The South American forage seed market is projected to register a CAGR of 8.8% over the forecast period (2020-2025). Among South American countries, Brazil held the top-most position in terms of the market value, in 2017, with a market share of 61.6%, in the South American market. Uruguay is also emerging as a substantial market for forage seeds. In terms of livestock production, the country is having a great opportunity, which is expected to drive the forage seed sector in the country, as well as in South America, in the future. Increased demand for milk, meat, and proper feed for cattle from the livestock sector is mainly driving the South American forage seed market.
Key Market Trends
Increased Demand for Dairy Products
South America has a relatively low per capita consumption of milk and dairy products. After 2015, the demographic and unprecedented economic recovery boosted the demand for dairy products in the region. The milk production costs in most South American countries are the lowest in the world, which makes the region attractive for sourcing milk in the future. Immense penetration of international dairy companies, like Nestle and Fonterra, is increasing the demand for milk and dairy products. Milk production in South America decreased by 7% in 2016, as compared to 2014. However, owing to the aforementioned factors, the South American dairy market is expected to increase by 25% by 2023, which may drive the forage market. This, in turn, may have an impact on the demand for forage crops and its seeds.
Increased Usage of Cereals
Brazil is the biggest country in South America, which grows cereal forage crops, like rye, oats, triticale, and wheat. Wheat forage consumption has increased in South America over the years. In the rice forage seed, the farmers are shifting toward improved and hybrid seeds, rather than using saved seeds. Sorghum grain and forage had a good expansion in South America in the last two years. Maize is also one of the important cereal forages, and Brazil is the third-largest producer of maize seed, which, when dried, is used as a forage. Major companies leading the South American market for cereal forage are Hancock Farm & Seed Co., Golden Acre Seeds, Northstar Seed Ltd, and Brett Young.
The South American forage seed market is fragmented. The top players constituted around 34.3% share of the market, while the other companies constituted 65.7% of the market share, based on the overall market revenue, in 2019. Major acquisitions are taking place between companies to expand the forage seed business. One such acquisition has been witnessed between DairyLand Seeds and Dow AgroSciences. The players in the market are investing heavily in this market to develop new products.
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