Consolidation;

WHEN RALPH TAYLOR, PRESIdent of a sunflower-seed company, saw that he needed a major investment in technology in order to stay competitive, he did what more and more farm businesses are doing these days: he sold out to a big company. "They came looking for us," says Taylor, of Dahlgren & Co. The buyer was Sanofi, part of Societe Nationale Elf Aquitaine, the French oil and chemical giant.

A new breed of agricultural giantism is taking hold in the depressed Farmbelt. As family farms fail in droves, large chemical companies are consolidating another end of the business, stomping the heartland to find small seed and plant-genetics companies for acquisition.

Until now, producers of pesticides and other chemicals extended their reach into agriculture by providing venture capital and research money for plant-genetics companies. But now that these genetics companies are moving closer to having commercial products, the chemical giants are buying both them and the old-line seed companies that will use their technologies. The seed companies also provide a distribution system.

The opportunity to sell comes at a time when hardship in the Farmbelt makes it difficult for seed companies to invest in genetics. "We didn't have the wherewithal to sustain a long-term research program that would have put us where we needed to be," says Taylor. Selling prices for seed operations are up sharply from a few years ago, as such purchasers as The Lubrizol Corp. and Monsanto Co. move in.

Fewer than 40 of the 400 seed companies in the Midwest will survive the heightened competition brought on by consolidation, analysts predict. "They will have to buy their own science program, take licenses from others, or reduce their market share," says L. William Teweles, a Milwaukee consultant. As a result, opportunities may be limited for small operators. Says Harvard Business School professor Ray Goldberg, "Instead of selling or distributing the seed or grain, they'll be doing the tax accounting."

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