Missouri Seed Traits Get New License

Putting Past Behind, Missouri Soybean Council Inks Deal to Commercialize High-Oleic Seeds

Chris Clayton , DTN Ag Policy Editor
Nine months after winning litigation over a bad licensing deal, Missouri soybean checkoff leaders are moving past a difficult time that led to changes in staff at the group. (Courtesy logo)

OMAHA (DTN) -- Leaders of the Missouri Soybean Merchandising Council capped a long effort to right the ship at the organization on Wednesday with an announcement to form a partnership with an Iowa company to commercialize a non-biotech, high-oleic soybean seed developed through farmer checkoff dollars.

Just a year ago, the council was in the middle of a lawsuit to recover royalties and end a licensing agreement with another company on the high-oleic soybeans and other seed varieties.

Under the agreement signed Wednesday outside of Columbia, Missouri, the council granted a new license, commercializing the high-oleic seed traits to Schillinger Genetics, Inc., an Iowa company. Schillinger Genetics will not only sell seeds with the high-oleic trait, but will also breed soybean varieties combining high-oleic with low-linolenic soybean oil traits, the council stated. The partnership involves licenses for breeding soybean varieties with the high-oleic technology as well as scaling up a seed program to sell the varieties in both Canada and the U.S.

The merchandising council said the agreement represents the first licenses granted to commercialize this technology.

John Kelley, chair of the Missouri Soybean Merchandising Council, recalled to DTN recently how the council has worked to retool the organization's staff, transparency and policies after the group had to fire senior staff in late 2013 and initiate a lawsuit against companies operated by the former staffers. When Kelley ran for the Missouri board, he was told he would probably have to attend three or four meetings a year in Jefferson City, Missouri, the state capital.

Last June, a jury in Kansas City, Missouri, awarded the Missouri Soybean Merchandising Council and Mid-America Research and Development Foundation a verdict of $602,945 against AgBorn Genetics, a Hermann, Missouri, seed company that failed to pay royalties on seed technology developed through the checkoff program. AgBorn was co-founded by a former staffer at the merchandising council who then granted AgBorn exclusive, worldwide rights to certain soybean seed traits, including the non-biotech, high-oleic trait. AgBorn got exclusive rights, and then did not pay royalties. Kelley, then the treasury-secretary of the council, helped discover the problem when he asked to review the contracts and licensing agreements the council had signed.

"Basically, we had no idea any of these items were done through any one company in perpetuity," said Kelley, who farms near Faucett, Missouri. "It was like a lifetime arrangement with people working for us on both sides."

As the council drilled deeper into the situation, the farmer leaders found other problems with the former senior leadership. They were terminated after an audit was conducted. Then, litigation ensued. The council moved on, hiring a new executive director, and council members such as Kelley found themselves spending an extensive amount of volunteer time dealing with the council's business after the board moved to replace the paid leadership.

"I would do it again, because I feel that strongly that it's that much better of an organization, and I'm proud of what we did," Kelley said.

Todd Rowden, a Chicago attorney who represents the merchandising council, said the farmer board went through all of its policies and procedures to strengthen conflict-of-interest rules. It was a thorough examination and review of policies. Staff now cannot purchase items or enter into contracts without multiple signatures and approvals.

"They went through their whole research process and budgeting and the kind of receipts that are required from their partners in research and vendors," Rowden said. "They were volunteering, and they were thrust into this crisis, and the way they managed their way out of it should be a Harvard business review case study the way they handled it."

The council and staff went line by line through policies and now operate with "complete transparency," Kelley said. "Anything that anybody does now is reported to the board, reported back to everybody. Anything that is done, we all know about it."

Despite the setbacks with licensing, Kelley was pleased with the outcome and convinced the process he and others went through was worth it to farmers. "I would have done the same thing for anybody, regardless of the job I was doing," he said.

The non-biotech, high-oleic trait was a key part in the lawsuit with AgBorn. Oils with high-oleic acids are high in monounsaturated fats, which have been shown to lower LDL cholesterol -- which the Centers for Disease Control and Prevention calls "bad cholesterol." High-oleic oils are also low in saturated fats. According to the United Soybean Board, high-oleic soybeans will be grown on just over 1 million acres this year -- or just 1.1% over total overall acreage. But the industry expects demand for high-oleic soybeans will top 18 million acres by 2023.

"We believe strongly in the potential of high-oleic soybean oil," said John Schillinger, president and founder of Schillinger Genetics, Inc. "SGI is investing in development of high-oleic soybean varieties for U.S. soybean producers, and our pipeline includes highly promising varieties of maturity groups 0 to V, and this partnership stands to expand that work."

In moving to help commercialize the high-oleic seeds, Kelley stressed to DTN that such efforts show the soybean checkoff is worth keeping because of the overall value farmers gain from the one-half of 1% collected on each bushel.

"That's what we are charged with is taking care of the farmers' money, of which we are farmers too," Kelley said.

Kelley also knew when he first visited with DTN that some new licensing agreements were coming to fruition for traits the checkoff funds had helped develop. Wednesday's news release noted the licenses granted to Schillinger "are non-exclusive and non-sub licensable."

"We're probably going to have some pretty good news on that," Kelley said last month. "We have a lot of partners we are working with. I can't say anything more because I don't want to put the cart before the horse."

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

(BAS/AG)