DeKalb Genetics Corporation - Company Profile, Information, Business Description, History, Background Information on DeKalb Genetics Corporation

3100 Sycamore Road
DeKalb, Illinois 60115

Company Perspectives:

At the heart of our company are dedicated, knowledgeable, well-trained professionals who are working to improve the productivity of agriculture. They are a diverse group of people including plant breeders, geneticists, technicians, accountants, agronomists, salespersons, statisticians, writers and secretaries. They are willing to go the extra mile because they believe in the importance of what they are doing and the mission of DEKALB: to provide our customers with quality products and services that will increase their productivity and profitability.

History of DeKalb Genetics Corporation

DeKalb Genetics Corporation is one of the largest and most successful international research, production, and marketing firms in the agribusiness industry. The company's focus is on seed products, including hybrid corn, sorghum, sunflower, varietal soybeans, and alfalfa. DeKalb is also one of the world's leaders in the research and production of hybrid swine breeding stock. Devoting 14 percent of every dollar to research, the midwestern company has created an impressive portfolio of biotechnological patents, such as the first fertile transformed corn patent, the first patent for insect-resistant corn, and a host of transgenic corn production and breeding technique patents. With 34 research facilities in the United States and 16 overseas, the company has garnered a large portion of the agribusiness market in Canada, Argentina, Mexico, France, Germany, South Africa, and Thailand. Selling 2.5 million units of corn, 4.5 million units of soybean, and 350,000 units of sorghum in 1995 alone, company sales reached an all-time high of $430 million.

Early History

DeKalb Genetics Corporation had its start in the farming land of the Midwest. During the late 1890s and early 1900s, farmers in DeKalb County, Illinois, began to develop an awareness of the many agricultural problems that confronted them. Although their farms were prosperous, they recognized the need for improved soil fertility, balanced rotation of crops, a pure seed law, more farmer control over the pricing and marketing of farm produce, and the improvement of crop varieties. These needs led the farmers to organize the Farmers' Institute, the purpose of which was to invite university professors to talk about different aspects of better farming in counties throughout the state.

As the popularity of and interest in groups such as the Farmers' Institute began to grow, the farmers realized that they needed bankers and newspapermen to help in expanding the information that was being provided about farming. In January of 1912, farmers, bankers, and the county board of supervisors from DeKalb met and pledged $10,000 to sustain an annual budget for a new organization that would attack the problems of soil fertility and legume seed. The group traveled to the University of Illinois and hired W.G. Eckhardt to act as the organization's first farm advisor. One of the first farm groups in the United States supported by farmer contributions, the new organization was called the DeKalb County Soil Improvement Association.

As the organization and its membership grew over the next few years, Eckhardt began to make numerous trips to and from Idaho to buy good seed. Illinois had no seed law and, as a result, nearby states used counties such as DeKalb as dumping grounds for inferior seed. Securing a reliable seed was an important and far-reaching project, therefore, and considerable amounts of money were used during the purchases in Idaho. Since the DeKalb County Soil Improvement Association was formed primarily for educational purposes and not for business transactions, the membership decided to create the DeKalb County Agricultural Association to take care of the seed business and also to conduct the business affairs of the DeKalb County Soil Improvement Association.

On June 2, 1917, the DeKalb County Agricultural Association was incorporated, and its first business transaction was to purchase legume seed and limestone, which was spread over farmland before legumes could be grown, and to handle seed corn. In those days, seed corn was openly pollinated and consequently varied in quality significantly from one year to the next. Most farmers in the Midwest tried to select their own seed during good years and then turned to commercial sources during the poor years, especially when early freezes had damaged the quality of the crop. One of Eckhardt's priorities was to develop a seed corn that was of extremely high quality and increased yield and could be sold to farmers in the area.

Eckhardt hired a man named Charlie Gunn as the Association's corn breeder, and Gunn went to work immediately. The corn that the Association had been handling at the time was Webb's Western Plowman, a relatively good variety of corn. Gunn wanted to produce an earlier strain, and he accomplished this feat by selecting ripe ears from green stalks. Called Gunn's Western Plowman, the selection was grown throughout northern Illinois. Yet Gunn wanted to improve both its earliness and its yield, so he blended various types of seed to produce a better yielding strain of corn.

During the early 1920s, Tom Roberts, a graduate from Iowa State College, replaced Eckhardt as farm advisor to the Association. Like his predecessor, Roberts continued to work closely with Gunn on the improvement of corn. Production of a utility type of corn, which was resistant to disease, involved ear-to-row testing techniques and many other methods, but progress was slow and cumbersome. When the two men heard of a new hybrid idea in corn, they believed that this new method might be the way to improve the corn then being grown.

Experimentation During the 1930s and 1940s

It was not until 1932 that the first cross-breeding of corn was tested by the Association. The results were so successful, however, that a large field of the variety was planted in 1933. That fall, the new type of corn had yielded 21 bushels more per acre than open-pollinated Western Plowman. In the spring of 1934, Tom Roberts decided to grow the new type of hybrid seed corn in anticipation of selling it to local farmers on the open market. Production was estimated at 300 bushels, but, unfortunately, the dust storms of the 1930s began to take their toll. Temperatures rose suddenly, rain was nonexistent, and the seed crop began to suffer. Artificial irrigation was used, yet only 350 bushels of seed graded out 325 bushels of kernels. The seed was sold to nearby farmers, and preparations were made for the next planting season of 1935. With a different hybrid combination, and more irrigation, the planting was a huge success. The Association began selling the hybrid corn seed as DeKalb 601 to farmers across the nation, and the results were overwhelming. A higher quality and increased yield revolutionized farm productivity. Most important, however, the hybrid corn seed increased farm income and helped pay off farm mortgages, thus saving an untold number of family farms at the height of America's Great Depression.

In searching for an appropriate logo that would incorporate the activity of the Association, Tom Roberts recalled from his earliest memories that, during the early 1900s, dairy cattle were called "mortgage lifters," since it was the cattle that provided enough income for farmers to retain their property during hard economic times. During the 1920s, the raising and selling of hogs for commercial purposes helped farmers pay off their mortgages. When the Association developed hybrid corn, Roberts was certain that a 20 percent increase in a farmer's yield from DeKalb hybrid corn would provide more income to pay for mortgages than dairy cattle or hogs. In a burst of inspiration, he said, "Let's put wings on an ear of corn to represent the lifting of the mortgages," and a soon-to-be famous logo was created.

As a natural extension of its activities in the United States, near the end of the 1930s and during the early 1940s, the Association began to export its hybrid corn seed to Canada. The fields and soil of Alberta and Saskatchewan were perfect for developing an even higher quality and increased yield hybrid corn. During the Second World War, the DeKalb County Agricultural Association worked in concert with the U.S. government to provide a constant flow of agricultural products for the Allied war effort. Increasing the yield of its hybrid corn allowed the United States to help Britain and other Allied nations to weather the war years, during which starvation was just around the corner for many people.

Postwar Developments and Expansion

After the Second World War, the American Midwest became the "breadbasket to the world," and DeKalb was at the forefront of increasing production and developing higher quality seed during these years. In the decade of the 1950s, the company established an entomology department, which began to study the effects insects have on a wide variety of crops, but especially corn and sorghum. The company also established numerous test plots throughout the Midwest to gather hybrid and variety crop data. At approximately the same time, DeKalb initiated a major research program that placed crops across the United States and tested the potential for top performing hybrids and varieties by sampling weather and soil conditions as well as insect and disease situations. In 1956, DeKalb was the first company to produce a high-quality, high-yield hybrid sorghum.

The company's investment in research and development continued during the 1960s. Dekalb created a pathology department to study the diseases and the changes in those diseases in both new and existing hybrids. A germplasm resources department was also created to collect germplasm from around the world and evaluate it for disease and insect reactions. In addition, a biotechnology research laboratory was formed to begin experimenting with the possibility of making genetic improvements in corn and other seed, which could not be achieved by using the traditional techniques of plant breeding. All of these developments enabled DeKalb to reach the pinnacle of success by the late 1960s and early 1970s. A new hybrid alfalfa was created in 1967, and hybrid sunflowers were developed in 1972. By 1974, the company had captured 23 percent of the corn seed market, second only to Pioneer Hi-Bred International.

Transition During the 1970s and 1980s

Unfortunately, the company's success was not to last. Tom Roberts, still influential at DeKalb even though his son Tom Roberts, Jr. was now chairman, convinced the Board of Directors to make the momentous decision to diversify into energy businesses at the height of the diversification craze in corporate America. DeKalb Energy, a producer of oil and gas, and Pride Petroleum Services, an oil and gas well support services firm, were created as part of the new diversification strategy. Management's concern with these new operations, however, took time and energy away from the company's concentration on the seed market. As a result, management began to miss opportunities, and the changing seed market passed them by. By 1982, DeKalb's market share had dropped from 23 percent to nine percent, and Pioneer Hi-Bred International scooped up much of DeKalb's former business.

Having seen enough of DeKalb's fall from grace in the agribusiness industry, Tom Roberts, Jr. sold all of the company's energy holdings and started a comprehensive plan to refocus on the seed market. His first move was in 1982, when he arranged a joint venture in genetics research with the seed division of Pfizer drug company. The decision had the immediate effect of halting DeKalb's precipitous market share decline, but over the next few years the joint venture was unable to develop many new products that would attract farmers back to the company. To compensate for the lack of new product development, Tom Roberts, Jr. decided to initiate a strategic expansion and marketing program that he thought would help regain DeKalb's lost market share. Production facilities and distribution offices were set up in Iowa, Ohio, Texas, Oklahoma, Nebraska, and Georgia. Corn research facilities were established in such faraway locations as Argentina, Brazil, France, Thailand, Italy, and Germany. Licensees were contracted in countries such as Hungary, India, Portugal, Turkey, Egypt, Bolivia, Indonesia, and Zimbabwe, just to name a few. Yet by 1991, the company's share of the seed market remained at nine percent and Tom Roberts, Jr. decided that it was time for him to leave the company.

The 1990s and Beyond

After Roberts's departure, DeKalb Genetics Corporation, directed by President and Chairman Bruce Bickner, slowly reestablished itself in the seed market and regained some of its former market share. Most of the gains came from a concerted attempt by management to devote large sums of money to research and development. Part of this strategy included arranging major joint ventures with larger, more established firms in the field of agricultural biotechnology. In February of 1996, DeKalb and Monsanto Company reached such an agreement. Monsanto agreed to invest $160 million in a significant minority share of DeKalb and pay the company $19.5 million annually over a period of a ten-year collaboration to develop new products in corn seed, sorghum, wheat, oilseeds, soybeans, and other produce.

By the mid-1990s, DeKalb Genetics Corporation, still the second leading agribusiness firm in the United States, was beginning to regain its former place in the hearts and minds of farmers across the Midwest. The company had also made significant inroads to capture a larger share of the international seed market through its growing presence in many foreign countries. Research and development, especially in the field of agricultural biotechnology, became the focus of the company's efforts and would soon lead DeKalb back to the preeminent position it once held in the seed product industry.

Principal Subsidiaries: DEKALB Argentina, S.A.; DEKALB Canada, Inc.; DEKALB Centroamericana, S.A.; DEKALB Italia, S.p.A.

Additional Details

Further Reference

Berss, Marcia, "Gone to Seed," Forbes, December 19, 1994, pp. 166-168.DeKalb County Agricultural Association: A History, DeKalb, Ill.: DCAA, 1955."DeKalb Genetics Corporation," The Wall Street Journal, October 16, 1995, p. B6(E)."DeKalb Genetics Sells Unit," The Wall Street Journal, May 1, 1995, p. A2(E)."DeKalb Genetics Stock Drops 12.6%," The New York Times, July 9, 1993, p. D3(L)."MGI Pharma Sells Patent Rights," The Wall Street Journal, January 4, 1996, p. B3(E)."Monsanto and DeKalb Genetics in Joint Venture," The New York Times, February 2, 1996, p. D4(L).Smith, Rod, "DeKalb Reports New Products," Feedstuffs, March 7, 1994, p. 6.------, "DeKalb Sees Stronger Year for Corn, Swine Breeding Stock," Feedstuffs, January 15, 1996, p. 6.Wyatt, Edward, "Corporate America Is Courting Agricultural BioTech," The New York Times, March 3, 1996, p. F11(L).

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