Clean Seed Capital Group, a Canadian agtech company, has agreed to acquire the Iowa, US-based planting technology business Harvest International, for $13.1 million. The transaction will merge two family-run companies working to support the future of precision agriculture technology in North America.
Clean Seed has developed precision seeding technology to disrupt existing and widely-used air seeders that push seeds through hundreds of feet of plastic tubes using air. The CX6 Smart Seeder has a wirelessly-controlled, six-product metering system directly over every opener — where the product meets the soil, and the input is to be applied.
“The deal had several appeals for us. The driving corporate appeal is it puts Clean Seed into the planter market in the US,” Graeme Lempriere, Clean Seed’s president & CEO, told AgFunderNews. “They are an active company in the US. Our company developed the Smart Seeder, which mainly focuses on small grains for the Canadian market and we disrupted the air seeder business. We recognized there was an opportunity to cross-pollinate our technology advantages into the planter business.”
The difference between planters and seeders relates to the type of crop they sow; planters are the most suitable for sowing row crops such as corn, and soybeans, whereas seeders are more suitable for sowing small grains like wheat and canola. Lempriere explains the two machines function differently in terms of seed delivery and row spacing for optimized planting. Due to the rationality of those crops, seeders are the more common implement in Western Canada and planters have a much larger market in the US.
“The planter business in the US accounts for, on average, five times the number of units and five times the commercial value of the seeding industry,” Lempriere said. “For example, there are about 90 million acres of corn planted in the US yearly and 20 million acres of canola in Canada.”
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Founded in 2007 by the Friesen family, Harvest International began designing, developing and manufacturing high-quality augers — farm implements that deliver grain from a truck up into a grain bin — and conveyor systems. By 2014, it transformed its business plan by creating and developing farmer-focused planter technologies to complement its existing offerings.
The company secured patents for key components of its planter row units and developed and patented a unique toolbar design that was much in demand, according to Lempriere. Last year, Harvest International sold off its auger and conveyor product lines to concentrate 100% on the planter market.
Lempriere said the acquisition supports Clean Seed’s strategy to remain at the forefront as “pioneers of the digital age of agriculture,” facilitating real progress for the farmer and food production as a whole.
“I really liked their management. The Friesen family has been in agriculture since the ’60s and they have patented and developed a very robust planter row unit along with their own unique frame design,” he said. “Their understanding of planters and our market understanding of seeders was a natural fit to cross-pollinate the expertise in management and manufacturing. When you put them together, we can control our own destiny.”
Clean Seed is currently in discussions with some peer Canadian lenders with the objective to finance the acquisition primarily, if not completely, with debt. The deal is expected to close in November.
Under terms of the deal, the companies will be integrated together and eventually produce complete, whole drills for both the seeding and planter markets. Byron Friesen, president and CEO of Harvest International, will continue running that company’s operations and will join Clean Seed’s board of directors. The engineering teams of both companies will merge and share collective thoughts.
“Harvest International has a proud history of farmer-focused innovations in agricultural manufacturing and intellectual property development,” Friesen said. “Joining forces with a like-minded tech-forward company like Clean Seed will allow our combined companies to deliver innovations not yet seen by North American farmers.”