HardAssetsInvestor

Mike Norman (Norman): Hello, everybody, and welcome to HardAssetsInvestor.com. I’m Mike Norman, your host. Today we’re going to be talking about seed and commodity agricultural markets here with my guest, Mark Grewal, who’s the president and CEO of S&W Seed Company. Mark, thanks a lot for joining me.

Mark Grewal, president & CEO, S&W Seed Company (Grewal): Thank you for having me.

Norman: So, the seed business. Now, we talk a lot here on this show about agricultural markets and farm commodities. Obviously, in a big boom like most commodities right now, I would suspect that your business is doing very, very well in these conditions.

Grewal: It absolutely is. Commodities are hot. Seed is the fundamental thing a farmer needs. And so, when commodities are hot, they need more of it.

Norman: Absolutely.

Grewal: And it gets hotter.

Norman: Talk us through a little bit about what your business entails, the production of seed. Obviously you have acreage, where you have crop. You get seed from that. Tell us a little bit about it.

Grewal: Well, you have different types of commodities. We specialize in seeds for alfalfa production. There’s seeds for cotton, vegetables, all crops. But the fundamental phase of growing is the same. So you have to take a crop that’s actually certified by a government agency, harvest it specifically with isolation requirements, then clean it and purify it free of weed seeds, bag it and ship it to the grower that’s going to plant.

Norman: Now, when we talk about prices in your commodity, in seed, are they going up lock step with farm commodity prices? With other grain prices?

Grewal: Absolutely. And it’s hot. So, for example, you take cotton right now. It’s double the price that it’s been in the last few years. They're going to run out of seed. People that want to plant it aren’t going to have the seed to plant. And so you have to increase the production. Alfalfa is going to trail that. It’s going to follow it, right behind it.

Norman: So if you're coming up against, let’s say, a constraint on the ability to produce enough seed for what’s demanded out there, that’s a problem for growers.

Grewal: It’s a major problem and something that we’re going to have to struggle through.

Norman: But, so it’s not something you hear about a lot. That’s really an important fundamental. But it’s certainly not a fundamental that’s known or out there.

Grewal: It really isn't. The chemical companies have grabbed onto it pretty well, the Monsantos, the DuPonts, the Dows, Bear. They’ve been able to actually buy those seed companies and control them. And it’s also been a mechanism for them to apply different chemicals that you have to use because they put them in genetically.

Norman: Let’s talk about the genetically modified seed. I know Monsanto is very big into that. Innovation, how does that come into play, maybe as a factor in alleviating a seed shortage, should one develop?

Grewal: Well what the big thing has been is it’s improved yields; it’s made yields higher, so it’s fewer acres that are needed; and it’s, in some cases, added nutritional values − not just to animals and the alfalfa world − but into things for people.