Do Independents Have an Edge?

 
Do Independents Have an Edge?

Market environment plays a role in farmer and seed dealer relationships

Big, medium, little, national or regional, seed companies come in all shapes and sizes. What advantages can an independent seed dealer have over a multinational seed company? 

Independent seed companies are typically family-owned and most own their seed production fields. As a result, overhead isn’t as steep, and the company has more control over the seed production process. 

“We don’t have to pay for contract growers,” explains Kevin Cavanaugh, director of research at Beck’s Hybrids. “The multinational brands do, and therefore, their cost to produce seed is greater.” 

That cost savings can be passed down to the farmer, which is especially important with today’s commodity prices.

Regardless of your supplier, the price of seed depends on several factors, including traits. Seed from independent companies might be cheaper—or it might not. One of the advantages of an independent seed company is they might offer the broadest range of traits, as well as conventional and even organic hybrids. 

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Regardless of supplier, farmers must choose the seed best suited to their production environment.

“Most independents have conventional seed, ones with no traits, and can sell to farmers if that is all they want,” Cavanaugh says. “However, the multinationals are technology providers, and when it comes to traits, they pay their stockholders with the revenue from the traits they sell. On a per-acre basis, they make more money on the trait revenue than they do on the genetics or the bag of seed.

“This year, farmers want less traits to cut costs, and all of a sudden, the multinational companies are really struggling,” Cavanaugh adds. “Our numbers were up nearly 20% on both corn and soybeans this spring. We’ve seen some really strong growth in our market share during 2015.”

While multinational companies own most of their offered trait technology, independent seed companies can take advantage of licensing agreements to cherry pick the germplasm and traits they want to offer. 

“Many of the traits are tied to convenience,” Cavanaugh says. “When times get a little bit tougher, growers are willing to do a little bit more so they can still be profitable.” 

But a farmer can also give up a trait, such as corn rootworm, and find himself in a catastrophic situation if infestation occurs. Farmers must know which traits are important to their area. That’s when a regional company might have an advantage over larger companies. 

“We try to find products in every given region that are great in those respective regions,” Cavanaugh says. “We see that as an advantage because that will get another 5 bu. to 10 bu. of yield in that given geography.”

Trust plays a big role in a farmer and seed dealer relationship. “We try to help growers understand where to invest their dollars,” says Tom Burrus, owner of Burrus Seed. “It isn’t always about saying I’m going to spend the least amount of money; it’s about spending my money on things that give me a greater return.” 

At Wyffels, Jeff Hartz, director of marketing, says their focus is on the customer and their needs, which means understanding their farm and specific hybrid and technology needs to help ensure they can squeeze the maximum amount of profitability out of every acre. 

“In terms of focus, we do just one thing and that’s sell corn,” Hartz says. 

While customer service is paramount to farmers, independent seed companies know they have to incorporate premium genetics and technology to remain competitive.

“Our goal is to link technology to tradition,” Burrus says. “For example, we have invested in seed treatments. It’s one of the things that makes us different. Our soybeans are treated with a full complement of fungicides, insecticides and biologicals.” 

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