BASF is getting into the seed business in a big way.

“It’s an exciting step that further demonstrates our long-term commitment to Canadian agriculture,” said Ron Kehler, business director, crop protection, at BASF Canada.

The chemical company has agreed to buy almost all of Bayer’s seed assets, its LibertyLink trait and its glufosinate herbicide business for US$7 billion.

The deal is contingent on Bayer completing its acquisition of Monsanto.

It includes the global cotton seed business, with the exception of India and South Africa, the North American and European canola business and the soybean seed business.

“It’s big news,” said Greg McDonald, general manager of Winfield United Canada, a group of 50 independent crop input retail owners operating more than 100 locations in Western Canada.

“BASF has always worked well with independent retails. I think it’s a positive.”

He said BASF has a good track record of innovation and he hopes they apply that to the newly acquired assets.

“You want to continue to see innovation come into the marketplace, especially if you’re an independent, because they tend to be on the cutting edge,” said McDonald.

BASF said it will spend $956 million annually on agricultural research and development once the Bayer assets are in the fold. By comparison, Bayer said it will spend $3.5 billion annually after it completes the Monsanto acquisition.

This is BASF’s first foray into the seed business. Sales of the seed products it is acquiring were nearly $1 billion last year.

Canola leads the way, accounting for 45 percent of the total, followed by cotton at 25 percent, soybeans at 20 percent and the LibertyLink licence making up the remainder.

The glufosinate business, which includes the Liberty, Basta and Finale brands, adds another $592 million in annual sales with slightly more than half of that occurring in North America.

The deal includes the transfer of more than 1,800 employees, 250 patent families, five chemical production and formulation sites, 10 research and development sites and regional seed production and breeding facilities.

McDonald said Bayer’s expertise in the seed business will be a good mix with BASF’s herbicide knowledge.

“It’s a pretty good engine already but I think it even could be better.”

Christian Faitz, a chemicals analyst with equities research firm Kepler Cheuvreux, has been predicting that BASF would end up with the LibertyLink franchise since Bayer announced in May 2016 that it was acquiring Monsanto.

In a recent research note, he said the deal enhances the value of BASF’s agricultural business.

“It makes BASF a franchise that will be able to have an integrated offering a few years down the road in one go, able to compete head-to-head in many markets with Bayer/Monsanto, Syngenta and Dow/DuPont,” he said.

Faitz noted that glufosinate is off patent.

“But the production process is rather difficult, which dampens generic competition as opposed to Monsanto’s Roundup franchise.”

Brennan Turner, president of Farmlead, said BASF made a good move by acquiring the top-selling canola products on the market.

The pod shatter resistance built into some leading LibertyLink canola varieties is becoming increasingly popular with farmers because it allows for straight-cutting.

“The sell-your-swather hashtag has become more commonplace on Twitter,” he said.

Turner doesn’t think the change in ownership of the LibertyLink trait will have an impact on the average farmer.

Todd Lewis, president of the Agricultural Producers Association of Saskatchewan, is relieved Bayer was forced to sell its LibertyLink trait to appease regulators because the Bayer/Monsanto entity would have controlled 95 percent of the canola trait business in Canada.

Farmers benefit from competition, he said. “At the end of the day that’s the only way to try and keep the cost of seed down.”

Lewis hopes BASF continues to pour money into the LibertyLink franchise and maybe comes up with a breakthrough in clubroot resistance. And he has one other wish.

“It would sure be nice to have less costly seed. I don’t know if that’s part of their plan or not but it would be nice if it was,” he said with a laugh.