Bioversity International and CIAT is part of CGIAR, a global research partnership for a food-secure future dedicated to reducing poverty, enhancing food and nutrition security, and improving natural resources. https://alliancebioversityciat.org www.cgiar.org