Seed Money

July 29, 2011 09:58 AM
 

The right seed could cost more in 2012

Expect corn and soybean seed prices to edge slightly higher in 2012. Although seed companies haven’t put a price tag on the crop yet, costs associated with refuge-in-a-bag and high commodity prices are expected to contribute to the bump.

Seed pricing is always a moving target and can get competitive as companies maneuver to gain market position. "There didn’t seem to be as much price-cutting in 2011, probably because of the reduction in inventory on some hybrids due to the short seed corn crop," explains Craig Newman, vice president of sales and marketing for AgReliant.

The Chicago Board of Trade price has a significant impact on the cost of goods, says Chuck Lee, Syngenta’s head of North American Free Trade Agreement marketing for corn and soybeans. "To manage these costs, we’re likely going to have to raise prices. We are also stacking a lot of traits [into hybrids], which provides more value to the grower."

Terry Gardner, director of marketing and sales for Pioneer Hi-Bred, says that new products are typically priced higher than those they replace due to the added value they bring growers. "We share that value with growers. Commodity prices do affect the cost of production, but we take a long-term sustainable approach and do not follow commodity prices up and down," Gardner says.

Ben Kaehler, U.S. seed affiliates leader for Dow AgroSciences, notes that pricing has not been finalized for the coming year. "We’ll evaluate the products and price them based on the technology they contain and the value they deliver. I expect some products will be higher [than 2011] and some will be lower," he states.

The industry has been undergoing costly retrofitting of seed houses in order to blend refuge into the bag. Other added expenses with refuge integration include more seed waste to match seed size and precise packaging to ensure the refuge percentage.
 

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