What is in this article?:
- Seed companies must weigh multiple factors for seed production
- Forecasting supply and demand
- Early ordering
Seed companies are now determining how much seed they will produce for the 2013 season.
Forecasting supply and demand
Throughout this process, customer demands also can change. “Market forces and product performance can frequently cause customer demands to change between forecasting time and actual demand need,” Bockhaus says. “The challenge is to have the right product at the right time as the true demand firms up.”
Long-range planning can last 12 to 18 months for commercial seed that’s supplied to producers, up to 24 to 30 months for parent seed production. All this is done with the same logistical and weather challenges that the customer faces. But shortages at any point of the cycle can severely impact supply.
“Production is always an exciting business,” says Eric Taylor, corn supply chain manager for Syngenta. “One of the most important processes is forecasting hybrid seed yields. Approximately 18 months before farmers receive their seed, Syngenta has to forecast the amount of seed that can be produced from an acre. There are several factors that play into that decision, which are different for each hybrid.”
Even though statistical models exist to help define the seed production forecast, “you end up feeling like the weatherman since your targets are never exactly right,” Taylor says. “Each individual field and its associated weather events is a chance to prove you wrong with a higher or lower yield.”
Rick Henley, corn business lead for Mycogen Seeds, says the company has a comprehensive forecasting and production planning process, “which is comprised of one part ‘tell’ and one part ‘ask.’ The ‘tell’ part is the strategic direction from management regarding new traits and technology; the ‘ask’ part is comprised of a lot of field input on existing traits and products.”
Still, the bottom line for corn seed production mirrors that of grain production: Poor weather conditions during the year can bite into production totals, and companies must hedge their bets to ensure that enough seed is available to meet demands.
At press time, the tight seed corn supply was in the spotlight as producers worked to get final orders, while the seed industry was ensuring demand is met. Of major concern were the high-end hybrids, where much production was shifted to South America due, in part, to poor North American production in 2011. Concerns of a tight seed supply in 2012 were echoed last fall, and companies were securing acreage in South America.