Outlook 2010: Seed

Amid the turbulent storm of lower sales, uncertain service, and general market pessimism that dominated 2009, the seed sector was like a bright sunny day. According to statistics compiled in our annual CropLife 100 report, CropLife found that seed sales were the one crop input/service segment to experience any kind of positive sales growth last year. For 2009, CropLife 100 retailers had $2.6 billion in sales, up an impressive 18% from the 2008 totals. Market share for seed now stands at 13% of all input/service sales for retailers, up 4% from the start of the 2000s.

Given these facts, a market observer might expect the seed sector to be the favored son among ag retailers. But this is not universally the case. Indeed, many retailers are beginning to question just how deeply committed their operations should be to seed.

If pushed, most retailers remain bullish on the future prospect for seed sales as an important part of their business models with grower-customers. “We believe we can lead with seed,” says Tim McArdle, vice president and general manager for Brandt Consolidated, Springfield, IL. “Companies are going to bring new traits in the next few years that are more output traits, so it’s hard to even sell a farmer crop protection or fertilizer unless you know what seed variety he’s going to plant and what potential it has.”

Direct Competition

Yet, others aren’t so certain that leading with seed makes sense. Or cents. A big issue is the fact that many seed suppliers by-pass the retail channel completely and sell their products directly to growers. “Sales by seed companies directly to growers is a big limitation to profitability,” says Tom Fullenkamp, CEO for Golden Furrow Fertilizer Inc., Eldon, IA. “We are excluded from being able to sell both DeKalb and Pioneer products.”

Just as troubling as being excluded from the mix, many retailers say seed salespersons also present a market challenge. In particular, says David Hintzsche, president for Hintzsche Fertilizer Inc., Maple Park, IL, many seed salespersons in his territory make it a practice to “give away” seed to maintain their market shares. “Our biggest problem to seed profitability is seed dealers who do not try to make money selling seed,” says Hintzsche.

Then there’s the whole question of the costs of selling seed. According to many retailers, the increased costs associated with technology advances and new traits in the seed sector are difficult to pass onto grower-customers. “Seed companies are overpricing their products,” says Brian Hefty, manager for Hefty Seed Co., Baltic, SD. “This forces retailers to take little margin if they want to get a price to the grower that he is willing to pay.”

Scott Hier, vice president of agronomy for South Dakota Wheat Growers, Aberdeen, SD, agrees. “There has never been the margin in seed,” says Hier. “There are too many brand dealers in our area.”

This is made all the more difficult by the costs associated with handling seed, say some retailers. At the recent State of the Industry roundtable discussion held by CropLife at the Agricultural Retailers Association meeting, one retailer said his company typically spends approximately 70% of its annual budget on selling seed. However, the segment represents less than 15% of total revenues.

“There is a tremendous demand for salesmen time to train and sell seed vs. other crop inputs,” says Dave Coppess, executive vice president, marketing and sales for Heartland Co-op, West Des Moines, IA.

Pulling Back

Because of all of these factors, some retailers are re-evaluating seed in their company portfolios. Some are “splitting off” seed from the rest of their business, trying to better determine how to make the segment profitable on its own. Others are either pruning choices or dropping seed from their operations completely.

“We are in the process of ridding the sales line-up of the least profitable lines,” says Keith Jorgensen, president for Delta Growers Association, Charleston, MO.

Despite all this, the outlook for seed sales in 2010 remains positive. According to USDA, biotech crops now represent more than 80% of all soybeans, corn, and cotton planted in the U.S. This is expected to keep growing in 2010, which should increase seed sales for retailers another 5% if past year performances can be used as a gauge. Furthermore, seed companies will continue pushing to expand their businesses, says Golden Furrow’s Fullenkamp.

“The major seed companies will pull the strings more and more and tie fertilizer, seed, and chemical together and get bigger and bigger,” he says.

Leave a Reply

Seed/Biotech Stories

Syngenta headquarters in Basel, Switzerland
Crop InputsFortune: Inside China’s $43 Billion Bid for Food Security
April 26, 2017
(Via Fortune.com) The worst famine in human history occurred in China from 1959 to 1961. An estimated 34 million people Read More
BPIA logo
Seed/BiotechBPIA Files Comments with USDA
April 24, 2017
The Biological Products Industry Alliance (BPIA) has filed comments with the USDA’s Animal and Plant Health Inspection Service (APHIS) Plant Read More
Pam Marrone
Crop InputsQ&A With Pam Marrone On The World’s First All-Biological Seed Treatment
April 4, 2017
Marrone Bio Innovations Inc. and Israel-based Ground­work BioAg in February announced successful field trials of the world’s first all-biological comprehensive Read More
Soybean Field
Seed/BiotechBayer Invests $8.1 million In Soybean Advancement In The Midwest
March 16, 2017
Growers in Illinois and across the Midwest now have the added benefit of a state-of-the-art soybean research facility, increasing accessibility Read More
Trending Articles
Crop InputsFlying Under the Radar No More, FMC Goes Big
April 13, 2017
Describing FMC as “under the radar,” admittedly, is probably a stretch. But in a snap of the fingers, FMC upped Read More
Young Corn Plants
Crop NutritionStill Hunting Yields
April 1, 2017
There’s no denying it — the agricultural marketplace today is undergoing a fundamental shift in fortunes. Not too many years Read More
Nutrients for Life Foundation Teacher
FertilizerNutrients For Life Foundation Celebrates 10 Years Teaching Fertilizer Education
March 23, 2017
Those in agriculture know fertilizer is a vital ingredient to grow strong, productive crops. In fact, fertilizer is responsible for Read More
AdjuvantsA New Weed-Control Era Begins: But First, One Last Obstacle
March 4, 2017
There is trepidation, there is reluctance, and there is excitement. Ag retailers feel it all about the new dicamba and Read More
LIFT Academy video screenshot
Crop InputsLIFT Agriculture Academy: A Q&A With West Central Distribution’s Dean Hendrickson
March 1, 2017
West Central Distribution recently launched its LIFT Agriculture Academy, a new, premiere training and professional development resource for West Central’s ag Read More
Farmer and aptop
Matt Hopkins10 Warning Signs Your Website Is Grossly Outdated
February 8, 2017
Your Website is often a visitor’s first impression of your ag retail business. A positive first impression can set the Read More
Latest News
ManagementWashington Update, Dow-DuPont Earnings, and the Passing…
April 27, 2017
Editors Paul Schrimpf and Eric Sfiligoj talk about the latest Beltway news, crop protection company 1st quarter numbers, and the Read More
BRANDT
CropLife 100Former PotashCorp COO Joins BRANDT Board
April 27, 2017
BRANDT has announced the appointment of another industry veteran to its board of directors. David Delaney, most recently EVP and Read More
Syngenta headquarters in Basel, Switzerland
Crop InputsFortune: Inside China’s $43 Billion Bid for Food …
April 26, 2017
(Via Fortune.com) The worst famine in human history occurred in China from 1959 to 1961. An estimated 34 million people Read More
Syngenta Sign
Crop InputsSyngenta Announces Changes in Board of Directors
April 26, 2017
ChemChina and Syngenta announced changes relating to the new Board of Directors of Syngenta following the closing of the ChemChina Read More
Crop InputsBioSafe Systems Introduces PerCarb Broad-Spectrum Bacte…
April 26, 2017
BioSafe Systems announces PerCarb (Sodium Carbonate Peroxyhydrate), a new alternative to potassium bicarbonate and lime sulfur products for use in Read More
Deere Twitter
EquipmentTop 10 Twitter Pics for #Plant17
April 26, 2017
Despite some wet weather in parts of the Midwest, growers and ag retailers are working feverishly to plant this year’s Read More
Donald Trump
Crop InputsTrump Targets Agriculture with Latest Executive Order
April 26, 2017
(Via UPI.com) President Donald Trump on Tuesday took executive action in an effort to help grow the domestic agriculture industry Read More
AGCO Ratliff featured
EquipmentAGCO Mourns Passing of Company Founder, Industry Vision…
April 25, 2017
AGCO Corp., a worldwide manufacturer and distributor of agricultural equipment and solutions, mourns the passing of founder and former President, Read More
Engenia soybeans
Crop InputsINNVICTIS CROP CARE Introduces VANDAL MOC Soybean Herbi…
April 25, 2017
INNVICTIS CROP CARE, LLC has announced the U.S. EPA registration for VANDAL MOC, a combination of sulfentrazone plus metolachlor. VANDAL Read More
Kochia
HerbicidesINNVICTIS CROP CARE Launches STAVE Post-Emerge Broadlea…
April 25, 2017
INNVICTIS CROP CARE, LLC has introduced STAVE as the newest addition to­ its expanding portfolio. STAVE will be a great Read More
Sonny Perdue
LegislationSonny Perdue Confirmed by Senate as Next Agriculture Se…
April 25, 2017
After months without a secretary of agriculture, the Senate voted Monday evening to confirm former Georgia Gov. Sonny Perdue to Read More
BPIA logo
Seed/BiotechBPIA Files Comments with USDA
April 24, 2017
The Biological Products Industry Alliance (BPIA) has filed comments with the USDA’s Animal and Plant Health Inspection Service (APHIS) Plant Read More
Eric SfiligojHope for Application Equipment Sales
April 24, 2017
The old saying goes that a “rising tide lifts all boats.” If this is indeed the case, then things may Read More
Stewardship video screenshot
ManagementNew Video Raises Awareness of 2,4-D Stewardship
April 24, 2017
A new public service video developed and produced by the 2,4-D Research Task Force, in conjunction with the American Soybean Read More
ManagementAn Inside Look at Award Winning Ag Retailer Gar Tooteli…
April 20, 2017
CropLife Editor Eric Sfiligoj discusses An Inside Look at Award Winning Ag Retailer Gar Tootelian Read More
Students Soybean Field
Industry NewsMACA Announces 2017 Young Leader Scholarship Recipients
April 19, 2017
The Mid America CropLife Association (MACA) Board of Directors selected 11 college students to receive the MACA Young Leader Scholarship Read More
Growmark FS Outlet
SoftwareKnoa Software Solution Helps GROWMARK Boost System Perf…
April 19, 2017
Knoa Software, a leading provider of user experience management (UEM) software, has announced that GROWMARK, Inc., a regional agricultural cooperative Read More
Crop InputsFBN Publishes ‘Voice of the Farmer’ Agricul…
April 17, 2017
Farmer’s Business Network (FBN) released today its “The Voice of the Farmer”, which the company is describing as “a special Read More