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Seed prices should hold steady for 2011 season

Seed prices should hold steady for 2011 season

Producers making 2011 seed purchases should find prices at or slightly above last year’s levels, and even some instances of prices lower than those of last year. It’s the newest hybrids and varieties that will be priced modestly higher. This is a welcome respite to the dramatic price increases seen over the past few growing seasons.

Seed costs jumped dramatically this past season from two years earlier, according to data from the University of Illinois. In 2008, seed costs were $67/acre for corn compared to $93/acre this year on highly productive farmland in central Illinois. Soybean seed prices were $43/acre in 2008 and $60/acre for soybean seed this past season. Early projections peg 2011 seed prices at $98/acre for corn and $62/acre for soybeans.


Flat to lower prices

“Our seed prices for 2011 are flat to lower versus last year,” says Brian Humphries, national sales manager for Wyffels Hybrids. “That holds true for our entire product lineup, regardless of geography.”

Humphries attributes a “leveling off” of technology prices as the key reason why prices won’t be moving significantly higher. “Over the past few years, we have worked to gain as much efficiency as possible in our production and marketing,” he says. “But the price of the newer technologies has been the major price driver.”

Terry Gardner, North America product marketing director for Pioneer, says year-over-year pricing for Pioneer products will remain generally flat, although some newer products will see a slight price increase. “We base our product prices on the value they give to the grower,” he says. “And not every producer needs the same set of genetics or traits.”

Earlier this year, Monsanto announced a reset of its pricing platform for the company’s trait packages. Prices are expected to be flat to lower for some of the company’s current traited lineup, including Genuity SmartStax corn and Genuity Roundup Ready 2 Yield soybeans. “All our soybean seed will be sold by count, and seed treatments will be an optional offering,” says Jennifer Ralston, soybean product management lead for Monsanto.

Stacked traits in corn seed remain a hot seller, and companies expect those products to stay in high demand in 2011. “There’s a continuing trend to accept stacked products and the value they deliver,” says Chuck Lee, head of corn and soybean marketing at Syngenta. The company’s new Agrisure Viptera corn trait that was included in the company’s new traited corn offerings accounted for nearly 20% of the company’s corn portfolio.


Price pushback on traits

While the industry remains committed to newer traits, this year producers often rejected higher-priced traits after several years of significant price hikes. “With the level of seed price increases seen over the past few years, producers started to push the pencil more,” says Gary Schnitkey, professor of agricultural economics at the University of Illinois. “And as they got more on-farm experiences with the various products, they started to see that they might not need the latest and greatest seed technology to make a profit. The value has to be there for a seed to be worth the price.”

So far, this fall’s early harvest pace has accelerated seed buying as producers evaluate products and secure product for 2011. It’s unclear if last-minute discounts will be seen, although companies will be under pressure to hold prices at current levels. “There will be pressure to hold on to, or gain, market share,” says Tray Thomas, Founding Partner of the Context Network. “Price cuts might help their market share numbers, but these companies have a tremendous investment in research. Reducing prices much will make it hard to meet Wall Street expectations, and negatively impact share prices.”

That could have a long-term impact not only on the seed companies but producers as well. “Reduced seed and technology prices mean less money for research and development,” Thomas says. “Current R and D costs simply can’t be supported if there are deep price discounts.”

Supplies are adequate, companies note, with no major hiccups in seed production this year. However, the hot products will run out first, so growers should make their decisions early.

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