SACRAMENTO, California – August 2019- S&W Seed Company (Nasdaq: SANW) announced the expansion of its Australian agriculture market presence through the addition of elite wheat germplasm to its portfolio of products. Under its exclusive, prepaid license from Corteva Agriscience, S&W will immediately offer a number of commercialized varieties to the Australian market. S&W will also continue a breeding program for varieties which S&W believes have the potential to offer a number of benefits to Australian wheat growers as compared to existing commercial varieties, including superior disease resistance, superior yields and grain quality to suit the diverse Australian conditions. The addition of wheat to the S&W portfolio, which also includes sorghum, alfalfa and sunflower, advances S&W’s strategic objective to become one of the leading suppliers of elite seed genetics to Australian farmers.
The license has an initial term of 15 years. S&W will own any new distinct wheat varieties generated from its breeding program.
Mark Wong, President & CEO of S&W Seed Company, commented, “S&W has significantly expanded its presence in the Australian market with a goal to become a one-stop supplier of elite seed genetics to Australian farmers. We believe the addition of a wheat program in Australia enhances our crop portfolio with excellent synergies to our existing business. We expect that the ability for our field-based sales teams to now have more opportunities to visit key customers will further build brand awareness and loyalty across our expanding crop portfolio of sorghum, alfalfa, sunflower and now wheat.”
Australia produces around 24.3 million tons of wheat on approximately 30 million acres of production annually. Wheat is Australia’s largest grain crop with a gross value reported at over US $4 billion. Up to 70% is exported into Southeast Asian countries.
The wheat market in Australia operates under an End Point Royalty (“EPR”) System in which the wheat variety owner earns a fixed royalty on every ton of grain produced. The applicable EPR varies by variety, but typically ranges from US $2to US $4 per metric ton. Under EPR systems, variety owners such as S&W do not produce or hold commercial seed inventories or sell seed. Industry partners increase commercial quantities of planting seed and distribute to growers. Varieties are tracked along the supply chain and, when grain is ultimately delivered to the grain buyer or end user, the EPR is collected and delivered to the variety owner.
Nicholas Willey, who joined S&W in 2018, was previously the lead Northern Wheat Breeder for the Dow AgroSciences wheat program tasked with designing, implementing and executing breeding and selection plans to deliver high yielding, disease resistant wheat varieties. Willey will oversee the Australian wheat program for S&W.
S&W will immediately take on a number of commercialized varieties in the market, including “DS Bennett,” a winter, white grained, dual purpose variety with excellent grain recovery offering long grazing potential, and opportunity for hay. Additionally, S&W licensed “DS Pascal,” a longer season spring wheat suited to Southern Western Australia, Victoriaand Southern New South Wales with numerous market leading characteristics, including pre-harvest sprouting tolerance, powdery mildew resistance, excellent standability, and a strong disease profile with excellent stripe rust resistance and yellow leaf spot tolerance. New elite varieties in the breeding pipeline are currently entered in National Variety Trials and are slated for release in April 2020. The program aims to deliver varieties to all wheat growing regions that fit diverse agronomic systems and increase the bottom line of Australian growers.
S&W anticipates receiving an EPR on approximately 230,000 metric tons of wheat grain delivered in FY20 with plans to grow market share year over year. The program is expected to be EBITDA break-even in FY20 and contribute positive EBITDA in FY21 and beyond.