Seeding Global Market : Merger of Saticoy Firm Will Grow Distribution

A squat, silver machine in Petoseed’s headquarters rhythmically presses out foil packets of vegetable seeds bound for abroad: squash hybrids headed to Turkey, tomatoes for Syria.

Outside, boxes lined up against a building at the end of Lirio Street list destinations including Italy and Tahiti.

The company, based in Saticoy since 1958, sells its hybrid vegetable seeds in about 110 countries, and its foreign ties are growing. This fall, company officials announced that Petoseed, along with a Dutch company that the firm bought last year, would merge with Asgrow Seed Co. of Kalamazoo, Mich.

Combined, the three companies hope to control 25% of the worldwide vegetable seed market. The move, company officials said, also will help them create new varieties of such vegetables as carrots, cauliflower, eggplant and leeks.

“The key for this new venture is to pool the resources of production and research,” said Dietrich Schmidt, Petoseed’s president and chief executive officer. “That would mean we have the potential to develop new hybrids faster. Our customers will get better products.”

The merger gives Petoseed still another international connection. Asgrow is owned by Empresas La Moderna, a Mexican conglomerate specializing in cigarettes and agriculture. Operating together under the name Seminis, a twist on the Latin word for seed, the three companies will have research facilities in more than 25 countries and projected annual sales greater than $520 million.

Empresas will own 60% of Seminis, with the remaining 40% held by Petoseed’s previous owner, the George J. Ball company.

And yet, little will change in Petoseed’s day-to-day operations. Schmidt has taken on the new title of president and chief operating officer of Seminis’ vegetable seed division, but still works out of Saticoy, sometimes strolling the offices and labs wearing a tie decorated with canned vegetable labels.

Company researchers will continue trying to breed hardier variations on familiar vegetables, much of the work done by hand as workers transfer pollen from plant to plant.

The world seed market in which Seminis will compete is vast, although estimates of its exact size are hard to calculate. Mark Condon, vice president for international marketing at the American Seed Trade Assn., estimates the market’s value at $55 billion to $60 billion per year.

The United States exports about $700 million worth of seed each year, with the figure rising about 5% annually, according to the federal government’s Foreign Agriculture Service.

Fueling the market is the need to increase crop yields and fight plant diseases.

“It’s very important to most countries, and fortunately for us, they’re willing to pay the premium for our high-quality product,” said Loyd Coonrod, a marketing specialist with the agriculture service.

Although American seed often costs more than foreign, Coonrod said the domestic seeds have a strong reputation with international buyers. “Better genetics yield better quality products and better yields, so they come out ahead on both ends,” he said.

In this market, Petoseed was already among the most prominent companies, Condon said. The merger, he said, will create a formidable competitor. “It was quite a nice little coup,” he said.

Petoseed already has research facilities scattered around the world, from Chile to Jordan to Thailand. The stations produce new hybrids for their local markets, designing vegetables with each area’s climate and diet in mind.

The changes made are refinements to produce better yields, better-quality vegetables or greater disease resistance--not to create whole new vegetables.

“We’re not changing the main characteristics,” Schmidt said. “We can’t do that. People in Thailand want a tomato that looks like a regular Thailand tomato.”

The company has been tinkering with plants for decades. In 1950, Howard Peto and Vic Hollar bought the R.H. James Seed Co. in Rocky Ford, Colo. The business, renamed Peto-Hollar, opened a tomato seed production unit in Ventura.

Then in 1953, Peto and Hollar dissolved their partnership, and the California branch of Peto-Hollar became Petoseed.

None of the company’s research takes place in Saticoy. Instead, the Lirio Street headquarters contains packing operations, as well as a product testing lab where batches of the different seeds are wrapped in wet paper to see how well they sprout.

In an atmosphere filled with mechanical groans and occasional bits of chaff, seeds are sorted to weed out imperfections. Some machines sift by size, others by weight. One blows cucumber seeds up into a transparent cylinder: The heavy, good seeds fall to the bottom while others whirl suspended in the air.

Stray seeds, some of them coated in bright colors to make them easier to identify, lie scattered about the floors. Some even sprout, said Clarence Walthall, a semi-retired plant engineer.

“We have crevices all over the place,” he said. “I’d be walking around, and I’d say, ‘That’s a squash plant growing there.’ ”

Like other vegetable seed companies, Petoseed has slowly assumed a role that once fell to universities. Thirty years ago, much of the basic research into new hybrids was performed by academics working on government money.

But as government funding shrank, private seed companies took up the slack.

“It became less appropriate for a university to come up with a new variety of tomatoes because it could be done out there in the private sector,” said Robert Brendler, a retired farm advisor with the University of California’s cooperative extension in Ventura.

The benefits of this research can be immense. Four years ago, a virus that attacks tomato plants hit the Dominican Republic, cutting yields and socking growers with an estimated $12 million in losses.

But one of Petoseed’s tomato varieties, Gem Star, is resistant to the virus. The company tested Gem Star in the Dominican Republic in 1993 and now sells it commercially there. Gem Star has reestablished tomatoes as a cash crop in the country, Petoseed spokeswoman Jan Stevens said.

Schmidt said his company’s ability to produce disease-resistant hybrid vegetables has the potential to help many developing countries.

“I don’t know how we could feed the world without hybrids,” he said.