Europe's biggest wheat business, the French farmer co-operative Limagrain, is like a David against the Goliaths which comprise the huge international agrochemical businesses, according to its boss Daniel Chéron. But it is on a gigantic mission to assist a "second green revolution" in the food supply chain, as it attempts to tap into the vast potential offered by the wheat genome, which so far is only minimally "characterised"
While it has business dealings with the likes of Monsanto, Syngenta and BASF, Limagrain's philosophy primarily as a seed producer is quite different. Its approach in breeding new varieties of wheat seeds is based on giving 'open access' to everyone, with protection of its intellectual property provided by the "plant breeders' rights" enshrined in European legislation. It is via this route that Limagrain mainly derives its financial returns. In contrast, the approach in the US and elsewhere in the world is quite different. There it is usually about being a "gate keeper" and patenting everything in sight, argues Limagrain.
However, it would be unfair to completely ignore the achievements of the agrochemicals sector in significantly improving the yields of arable farming over the past 50 years. It's just that this has come at significant cost to the environment, which in future may be neither acceptable nor sustainable. The debate appears to hinge on the time needed to make the transition away from using fossil fuel-derived chemicals to assist in feeding the world - and with the clock against us, how long we have to adapt to the changes needed.
Despite calls by leading green policy advisers - such as Jonathon Porritt, chairman of the Sustainable Development Commission and director of the Forum for the Future - to break the food chain's umbilical link with petroleum (from which most fertilisers are derived) it doesn't seem likely that this is going to happen any time soon - at least according to Jat Sahota, head of corporate responsibility at Sainsbury, speaking at a Westminster Food and Nutrition Forum on food security last month.
At the same conference Dominic Dyer, chief executive of the Crop Protection Association, which represents many of the major agrochemical firms, said: "This industry has been demonised to a large degree and a lot of that is not deserved." While recognising the downsides of, for example, using pesticides, these "are far outweighed by the benefits", he added. He argued that without pesticides 30-40% of harvests would be lost.
But while stressing that today's pesticides were safer than they had ever been, even Dyer conceded: "I'm not saying pesticides are the future of food production." However, he argued, the consequences of banning them out of hand would be catastrophic.
Exploiting genetic variety
One of the benefits of a more open system is that it allows plant breeders to take advantage of the huge diversity in wheat that already exists around the world. By selectively cross-breeding different wheat strains using conventional and genetically modified (GM) techniques, while making use of the latest DNA profiling technologies to short-circuit the analysis and selection of the most desired traits, Limagrain's scientists believe over the next 10 to 20 years they will be able to develop wheat varieties especially suited to the emerging global social, economic and atmospheric conditions in different parts of the world.
Breeding manager Bill Angus believes Limagrain will be able to provide solutions for a multitude of problems: from wheat varieties that are resistant to common insects and fusarium mycotoxins (fungus), to those which have particular drought resistance. And from others that are more nitrogen efficient to those which have better nutrient profiles, such as enhanced selenium content.
According to Angus, it's all about making the most of the myriad wheat varieties that already exist and introducing properties from other organisms using GM techniques where this provides even better solutions.
"We are just scratching the surface of the genetic diversity that is available within the wheat genome," says Angus. "What we have to do is put all of these building blocks together in a much more joined up way - and relatively quickly ... we are looking for the needle in the haystack, so you maintain the diversity in your breeding programme." He adds: "We can now tap into that huge amount of genetic resource that is available."
Although Limagrain has a presence in various parts of the world outside its European power base, including in Australia and China, senior managers have a long-term strategy to fill in the gaps in its wheat operations to maximise on the diversity of the strains it can draw upon. "We still have a number of holes - weak points - in four main areas: India; North America; Argentina; and the Ukraine and Kazakhstan," says Chéron. The company is currently in discussions with a potential partner in Argentina but, Chéron admits, there is still a long way to go with its ambitions in the other target areas. "Asia is a big challenge for us and we need to set up more in this continent," says Chéron.
Financing its growth
To finance the planned joint ventures and acquisitions, Limagrain will need to raise further capital on the markets to complement its planned organic growth. Currently it is owned 70% by farmers with the rest of its shareholding traded on the Paris Bourse. However, Chéron stresses that the public offering would never rise above 50%, because this would relinquish the farmer co-operative's control. "That is clear," he emphasises.
Limagrain, which has subsidiaries in 36 countries and 6,000 employees, had a turnover last year of around euro 1.1bn (euro 500M from field seeds, euro 400M from vegetable seeds and euro 200M from cereal products). It has plans to double turnover over the next five years, increasing each of these sectors to around euro 700M each. It's a big challenge and one on which Chéron's future will stand or fall. Going forward, the company's focus will be primarily wheat based. "This is where we have to be strategically," says Chéron.
But will this David ultimately succeed in its bold ambition and retain its independence? That remains to be seen.
The big boys are known to be circling and have shown interest in acquiring Limagrain. While the price may not have been right thus far, circumstances change. And if it were subsumed into a larger conglomerate would it really matter?
The answer perhaps lies in posing the question: who has more interest in developing wheat varieties that use far less fertilisers, insecticides and fungicides: seed producers or companies that depend for the lion's share of their revenues on those very same chemicals?
Describing Limagrain's commitment to the breeders' rights approach, Chéron says: "It's a difficult fight that takes a lot of our time. The existence of Limagrain could be problematic if we go towards patents." FM
Functional ingredients
So, why should other food manufacturers care about the fortunes of this seed and ingredients supplier? The reason is that, while Limagrain's annual research and development expenditure, currently euro 123M, may pale into insignificance compared with the likes of Monsanto, it has proved itself to be a significant force when it comes to developing new functional ingredients that are now helping bakers such as Warburtons and The Weetabix Company to develop their next generation of bakery products. And since acquiring baker Pains Jacquet, Limagrain has even moved into the finished products business.
But it isn't just in the bakery sector that Limagrain is proving its innovative credentials. Over the past couple of years it has launched various functional flours and clean-label ingredients, which are now finding applications in everything from ready meals and sauces, reduced fat pâtés and cakes to healthy breakfast drinks. Not only do these products offer health benefits, they enable cost savings during manufacture, claims the company. Expect to see a number of new launches from Limagrain at the Food Ingredients exhibition in Frankfurt from November 7-19 November.
One of the challenges for cereal flours in the past has been the problem of their limited solubility in products such as beverages, jams and compotes. Limagrain has overcome this limitation through the development of novel hydrothermal treatment during grinding and sieving called the Farigel process, which prevents liquids becoming highly viscous. Although not widely adopted yet in the UK, it is being used by French chocolate drink and orange juice manufacturers to add a healthy wheat flour ingredient to their products without detracting from their texture or mouthfeel.
Last year Limagrain launched GluSAFE, a substitute for gluten in breadmaking, which produces the same results as added gluten in terms of consistency, elasticity and tolerance of the dough, while retaining similar if not better loaf volume, but using a fraction of the quantity of gluten at lower cost. "The value proposition of GluSAFE is cost reduction; everyone is looking to reduce recipe costs," says Limagrain marketing director David Pearson.
Going forward, the health agenda is set to drive much of the innovation emerging from the company. As the md of Limagrain Cereal Ingredients, Damine Bourgarel, says: "Health and nutrition will become more important for the future."