As seed companies continue to deliver new genetics and trait packages in their seed products, producers can expect to pay a bit more in 2013. While individual pricing packages vary depending on the product mix, industry sources indicate seed will be 5% to 10% higher.

A diverse product offering, increased costs of production, and significant investments in research and development have helped to push prices higher. And with historically tight inventories that are driven by increased demand and less than stellar seed production years, it’s unlikely that any significant discounts will await producers who hold off their purchases.

“Pricing will depend on the product mix and hybrids a farmer chooses,” says Danielle Stuart, a spokesperson for Monsanto. “If a farmer selects a new hybrid, it will be priced slightly higher than a hybrid that has been on the market for a few years.”

Higher seed production costs

Those interviewed are confident that seed supplies will be adequate for 2013 demand, but acknowledge that the 2012 drought did put a wrinkle in production for the 2013 planting season.

“It’s important to understand that industry wide seed production costs are rising again this year,” says Jeff Hartz, Wyffels Hybrids director of marketing. “Producing seed in South America can be very expensive, and in some cases these production cost increases may outstrip end product costs increases to the grower.”

As producers wrap up harvest for 2012, early indications are that the investments poured into the latest genetics have paid off. While yields were not exceptional, the genetic packages did perform better than expected – and in some cases much better. “Producers are recognizing the genetic advances in seed, especially comparing this drought to the others that they have faced,” says Mick Messman, DuPont Pioneer U.S. product marketing. “This year is a really good example of showing the advancement of that investment. The feedback from our customers has been that they were pleasantly surprised with their yields given the tough growing conditions.”

Tight seed supplies

“Our seed production fields experience the same type of environmental pressures and stresses that our grower customers experienced,” says Hank King, Mycogen Seeds, corn marketing. “Prolonged higher temperatures and low rainfall significantly impacted the summer seed crop in some areas.”

Concerns over seed supply aren’t anything new. During Monsanto’s fourth quarter earnings report, Brett Begemann, Monsanto President and CCO, said: “It is obvious that our business planning is happening against a backdrop of this year’s devastating drought. On the positive side, as farmers turn toward next year, seed is a priority. As I think about seed availability, 2013 is set up to be remarkably similar to 2012. Last year, storms and heat stretched our seed production. This year, it was drought.”

Expanded growing areas

To combat weather risks, as well as increased demand, companies have diversified the growing areas. “We grow across a wide range of the U.S., east to west and north to south,” reports Pioneer’s Messman. “We select high-performing, productive fields and more than two-thirds are irrigated. And we plant more seed than we expect to sell.”

As with most years, the most popular hybrids will be in great demand, which means supplies could be tight depending on the hybrid and geography.

“The seed industry always seems to come up with enough seed to cover acres,” Hartz says. “The issue, to a greater or lesser degree every year, is what seed each brand is going to have in significant inventory.”

Hartz explains that the key in building a good brand image is to have high inventories of the best seed products. “You need to have a strong portfolio of products to be successful today. You need three, four and five hybrids you can put on a farm that all have the capability to dominate. This year, it may be hard for many brands to build inventory of those key hybrids.”

But until actual product is bagged and shipped, it is difficult to accurately predict which products will actually be short, and in what geographies.

Order early

The speed of this year’s harvest also saw an uptick in early order activity, companies indicated. “We have already seen a strong response to our early-order programs this year,” King says. “Seed supplies will be tight, but growers have a better chance of getting the products they want if they order and purchase early.”

Beck’s Hybrids reports similar early order activity. Ryan Parkin, Beck’s marketing communications, says, “We encourage our customers to order early for two reasons – lock in the hybrids that they prefer on their operation and utilize early order incentives.”

Production in South America

The company doubled production acres in 2012 due in part to the short seed supply in 2011, and to prepare for adverse weather conditions, according to Parkin. “We are also producing additional seed in South America this winter to assure our customers have an adequate amount of seed available to plant,” he says.

Many U.S. companies have increased seed production in South America. Newer seed products are brought to market more quickly by using South America.

“Production in South America has been a part of our overall supply strategy in the past, and it is certainly an option this year that will allow us to augment our North American supply,” Messman says.

The rest of the input forecasts may be found here:

Crop protection

Seed

Fertilizer

Machinery

Interest rates

Farmland

Farmland myths

Fuel