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

Untreated soybean seed Heartland Coop
Seed/BiotechMarrone Bio Innovations, Groundwork BioAg Bio-stacked Microbial Seed Treatments Result In Increased Yields
February 13, 2017
Marrone Bio Innovations, Inc. and Groundwork BioAg, Ltd have announced successful seed treatment field trials of the world’s first all-biological Read More
Seed/BiotechNufarm Introduces New Seed Treatment Solutions
February 3, 2017
Nufarm Americas, Inc. has announced the addition of new, innovative and proven seed treatment solutions to its product portfolio. Promoting Read More
Seed/BiotechAgrisure Viptera Trait Demonstrates Effective Control Of Above-Ground Insects
February 1, 2017
Across the Corn Belt this past season, hybrids containing the Agrisure Viptera trait demonstrated effective control of above-ground insects in Read More
Syngenta plant
Seed/BiotechSyngenta AI Challenge To Address World Hunger With Machine Learning
January 31, 2017
Syngenta and the AI for Good Foundation have partnered to launch the Syngenta AI Challenge, a new international competition focused Read More
Trending Articles
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
AgriSync
Matt Hopkins17 Agriculture Apps That Will Help You Farm Smarter In 2017
December 9, 2016
Ag professionals are working smarter, not harder, than ever before. Smart farming technologies have enabled them to reduce costs, maximize Read More
R4023 Sprayer, John Deere
CropLife 100Ag Retail Equipment Report: The Green Party Continues
December 7, 2016
In the annual race for sales in the ag retail equipment marketplace, the color schemes for participants are a little Read More
Mike Stern
Precision AgClimate Corp. CEO Talks Retailer Support For Digital Ag
December 1, 2016
CropLife Magazine’s sister publication, AgriBusiness Global, recently sat down with Mike Stern, CEO of The Climate Corp., following the Monsanto subsidiary’s Read More
Precision AgTrimble Debuts End-to-End FMIS Platform
November 28, 2016
October’s inaugural PrecisionAg Vision Conference left this author with many thoughts and things to ponder in the coming months. Probably Read More
CHS Primeland
CropLife 100The 2016 CropLife 100 Report: Reviewing The Many Bulls And Bears Impacting This Year’s Marketplace
November 28, 2016
For virtually all of 2016, the nation was wholly focused on the big Presidential election. Some folks aligned themselves with Read More
Latest News
Roy Blunt
LegislationARA Recognizes Blunt, Heitkamp For Legislative Efforts …
February 17, 2017
Agricultural industry continues to face federal regulatory challenges. Thankfully, agriculture’s allies in the U.S. Senate stepped forward. The Agricultural Retailers Read More
LegislationThe Fertilizer Institute Commends Senate On Confirmatio…
February 17, 2017
The Fertilizer Institute (TFI) President Chris Jahn issued the following statement on the Senate confirmation of Oklahoma Attorney General Scott Read More
Trump, Senate, Cabinet
LegislationBREAKING: Trump EPA Nominee Scott Pruitt Confirmed by S…
February 17, 2017
Scott Pruitt, who as Oklahoma’s attorney general spent years suing the Environmental Protection Agency over its efforts to regulate various Read More
ManagementFebruary Road Trip Edition
February 17, 2017
Editors Paul Schrimpf and Eric Sfiligoj discuss their recent visits to Indiana and Kentucky. Read More
Heritage Cooperative Finished Building Aerial
ManagementHeritage Cooperative, Agland Co-op Approve Merger
February 17, 2017
Agland Co-op and Heritage Cooperative stockholders have both approved the merger agreement between Agland Co-op and Heritage Cooperative. Now begins Read More
LegislationARA Fly-In: Ag Retail Descends on Capitol Hill, Lawmake…
February 15, 2017
More than 100 agricultural retailers, distributors and suppliers headed to Capitol Hill Tuesday morning for the Agribusiness Congressional Fly-in, according to a Read More
Untreated soybean seed Heartland Coop
Seed/BiotechMarrone Bio Innovations, Groundwork BioAg Bio-stacked M…
February 13, 2017
Marrone Bio Innovations, Inc. and Groundwork BioAg, Ltd have announced successful seed treatment field trials of the world’s first all-biological Read More
NL5000 With G5 Technology
SpreadersNew Leader Introduces NL5000 Dry Nutrient Applicator Wi…
February 13, 2017
New Leader, a division of Highway Equipment Company (HECO), has announced the next generation of spreading technology with the NL5000 Read More
Fertilizer Storage
Crop InputsThe State Of The Fertilizer Industry
February 9, 2017
He’s all hat, no horse.” It’s a humorous way of describing a person who tells a good story, but is Read More
CropLife 100Pinnacle Agriculture Agrees To Credit Agreement Amendme…
February 9, 2017
Pinnacle Operating Corp. has entered into an amendment (the “Amendment”) to its First Lien Credit Agreement that will provide for, Read More
ManagementUpdates on Upcoming Trips, Dow-DuPont, and the Des Moin…
February 9, 2017
Editors Paul Schrimpf and Eric Sfiligoj review a few future travels, along with the latest on big company mergers and Read More
Championship Tractor Pull
EquipmentNational Farm Machinery Show Highlighted By Championshi…
February 9, 2017
The scream of monster engines, the stench of burning rubber and the ground-pounding vibrations of the country’s largest, loudest and 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
Corn Field
InsecticidesArysta LifeScience, DuPont Collaborate On Rynaxpyr Prem…
February 8, 2017
Arysta LifeScience recently announced that it has entered into a global collaboration with DuPont Crop Protection for the development of Read More
Industry NewsThe Fertilizer Institute Board Elects New Chairman, Vic…
February 8, 2017
The Fertilizer Institute’s (TFI) Board of Directors has elected Chuck Magro, President and CEO of Agrium, and Tony Will, President Read More
Sonny Perdue
ManagementARA Joins More Than 600 Organizations In Support Of Per…
February 8, 2017
The Agricultural Retailers Association (ARA) recently joined with more than 600 agricultural groups on a letter of support for Governor Read More
World Agri-Tech Innovation Summit Panel 2016
Crop InputsWorld Agri-Tech Innovation Summit To Be Held In San Fra…
February 8, 2017
“Breakthrough Applications and Business Models for Sustainable Farming” is the theme of the World Agri-Tech Innovation Summit to be held Read More
Cedar Country Cooperative
Eric SfiligojConsolidation In Agriculture: More Middle Movement
February 7, 2017
If you’ve regularly followed my column, you know I’m something of a movie junkie. Like many, one of my favorite Read More