Israel’s Hazera: From Tomato Seeds to International Growth

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Tomatoes at a Hazera factory. The company's varieties have a long shelf life, and its seeds have made the company a strong player in worldwide agribusiness.Credit: Ilan Assayag

Thirty visitors from France recently strolled the hothouses on Brurim Farm, admiring its tomato breeds, examining the various varieties and showing keen interest in the scientific explanations their Israeli hosts provided.

The visitors were directors at the French company Limagrain, which eight years ago bought the Israeli seed company Hazera, and they’d come to Israel to inaugurate a new management and an R&D center built at a cost of about $20 million.

And the tomatoes the executives were viewing at Brurim, 40 minutes southeast of Tel Aviv, have made Limagrain’s investment in Hazera, well, fruitful.

Hazera is one of Israel’s oldest agriculture partnerships, founded in 1939 by a number of kibbutzim and moshavim to find ways to improve crop yields in Israel.

Weathering some tough times, Hazera over the years has become a key player in the global effort to develop crops with longer shelf life, better resistance to pests and greater resilience in extreme climate conditions.

Daniela and Gabriela

Hazera’s biggest breakthrough was the Daniela tomato, say Hazera’s vice president of marketing, Yehuda Olshansky, and its head of the Mediterranean-basin marketing division, Zion Barel.

Before Daniela showed up, shoppers would buy green tomatoes and wait for them to ripen. But the Daniela variety gets picked when it’s red and has a shelf life of 23 days, the executives said.

The Daniela boosted Hazera’s revenue, and in time a little sister was born, the Gabriela, which incorporates a gene to delay ripening and lengthen shelf life even more.

Even 20 years later, the roughly 20 tomato types Hazera developed are responsible for 25% of its revenue and their profit margins are the widest in the product line.

A rough patch, and opportunity

The sailing hasn’t always been smooth. In the early 2000s, Daniela lost its luster and Hazera had to reinvent itself. The company invested in developing seeds for unique varieties of chickpeas and water-economic cotton.

Limagrain saw opportunity, bought the company and delisted it from the Tel Aviv Stock Exchange. (At about the same time, three other Israeli seed companies were bought by multinationals.)

In 2008 Hazera was merged with the Dutch company Nickerson Zwaan. The merged company has headquarters in Israel and the Netherlands, while the management is largely Israeli.

Parent Limagrain is a cooperative, owned by 2,000 French farmers, that among other things is the second-biggest maker of bread and pasta in France. And Limagrain’s Vilmoran subsidiary, through which Limagrain acquired Hazera, is the world’s No. 4 seed company.

In 2006, when Limagrain acquired Hazera, Vilmoran’s annual sales were 900 million euros. Today they’re 1.5 billion euros, or 75% of parent Limagrain’s revenue.

And for Hazera’s part, since it joined the group, its sales have more than doubled, to 670 million shekels a year.

Five countries - the U.S., the Netherlands, France, Japan and Israel - form the core of the seeds industry, and Limagrain has a base office in each of them, CEO Daniel Chéron says.

But despite the growth, Hazera’s workers are fretting, aware that three years ago the St. Louis, Missouri, agribusiness giant Monsanto closed down a factory from the rival company nearby. How safe are Hazera’s workers?

“In 2010 Hazera had 260 employees in Israel. Today it has 360,” Jean-Christophe Gouache, Hazera’s vice president of international affairs and chairman of its scientific-affairs committee, told TheMarker.

“We did not cut back the number of workers in Israel,” he says. “Israel is important for us, not only because of geographical location but also as a site for research.” The best evidence of the company’s commitment is the new building, he points out.

`A different philosophy’

Jean-Yves Foucault, président of Limagrain, notes that the company is a cooperative and aims to feed the world.

Israel also once had a cooperative: Tnuva, the country’s biggest dairy and fresh-foods producer. But six years ago it was sold because the farmers who owned it couldn’t resist.

Foucault says Limagrain gets offers, too, but it’s resisting.

“As members of a cooperative, at the heart of our decisions is a goal of making products, not big money,” he says.

“We don’t see ourselves as owners of a cooperative. We’re its users. In an analogy from the real estate world, we lease it and hold it in trust.

“I don’t own a cooperative, I’m a member of it and have the right to use the company while being a farmer. When I retire, I have to pass that right onward. My first job as president is to return that right in better shape than when I got it.”

Israel’s high-tech culture is to groom a startup and sell it, says Rami Dar, global innovation manager at Hazera Genetics and Nickerson-Zwaan.

“Our group has a completely different philosophy,” he says. “We’re farmers and aren’t looking for an exit. We want to create value in the agricultural chain.”

And as a practical matter, France’s legal structures make selling shares in the cooperative quite difficult, Gouache says.

Cultivating hybrids

Hazera’s business is developing hybrid seeds. The company cultivates male and female plants of a given strain over about eight generations, explains Dar.

It then picks the best ones and combines their genes into specialty seeds with superior qualities, adapted to a degree to customers’ requirements.

“It takes a lot of combinations until you reach the hybrid you want,” says Dar. “The process with us takes five or six years.”

The resulting plants are sterile, with no seeds for the next generation. That means that farmers who want to grow a variety have to keep buying the seeds from Hazera.

By the year 2050, Earth’s population is projected to reach 9 billion. Realizing the goal of helping feed those people will involve going international, including building its R&D capabilities, to compete with Monsanto and Switzerland’s Syngenta, he says.

Five years ago the company operated mainly in Europe and North America. In the past five years it began to develop in South America and Asia, as well as in Africa, where it works in Kenya, Ethiopia, Morocco and Zimbabwe.

Hazera’s connection with Limagrain brought in the French company’s expertise in developing vegetables.

“We received technology that helps shorten the sprouting period and improves the uniformity of sprouting,” Dar says.

“We have much richer technological resources than if we had stayed alone, for instance, genetic markers to identify which characteristics the plant has, instead of having to grow it in the field.”

Before Limagrain came in, he would grow 1,000 plants in a hothouse, measure the size of the fruit, choose 10 or 20 of them, and continue the process.

“Now I take one leaf from each plant, check its DNA and rule out 800 of the 1,000 because only 200 have the combination of characteristics that I want,” says Dar.

“The probability that out of the 200, I will find 50 that I want to cultivate is much higher than when choosing out of 1,000 plants.”

Using genetic markers, in a month the company can test the same number of plants that would previously have taken a year, he says.

The Dutch contribution to the company was cabbage and cauliflower, as well as cucumbers and some varieties of onion, says Olshansky, adding that it also brings a marketing presence in Europe.

And about those tomatoes: Some consumers claim that today, tomatoes have lost flavor as they’ve gained color and shelf life. Barel and Olshansky say there’s something to that, and one of the company’s efforts is to restore that flavor and sweetness.