Ian Gilson, CFA
S&W Seed (SANW) Stevia update:
The company has provided some news on Stevia. The first crop has been planted and leaf should be available for inventory and seed production later this year. The first shipments are expected in the December quarter, the second quarter of the 2012 fiscal year. We had not included any significant revenue in the first fiscal quarter and only $0.15 million in the second quarter in our published estimates. The company has exclusive rights to use improved stevia plant varieties collected by Dr.Shock
of Oregon State University. Testing for Reb A sweetener concentration is currently underway in S&W Seed test plots. As the company plants and harvests plants with better Reb A values we would expect higher prices per pound.
Truvia (stevia/Reb A from Pure Circle) is now the second highest selling sugar substitute in the United States, passing Sweet N' Low in about two years after its commercial introduction, with the overall Stevia market exceeding $500 million a year.
S&W Seed's value to Pure Circle is being able to produce more productive plants using cross breeding of plants currently in test plots. As the US market grows sweetener companies will have to treat the leaf closer to the market than Asia, and S&W Seed (SANW) will be a pivotal player in this market.
The Alfalfa Market:
The shortage of alfalfa hay (due to low levels of planted acreage in late 2010 and early 2011) has caused significant increases in prices. (Source: The Holt Report, Inc.). This will pull acres back into alfalfa plantings, increasing the demand for seeds from S&W Seed.
August 16, 2011
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