Top farm managers expect seed for the year 2000 to be plentiful and at bargain prices.
After last spring's discount war on seed, major purchasers are gearing up for another wild buying year. For the 2000 crop, purchasers anticipate plentiful seed supplies and more good deals. But this time, they hope the deals will occur early and not in a last-minute rush.
"[Last year's] discounts and free seed will cross our minds this fall and winter when we're lining up seed for next year," reports Rex Wilcox, farm manager with Stalcup Agri Services, Storm Lake, IA. "The bottom line is we will be aware of seed promotions and we hope everybody gets treated fairly. We want the price up front."
Grain producers should find good seed and fair prices to take the edge off low commodity prices. Several midwestern farm managers report they expect to find the seed they want at competitive prices. These managers told Farm Industry News how they plan to buy seed this winter along with what they expect to buy.
The late discounts for seed last spring put many buyers on hold. "In my mind, the question is how long should I wait before I buy?" reports Jerry Warner, Farmers National Company, Omaha, NE. "Prices for seed corn kept getting lower and lower. Those who bought early weren't necessarily rewarded. They were able to get the product, but there were all kinds of free deals that ended up putting out some pretty cheap seed towards the end of the season."
Warner says that Farmers National usually makes seed purchases or commitments at harvest time or shortly after on many of the 3,700 farms the company manages. This year it will probably do the same, but it will ask seed companies to "get the price set early rather than change it throughout the season. My advice to a seed company is to be up-front and fair with the grower and the grower should do likewise in order for the seed company to plan accordingly," Warner says.
Gary Walters, farm manager with Norwest Bank, Sioux City, IA, says that he also plans to continue booking at least half the seed purchases and prepaying in December for the 75 farms he manages. But as he did last season, he will go back to companies for a price adjustment if heavy discounting occurs in the spring.
His advice to growers is to keep buying options open for as long as possible. The goal is to book the best technology possible to guarantee a supply without getting stuck with a higher price than what is offered in February or March.
Although Walters' mail is already filled with seed catalogs, he says he won't book seed until he has a firm price in hand, which usually isn't until after harvest. And with companies that tend to discount, he'll wait on booking until after January 1.
Product managers for Ag Services of America, Cedar Falls, IA, also advise to wait to place orders until prices are set. Kevin Schipper says that the company goes through a budgeting and seed purchasing process for its 1,500 farmers from November through January. Seed selection should be based on what best suits the farm's needs and not discounts.
"We know seed companies would like to see price discounting practices minimized," Schipper says. "It is not doing much good for the industry. Companies work hard to develop quality products and pour a lot of money into research and development. Price discounting is perceived as less value in the products than what there really is."
Farmers buying for several hundred acres might try a group purchase with neighbors to obtain a lower price.
"I think smaller farmers to be competitive will have to start bundling their orders and going to dealers with a little more weight," suggests Walters. Large orders may cost only 25 dollars/acre for seed versus 40 dollars/acre for seed on smaller orders.
Smaller farms also could try concentrating seed purchases with one company to increase a discount. "If you go to three companies and get small discounts f rom each one, why not build your volume and go to just one for a bigger discount?" asks Stalcup's Wilcox.
Grouping inputs to obtain a good price also applies to seed and chemical needs. Called "bundling" in the ag business, bundled inputs can generate price breaks.
Schipper says many of Ag Services' farmers took advantage of a bundled package offered last year. Customers who purchased 75 percent of their seed from Pioneer and 75 of their herbicides from DuPont received an interest rate reduction of 1_1/2 percent on their entire line of credit.
Ag Services plans to continue offering bundling options to its clients for both price savings and convenience.
A lower-than-expected corn borer infestation could pressure seed companies to lower technology fees, suggests Wilcox. He hopes that possibly lower technology fees could lead to price breaks. Last season, he purchased a Bt corn hybrid with no technology fee and it appears to be doing well. His office manages 270 farms.
"We'll look at anything to help hold costs down," he adds. "Herbicide-resistant crops are still something to look at [for cost savings]."
risks of GM grains
After last spring's concerns about genetically modified (GM) grains, farm managers are weighing the risks of these hybrids/varieties against the benefits. As a group, the managers tend to use new technology like GM products quickly and extensively, according to Warner.
"I understand managers are much heavier users of Bt than farmers in general," he says. "I know they were quicker to adopt Roundup Ready beans, too. As a class of consumers, they are pretty bottom-line oriented.
"You need to run the economics of using GM products or not," Warner explains. "Get out the pencil and decide where you're at financially."
Ag Services also advises its clients to pick the correct genetics for their farms and then check the economics of adding a GM technology. The company tells clients that if the technology pays and a market is available for it, they should use it.
Walters says he will not buy seed that is not acceptable in foreign markets unless the growers have retail outlets for it. A few of his farmers do raise GM products for livestock, though. The crop goes directly to the feedlot and not through an elevator.
A buying group from Washington Court House, OH, also does not intend to plant RR corn because of export concerns. Manager Joanie Grimes says her group is taking a wait-and-see attitude about purchasing other GM hybrids/varieties. It is waiting to see which elevators are willing to segregate the products.
Many farm managers will look at value-added crops to bolster farm incomes next year, including the Ohio group. Grimes says it will actively seek specialty products such as white and waxy corn. It also is looking at specialty soybean products such as tofu. "While it's limited acres, it's been a good program for us," Grimes says.
Warner says that Farmers National will grow value-added crops where possible. These crops let the company extract a bit more money for a little higher level of management. He expects an increase in acres for high-oil corn, white corn and food-grade production next year. Warner knows that, because livestock prices are low, the premiums will be less than they were this year. He expects high-oil corn premiums to run 15 cents/bu. compared to 25 cents/bu. this year. White corn premiums should be 50 cents to 60 cents/bu.
Another area some farmers may look at is organic farming. Warner says he has seen big premiums for non-GM organic products. "I view organics like any other value-added contract," he explains. "If we can do it and make a margin, it should fit in our operation. But only a limited number of farms can go organic.
"With commodity prices where they are today, we have to do something," he adds. "If a farmer has a high-quality farm with access to a specific market that allows him to grow a value-added crop, I would encourage him to look at that really hard."
When seeking seed bargains, growers should not forget the plantability of the seed.
"If you can't find the right seed to work in the planter, it is a poor purchase," Wilcox says. "You have to be able to get a uniform stand out of whatever you select. If you can't, it won't matter if you did find the best seed because you're not going to get a good yield."
Wilcox advises growers to select the size and uniformity of seed that works in the planter. Paying more for a uniform seed to ensure a good stand could be a good investment.
On the other hand, if you know your planter can handle smaller seed, buy it, he says. It should save you some money.
The farm managers don't forget the basics, however, when it comes to seed selection. They still check performance of new hybrids/varieties on field tests as well as how lines performed on different farms. Only when they have that information will they start shopping.
"I've always recommended that farmers buy the right genetic package to match their soil type and fertility levels," reports Schipper. "We focus on matching soil type to seed. Once that decision is made, technology comes into the picture."
In fact, that is still the most basic advice the managers give. Select seed that works on your farm. Once you've selected it, then you can seek the best price possible. Because even the best-priced seed costs dearly at harvest if it won't perform on your soil.
In the year 2000, expect to find more varieties and hybrids in seed lines containing traits that were developed in the past few years. And all indications are that the seed companies will have plenty of seed to sell.
Some of next season's seed lines will include the following characteristics:
* More varieties that have not been genetically modified.
* New Roundup Ready (RR) corn hybrids. Companies expect more interest in these hybrids due to the heavy acceptance of RR soybeans.
* More corn hybrids with imidazolinone-tolerant (IT) corn (now called Clearfield) because it is not a transgenic hybrid and carries no technology fee.
* Expanded geographies where corn hybrids with Bt traits may be used.
* A wider range of herbicide and insecticide options. All will be offered in more stacked-trait hybrids/varieties.
* For seed production, a limited supply of the SeedLink Pollination Control line from AgrEvo, which eliminates the need to detassel seed corn.
* Several new stacked RR soybean numbers, and varieties resistant to soybean cyst nematode.
* More RR soybean varieties to fit northern geographies.
* More hybrids/varieties and greater availability of specialty grains like waxy, high-oil and white corns and high-oleic soybeans. Asgrow has gone so far as to develop a soybean variety to fit the Creston, IA, processing plant location.
High-technology traits. Seed companies will continue to blend and stack more high-technology traits to meet customer needs. Increasingly, farmers will be able to "customize" their seed based on location, soils and markets.
Research also is continuing on several new traits, such as rootworm resistance and output traits to improve grains for processing and livestock feed.
Financing options. If you need financing, many companies are ready to help. Last year's heavy interest in financing drove home the message that companies need to offer financing to make sales. So expect to see more and improved financing options for your seed purchases.
Garst Seed, for example, has offered financing the past five years. Last year, it increased the financing option to a customer's full crop, which garnered heavy interest, and it plans to continue offering the total crop financing plan this next year.