DuPont 2014 Annual Report Download - page 4

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Part I
ITEM 1. BUSINESS, continued
3
Agriculture
Agriculture businesses, DuPont Pioneer (Pioneer) and DuPont Crop Protection (Crop Protection), leverage the company's
technology, customer relationships and industry knowledge to improve the quantity, quality and safety of the global food supply
and the global production agriculture industry. Land available for worldwide agricultural production is increasingly limited so
production growth will need to be achieved principally through improving crop yields and productivity rather than through increases
in planted area. The segment's businesses deliver a broad portfolio of products and services that are specifically targeted to achieve
gains in crop yields and productivity, including Pioneer® brand seed products and well-established brands of insecticides, fungicides
and herbicides. Research and development focuses on leveraging technology to increase grower productivity and enhance the
value of grains and oilseeds through improved seed traits, superior seed germplasm and effective use of insecticides, herbicides
and fungicides. Agriculture accounted for approximately 50 percent of the company's total research and development expense in
2014.
Sales of the company's products in this segment are affected by the seasonality of global agriculture markets and weather patterns.
Sales and earnings performance in the Agriculture segment are significantly stronger in the first versus second half of the year
reflecting the northern hemisphere planting season. As a result of the seasonal nature of its business, Agriculture's inventory is at
its highest level at the end of the calendar year and is sold down in the first and second quarters. Trade receivables in the Agriculture
segment are at a low point at year-end and increase through the northern hemisphere selling season to peak at the end of the second
quarter.
Pioneer is a world leader in developing, producing and marketing corn hybrids and soybean varieties which improve the productivity
and profitability of its customers. Additionally, Pioneer develops, produces and markets canola, sunflower, sorghum, inoculants,
wheat and rice. As the world's population grows and the middle class expands, the need for crops for animal feed, food, biofuels
and industrial uses continues to increase. The business competes with other seed and plant biotechnology companies. Pioneer
seed sales amounted to 22 percent, 23 percent and 21 percent of the company's total consolidated net sales for the years ended
December 31, 2014, 2013 and 2012, respectively.
Pioneer's research and development focuses on integrating high yielding germplasm with value added proprietary and/or licensed
native and biotechnology traits with local environment and service expertise. Pioneer uniquely develops integrated products for
specific regional application based on local product advancement and testing of the product concepts. Research and development
in this arena requires long-term commitment of resources, extensive regulatory efforts and collaborations, partnerships and business
arrangements to successfully bring products to market. To protect its investment, the business employs the use of patents covering
germplasm and native and biotechnology traits in accordance with country laws. Pioneer holds multiple long-term biotechnology
trait licenses from third parties as a normal course of business. The biotechnology traits licensed by Pioneer from third parties
are contained in a variety of Pioneer crops, including corn hybrids and soybean varieties. The majority of Pioneer’s corn hybrids
and soybean varieties sold to customers contain biotechnology traits licensed from third parties under these long term licenses.
Pioneer is actively pursuing the development of innovations for corn hybrids, soybean varieties, canola, sunflower, wheat and rice
based on market assessments of the most valuable opportunities. In corn seeds, programs include innovations for drought and
nitrogen efficiency, insect protection and herbicide tolerance. In soybean seeds, programs include products with enhanced end-
use value, herbicide tolerance and insect protection.
Pioneer has seed production facilities located throughout the world. Seed production is performed directly by the business or
contracted with independent growers and conditioners. Pioneer's ability to produce seeds primarily depends upon weather
conditions and availability of reliable contract growers.
Pioneer markets and sells seed product primarily under the Pioneer® brand but also sells and distributes products utilizing additional
brand names. Pioneer promotes its products through multiple marketing channels around the world. In the corn and soybean
markets of the U.S. Corn Belt, Pioneer® brand products are sold primarily through a specialized force of independent sales
representatives. Outside of North America, Pioneer's products are marketed through a network of subsidiaries, joint ventures and
independent producer-distributors.