Background

From salmon and fruit to wine and minerals, the abundance of natural resources that Chile enjoys has made a lasting contribution to the country’s economic growth. In the south-central Araucanía region, a healthy agricultural industry has helped Chile become the third largest producer of lupine (a grain cultivated for its nutritious bean) in the world, only trailing Australia and Germany. The most commonly produced lupine in Chile is white lupine, which has a higher protein and oil content than many other lupine grains. White lupine cultivation is especially important in Chile because it is not only used as food for humans, but is also a major source of animal and aquaculture feed.

Long before Chile enjoyed success as an important international grain exporter, biological geneticist Erik Von Baer saw an opportunity in the natural resources and climate of his home region of Araucanía. In March 1956, with the support of ten farmers in the region, he started Baer Seeds (Baer), a genetics company that is devoted to researching and developing new plant varieties for local farmers. Formed from humble beginnings, Baer received financial support from local farmers and in turn supplied them with plant varieties that would provide the greatest yield in the region’s environment. This approach proved to be very lucrative for the farmers and Baer, which became one of the leading developers of new seed varieties in Chile.

Research and Development

With the financial backing of the farmers in hand, Baer launched its research and development (R&D) initiative to breed and produce seeds that would be of maximum benefit to the farmers that invested in the company. Early R&D work focused on bringing in a range of unfamiliar agricultural crops and testing them to see how they would grow in the region’s environment which is filled with deciduous forests and open plains that are perfect for agricultural cultivation. Baer acquired a field that it used exclusively for testing purposes, and once it grew a crop successfully the company would supply the crop to local farmers for a trial run. The farmers would report back to Baer on the success or failure of each crop, which helped Baer determine the next course of action for its R&D. Because of these tests and trials, many new crops were introduced to farmers, who quickly found new sources of food and income. One of the most important agricultural products Baer introduced to the region in these early days was a Swedish variety of rapeseed (Brassica Napus), a bright yellow flowering plant that is used to produce oil (such as canola oil) and biofuel, which went on to become Chile’s leading oilseed crop.

Baer’s early R&D successes brought about another important dimension to the company’s work. While it continued to introduce new crops to the region, in the mid 1960s it started serious research into developing new plant varieties specifically engineered to be the most productive in the Araucanía region. In 1967, Baer launched its first genetically engineered wheat – Baer Intermediate – and it quickly became the most widely sown variety in Chile. The following year, Baer launched an intensive R&D program into a new variety of white lupine (lupines albus). The initial goal was to develop a new breed of white lupine that could be used as a forage crop (a plant only consumed by livestock in fields) in the colder regions of southern Chile. When Baer made various attempts at breeding it with other crops such as soya, the company discovered that it could develop a new plant variety that can be sown in cold environments and also maintain high levels of protein and oil, making it suitable for human and animal use.

With this new variety in hand, Baer launched its Winter Nursery Program in which it provided farmers with this new, hardy variety of white lupine. Farmers in the Araucanía region quickly discovered that they could enjoy two harvests a year from the new variety, and participating farmers in southern regions of the country could harvest a crop that was previously impossible to grow. Through the success of the Winter Nursery Program, Baer’s new white lupine variety proved to be immensely popular, and by the early 1970s it replaced Baer Intermediate as the company’s most important plant species, which also made a considerable contribution to the development of Chile’s agricultural industry.

Building on the success of the Winter Nursery Program, Baer continues to launch similar programs with many of its new plant varieties, fertilizers, agrochemicals and other plants that have been imported and engineered to adapt to the climactic conditions of Chile. Baer draws on its decades of experience and know-how to provide technical assistance and support farmers and other seed companies participating in its programs. This strategy of implementing new developments through trial programs has become a very important part of the company’s overarching R&D goals, as it gets new plant varieties out of Baer’s testing fields and into real-world farming situations. It has proven to be a successful and integral part of Baer’s overall operations, as it accelerates the development of new plant varieties, ensures quality and brings new crops and resulting products to the market quickly.

Baer continues its R&D work into developing novel and successful plant varieties in all important agricultural crops, such as cereals, rapeseed and forage crops. The company’s R&D successes have also earned it significant attention from multinational seed, fertilizer and chemical companies. As a result, it has become the partner of choice for R&D and testing when such companies want to export or develop a new product for the Chilean market. With its own modern laboratories, seed cleaning facilities and three research farms with over 1,000 hectares of space, Baer has more than enough expertise and infrastructure to meet its internal R&D goals as well as the R&D goals of its clients.

Baer introduced rapeseed to Chile (Photo: Dag Endersen)

Commercialization

After four years of R&D, Baer was finally ready to bring its products to the market. In 1960 the farmers that invested in the company formed the Saprosem Cooperative (the Cooperative), which worked with Baer and other plant breeders to produce and market newly developed plant varieties, fertilizers and other agrochemicals. With the success of Baer’s R&D as its backbone, the cooperative quickly grew into Chile’s largest seed-producing firm, with the majority of distribution activities handled by the state-owned National Seeds Firm (NSF). After the NSF was privatized, various events led to the dissolution of the Cooperative in 1981, which had an effect on the commercialization of Baer products. A number of the Cooperative’s seed breeder member’s formed Saprosem Ltd. (Saprosem), a new firm which was established to breed and market Baer seeds. At the same time, Baer introduced its own production line and focused on producing seeds that were not only already successful and proven, but also newly developed seeds that did not yet have a guaranteed market. The company also began to develop and market new varieties of organic seeds.

As of early 2011, Baer continues to produce and market its own products. The company has developed many different varieties of seven types of seeds: oat, barely, lupine, rapeseed, quinoa, triticale and wheat. Many of the these varieties are made using the Clearfield Production System, a novel technology developed by BASF, the world’s largest chemical company, which uses enhanced, traditional plant breeding techniques to control many problematic grass and broadleaf weeds.

Partnerships

The new internal production initiative – as well as that of Saprosem – focused largely on products for farm use (e.g. animal feed). However, many of Baer’s products before the dissolution of the Cooperative were also meant for human consumption, and this market represented an important part of the company’s business. To maintain its competitive edge, Baer partnered with AVELUP Ltd. (AVELUP), a Chilean company that develops and markets nutritional organic grain-based products for human consumption. Working with Baer, AVELUP tests new seeds and plant varieties to commercialize a wide range of organic products for the domestic food industry. The company also exports Baer seeds and plant varieties (such as naked oat and white lupine) and uses them to develop and market animal feed.

Although the company’s experience and expertise provides it with an advantage when determining what kind of new varieties should be developed, the vast majority of new varieties are in fact brought about through various R&D partnerships with specialized centers, universities and private and state firms. Under these partnerships, the organizations have common goals in mind – such as to develop a hardier variety of wheat – and to provide Baer with a specific germplasm (a collection of genetic resources for an organism) for that purpose. The company then uses this germplasm as a base for its research and develops a new variety according to the needs of the providing organization(s). After R&D and testing, Baer provides the organization(s) with income-generating technical assistance for the production and marketing of the new varieties.

Through these partnerships, Baer also carries out R&D related to herbicides, fungicides, fertilizers, and plant regulators in order to obtain the technology packages and recommendations for the different cultivars in the areas in which they are sown.

Licensing

Because new Baer-developed seed and plant varieties give farmers a significant advantage in growing and harvesting new crops, the company wanted to expand its market reach as much as possible. Going beyond in-house and partner-based commercialization, Baer has made considerable use of licensing throughout its history. One of the most lucrative and earliest major licensing deals was the distribution agreement with NSF, in which NSF paid licensing fees to Baer for the use of the company’s new varieties. This deal generated much needed income for the company to continue its R&D activities, and such licensing initiatives remain a mainstay of the company.

Licensing agreements are also integral to the new plant and seed varieties that were developed out of partnerships (which represent the majority of the company’s work). Baer grants licenses to its partners for its developments, which provides a steady influx of income that the company puts to use to continue its R&D. This scheme has proven to be very successful, and the many licensing agreements have not only been a source of income for the company, but have also allowed its new varieties to reach farmers throughout the country and play an important role in the growth of Chile’s agricultural industry.

Baer’s logo, INAPI trademark registration No. 821337

IP Management and IP Infringement

Because over seventy percent of Baer’s sales portfolio corresponds to its new plant varieties, use of the intellectual property (IP) system is essential to the company’s competitive strategy. To that end, the company seeks to protect all of its new plant varieties. Baer undertakes most of the IP protection activities – from application to management – in-house, and also retains legal counsel for specialized advice when it is deemed necessary.

The popularity of Baer’s new plant varieties has also unfortunately given rise to imitators and IP infringement. Of specific concern is the illegal and unlicensed trade in the company’s seeds, which is a constant problem. The company has taken an active role in an effort to curb this illicit activity and is a member of Chile’s Breeders Committee of the National Association of Seed Producers (ANPROS), which promotes breeder’s rights and works to stop illegal trade and other forms of IP infringement. Baer has taken such an active role in ANPROS that owner and manager Erick von Baer became Director of the organization.

New Plant Varieties

Under Chile’s 1994 law for the protection of new plant varieties, breeders enjoy rights for the protection of new plant species which, due to their high technical and financial cost, must be protected within a legal framework. Baer is an avid user of this legal framework, and as of 2006 Baer has protected over seventy plant varieties of eight different species. Some specific milestones in the company’s history include using the IP system to register new varieties such as Victoria-Baer (1989), Rumbo-Baer (1995) and Typ Top-Baer (1999). In 2009, the company developed a new variety of lupine – Pecosa-Baer – that is tolerant to the main fungal diseases, has homogenous ripening and has a generous yield of a sweet grain with high protein content.

In 2009, a draft bill was submitted to the Chilean government regarding new plant varietiesto bring national law in line with UPOV-1991 standards. As of early 2011, the draft law is still under consideration. Taking into account the IP infringement that Baer has faced, the company is a proponent of the new law. According to Mr. Erick von Baer, it is not only designed to bring in revenue for breeders so they can finance expensive R&D projects, “…but also to standardize products and facilitate traceability in the production chain.” Mr. Baer argues that the modern food industry requires standards and uniform products, and if Chile cannot offer that, it will never increase its presence as a major international agricultural player.

Trademarks

To protect its brand names and therefore its image, Baer is an active user of the trademark registration system in Chile. In 1977, the company registered a trademark for its name and logo with the Instituto Nacional de Proprietad Industrial de Chile (INAPI). The registration was updated in 1987, 1997 and again in 2008.

Business Results

Thanks to Baer’s successful development of new plant varieties, partnerships with domestic and international breeders and extensive use of the IP system, the company has become one of Chile’s leading seed producers and R&D centers. It has been able to maintain a leading market position with many different plant species, such as wheat, barley, oats lupines, quinoa, rapeseed, and forage seeds. In 2008, founder, owner and manager Erick von Baer received the Innovation Award of the Country Land Magazine for his company’s development of Pecosa-Baer, a new variety of wheat resistant to pesticides.

More than a Familiar Taste

From humble beginnings, Baer made inventive and successful use of R&D, partnerships and the IP system to propel itself to the forefront of the Chilean agricultural industry. From helping rural farmers increase their livelihood to fostering the growth of the economy, Baer has used IP as a productive tool to make a lasting and positive impact.

Source: WIPO