S&W Seed Company (Nasdaq: SANW) announced the company has signed a licensing agreement with a leading U.S.-based seed company for production and marketing of a proprietary hybrid grain sorghum variety in the U.S. and Mexico.
The U.S. is one of the largest sorghum markets in the world with an estimated 597 million bushels harvested from approximately 7-8 million acres in 2015.
This is the first U.S.-based licensing agreement by S&W for any of its sorghum varieties, positioning it to benefit in a crop that is gaining increasing popularity in food products due to its gluten-free characteristics, as well as its antioxidant, high protein, low fat, high fiber and non-GM properties.
“Sorghum is gaining increasing importance throughout the world due to its efficiency as a high-energy, drought tolerant crop that is environmentally friendly, and has favorable consumer attributes,” said Mark Grewal, CEO of S&W Seed Company. “We believe our hybrid grain sorghum varieties are some of the highest yielding in the world, and incorporate other important traits such as disease resistance and drought tolerance.
“This agreement allows us entry into a growing U.S. sorghum market with a producer that has tremendous capabilities to expand production and drive distribution. We look forward to a long-term and successful relationship with this new licensee.”
2015 sorghum food consumption increased by nearly 40 percent compared to 2014. More than 350 products on grocery store shelves contain sorghum, and mainstream brands are adding sorghum to new product formulations every year.
U.S. sorghum is traditionally grown throughout the Sorghum Belt, which runs from South Dakota to Southern Texas, primarily on dryland acres. Recently, acreage increases have been seen in non-traditional areas like the Mississippi Delta and Southeast regions.
The top five sorghum-producing states in 2015 were Kansas, Texas, Arkansas, Oklahoma, and Colorado. The company estimates the U.S. sorghum seed market at between 25 and 30 million pounds of planting seed, worth an estimated $100 million annually.
In addition to this new agreement in the United States, S&W has licensing agreements with different partners to provide its grain sorghum and forage sorghum genetics throughout the world, including Australia, parts of South America, South Africa, China, Pakistan and South Africa.
Recent Executive Interview
The management team of S&W Seed Company and S&W’s subsidiary, SV Genetics, recently conducted an executive series interview discussing S&W’s recent acquisition of SV Genetics, and its outlook for the sorghum and sunflower industry. A transcript of the interview can be found on the company’s website at http://swseedco.com/assets/SVGInterview.pdf.