Five Points, California, USA
November 22, 2011
Mark Grewal, CEO of S&W, believes that vertical integration will help S&W achieve 2012 and 2013 production goals for S&W's alfalfa seed varieties
S&W Seed Company (Nasdaq: SANW) today announced that it has leased 1,500 acres of Madera County farmland. The 1,500 Madera acres are in addition to 800 acres of leased farmland in Kern County, announced by the company in April 2011. The Madera and Kern locations will both be used primarily for growing S&W's proprietary alfalfa seed for harvesting in calendar 2012.
Since its founding in 1982, S&W has relied almost exclusively on contracting with farmers in California's San Joaquin and Imperial Valleys to grow S&W's own alfalfa seed varieties for processing and sale to S&W customers, domestic and international. For the calendar 2012 harvest, S&W will continue to source the majority of its alfalfa seed from its core group of contract farmers. However, the additional seed grown by S&W on leased acreage will help S&W meet increased demand for its high yielding and salt tolerant alfalfa seed varieties. Out of the approximately 1,500 acres of Madera county farmland, 450 acres are currently planted in S&W's alfalfa seed varieties, while 950 acres will be replanted in alfalfa seed from other crops and the remaining 100 acres will be used for other crops. S&W intends to farm approximately 1,700 acres of alfalfa seed for harvesting in the summer of 2012 from the Madera and Kern locations.
Mark Grewal, S&W's CEO commented, "We will continue to find cost effective ways to increase availability of our proprietary varieties at competitive prices. The majority of our production is from our loyal contract growers who have been with S&W for several years. We are adding selectively to this list and experienced San Joaquin Valley and Imperial Valley farmers should contact me personally to discuss their interest in contract growing for us in 2012. We are also open to leasing additional farmland, as long as it is suitable for alfalfa seed production and the lease rate is attractive. As many are aware, alfalfa seed is a highly valued crop for its ability to improve soil quality, particularly our salt tolerant varieties. The agronomists at S&W have many years of experience in growing seed alfalfa, enabling us to quickly step into growing it on leased farmland, as we have shown with the Madera and Kern County properties."
Mark Grewal continued, "There is excellent demand for the alfalfa varieties that our team has bred over many years specifically for Middle Eastern and African climates. Since we believe there is no substitute for firsthand knowledge of our customers' needs, S&W's Chairman and I recently drove several hundred miles of Saudi Arabia's farming districts, where we walked dozens of alfalfa fields on both large corporate farms and small family farms. We met and talked directly with farmers, many of whom have planted our varieties for the first time. In fact, in a joint effort with our outstanding Saudi sales team, we converted more than 150 new Saudi farmers to S&W in the 2011 calendar year. We also added significant new customers in other Middle Eastern States and Africa. If we can continue to price S&W seed within reach of small and medium sized farms in the region, its yield and quality benefits will continue to win farmers over to our brand."
The Madera property is situated in the San Joaquin Valley of California and is owned by John Hancock Insurance Company. The property will be leased for a term of one-year through a sub-lease agreement with the current lessee, Triangle T Partners, at Triangle T Partners' cost. The board of directors of S&W has evaluated the lease arrangement and believes it is at a below market rent, even without taking into account the benefits of having over 450 acres already planted with S&W varieties.
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