Serious About Seed

Call it a line in the sand. A point of no return. It’s the moment in dealers’ lives when they decide to get serious about selling seed. This month, CropLife® wanted to find out why some retailers have invested so heavily in these products and what they’ve had to do to build the business.

Why now? Readers have lamented the complexities of the seed trade to us for several years, that all the hard work required doesn’t pay off. But in returns for the CropLife 100 survey, to be published next month, an unexpected figure emerged: Many respondents report the percentage of total earnings that seed brought in for 2009 went up a notch from the year before.

We talked with dealerships and coops who have had varied experiences over the last 10 years that seed traits and technologies have been transforming the crop input landscape. What became apparent from visiting with most of them is the work is worth it. For the simple fact that selling seed can be a powerful tool to build enduring relationships with grower-customers — and there is indeed money to be made.

When It Started

Dan Weber, vice president of agronomy for Ceres Solutions LLP, Crawfordsville, IN, felt the growing importance of seed about nine years ago. “We could see the seed technology train coming, and we needed to get aboard if we were going to continue to provide our farmers with the best products and programs to help make them successful.” Indeed, almost every ag chemical company representative he met told how much of the firms’ R&D budgets were going into seed traits — and how little they were working on new chemistries. “We needed to figure out how to capture lost crop protection margins while providing value through seed sales,” he explains.

At the same time, Kyle Baltz, president of Baltz Feed Co., Pocahontas, AR, says his family’s 50-year-old company had seen the area’s market deteriorate to where his staff had become simply “order takers” when it came to seed. At neighboring dealerships, certain varieties were over-promoted by seed company reps or strong regional companies would convince retailers to stock only their product, thanks to personal relationships or kickbacks. “In neither of these cases was the stocked product being driven by customers’ requests. We saw seed as an area that was not being serviced,” he explains. The new approach was simple: Go and learn seed. Watch which varieties do well for growers and stock those products, even get pre-orders for them.

Expertise Builds Grower Confidence

Education in hand, Baltz felt his company could assert itself as an unbiased expert on varieties on the market. The team focused on — and still focuses on — the major brands, with exceptions for regionals when growers ask. Baltz says they try to select the best varieties, and they do not have a vested position with any one seed manufacturer. Sales staff gain expertise through seed company training and reviewing University of Arkansas field plots as well as Baltz’s own plots.

Hintzsche Fertilizer, Maple Park, IL, has also maintained extensive plot systems where staff spend a lot of training time during the summer. Information accumulated from the fields, including yield data, is compiled in the fall and shared with customers. The company can point to which hybrids will make the most money that year, then show multiple-year data on a family of hybrids so growers can see what a product did when it was dry, cold or hot.

“Spending time in those plots, our people start to see traits or specific qualities in hybrids in different locations. And the customer will see it in your eyes when you tell them about it,” says Scot Sparks, seed division manager at Hintzsche. It’s important that sales staff see the results and get their own opinions, so they can describe hybrids to the customer “when there’s snow on the ground.”

As a former seed company staffer himself, Sparks adds that dealers can’t always trust seed companies’ promises about a hybrid because they may be making recommendations for a large region. When narrowing a geography down to a small area, the hybrids may not respond the quite the same. “We do our own recommendations on placement and positioning base on what we see in our area,” he says. “We don’t always agree with what they say.”

At G&H Seed Co. Inc., Crowley, LA, management and agronomic staff are constantly being trained in the Best Management Practices (BMPs) for each of the crops the company services in a four-state area. That’s no small task considering the firm sells rice, wheat, corn, soybean, grain sorghum, ryegrass and other forage seeds.

“Customers expect and receive recommendations from a well-trained field service representative without paying consulting fees,” emphasizes Michael Hensgens, business manager with G&H. Staff constantly share information they’ve learned in the field with other field service team members.

Greg Spears, seed division manager at Trupointe (a recent merger of Southwest Landmark and Advanced Agri-Solutions Coop), Piqua, OH, says if a salesman has a territory, he’s expected to be the expert on that area, narrowing down which hybrids of the many available will work for a grower.

Because of the great advances in genetics, Spears says a farm plan now starts with what seed a grower is going to plant. “Then we want our sales force to be well-rounded and add more value. It’s important that sales person is building a relationship not just in one area of expertise but in offering the total package to the farm, from seed to fertilizer to chemicals.”

Harlan Asmus, president and general manager of Asmus Farm Supply, Rake, IA, sees fertilizer and chemical products as an entryway for seed business: “We build a relationship with a potential seed customer by first selling them other inputs.”

Face time with growers can take various forms, including a steak night at Bonanza where customers can learn which varieties “we’re going to be hot on this year,” says Baltz. Growers come to expect the company is committed to getting them in the best position it can for next year’s planting, he believes.

Unexpected problems during a season can test dealers’ commitment. “There’s been enough times in the last five years, for instance, that Group 4 soybeans have been short, but our customers have gotten all they needed, their original order,” Baltz says.

Nuts And Bolts

Beyond building a committed sales staff sales, retailers must work through with a host of other seed issues. “Seed is the most complicated thing we do,” says Baltz. “First you have to determine which varieties and hybrids you want, then determine supply, then take a position, then more often that not get allocated, then determine what discounts to take advantage of, then track lot numbers, counts, locations, etc.”

Specific problems such as managing inventory and maintaining adequate margins are two factors that are limiting success with seed at Ceres Solutions.

When retailers first got into seed, many had extra square footage in buildings to accommodate inventory. At Hintzsche, seed now takes up 25,000 square feet of previously existing warehouse space, plus the company built 16,000 units of bulk storage about eight years ago. The area also includes seed treatment equipment.

Clyde Kringlen, sales manager with Triangle Ag LLC, Ulen, MN, was concerned the company had overbuilt three years ago. But business growth has proven the expansion, which included bulk and bag storage at six locations, valid. Customers are now familiar with what products they can get where, including seed treating.

Unfortunately, facility and distribution needs can change as seed products change. Spears says his company originally planned to build seed storage at each of its locations. But as soybean packaging changed over the last five years, the coop saw the need to construct one mega soybean bulk facility – and is in the process of building another to the north. “We’ll have two main bulk hubs that can support a pretty big radius,” Spears describes.

As Ceres Solutions has grown in seed corn and bulk soybean sales, the company has also moved to the centralized seed hub concept, with each hub serving a specific geographic region of about 50 miles. Weber explains that receiving, sales, and distribution are provided through these hubs. The company has built four so far.

Fred Seiler, seed and trait specialist with Mid Kansas Coop, Moundridge, KS, reports the company built its first bulk plant in 2007, with another currently under construction. And plans even call for adding two more plants in the next three years.

Transporting product to customers can pose a major logistical challenge. In fact, Hintzsche has one full-time logistics manager, who handles all the seed ordering, seed receiving, assembling loads, and palletizing them by customer. The manager also oversees the seed treatment in the company’s bulk seed equipment.

Many retailers are delivering seed right to farms, saving customers time and energy. Baltz would like to step up his company’s pre-planning efforts, trying to deliver seed earlier in the spring, and getting pallets in farm shops a month ahead of planting. “When you get to the actual planting day or day before, everyone is at their wits’ end. Farmers are all jacked up, and we’re usually two days behind in fertilizer application, so we’re all jacked up,” describes Baltz. Early delivery will improve efficiency and calm nerves.

This season, The Andersons, Inc. facility in Walton, IN, invested in a large-capacity weigh wagon for deliveries, to aid growers during the busy planting season. Customer response has been very positive. “These farmers go so fast, they don’t slow down for anything, and you don’t want to cause a bottleneck for them,” says Joe Johnson, plant manager.

Trupointe has people devoted solely to delivery during spring planting, with semi-trucks hauling seed right to the farm, literally anytime a grower needs it, Spears says. He believes delivery makes both his company and farmers more efficient.

Accounts receivable for seed orders is another challenge retailers are working through. Baltz believes his company is managing too much seed financing. “We need to trim our accounts receivable on seed a little bit, utilizing the manufacturers’ and Farm Plan options,” he admits.

 

Partnering With Seed Companies

“It’s not too hard to decide which seed companies to work with,” says Sparks. “They sort themselves out pretty quickly because they either want to work with us as a partner or they want to do what they want to do, not support what we want to do.” Dealers identified a number of areas that can cause friction between dealers and manufacturers.

Margins and profitability have topped the list of retailer concerns in the past. Weber says Ceres Solutions will continue to work with seed partners to ensure his company is fairly compensated “for moving the seed to the farm through our assets and utilizing our people. I think those true costs are still being identified but we are getting closer to knowing where we’re at and where we need to be,” he says. One specific issue that would help margins: Weber thinks retailers with the assets to treat seed should be allowed to do the job for the grower – and capture the value added for the service.

Asmus is not pleased that some seed companies limit access to markets, only allowing a certain number of dealers in a region. He sees it hindering his dealership’s seed sales, which produced just 5.2% of the company’s profit in 2009. “Seed is not much of a profit center for us, and we are not where we want to be in sales,” he admits.

Other seed companies will allow many dealers in a region to represent their product. Sparks says that can lead to problems when seed salesmen aren’t properly trained in the technology. He would like to see some kind of standards set for what a dealer needs to know before handling seed. “Seed is not a commodity,” he emphasizes. “There’s way too much at stake for the end user to have malpractice going on by people who are trying to do the right thing but really don’t understand what they have to offer.”

There was debate among retailers about the value of the increasing number of traits seed companies are putting in products. Baltz wonders if there really are so many different field situations that require so many different hybrids, as many as 100-plus releases. “And if there are, can dealers effectively get them into the right spots?” Simplification here would be helpful, he believes.

Baltz also struggles with companies constantly upgrading varieties. “Farmers can plant a variety two to four years in a row, then companies want to bump them up to the next, newer generation,” he says.

Hensgens says the added patented traits have raised the cost of seed, but have also given his company the opportunity to work with producers to adjust their seeding rates to a level that best suits their crop and cultural practice. Lower rates ultimately mean the same or lower seed costs — plus customers’ confidence that G&H is looking out for their best interest, not just trying to sell more seed.

Kringlen points out dealers can show farmers how they can cover higher seed costs with higher yields that the new technology hybrids will produce, when matched to individual fields.

Seed marketing programs were a big talking point for some retailers. Spears believes some growers see these as gimmicks. No matter how great the incentives, though, Spears wants his staff to emphasize seed choice should be about in-the-field performance.

Some dealers have felt boxed in by seed company return policies. The penalty for a return of more than 10% really starts to impact profitability, says Baltz. He has run into years, for instance, when unpredicted weather shifted growers’ choices of a soybean from Group 4 to Group 5 — or even to another crop entirely. The dealer gets holding unwanted product. It’s a constant struggle to maintain needed seed supplies without over-committing, says Baltz.

Generally, the retailers we talked with felt they were compensated fairly for seed sales, in spite of the work building the business entails. “Some people get frustrated with it, yet it can be extremely rewarding in the end to a company,” says trupointe’s Spears. “I think it’s a great opportunity if you’ve got the right people on your sales force to build stronger relationships with your growers.”

Leave a Reply

Seed/Biotech Stories

dicamba, Roundup Ready 2 Xtend
Crop InputsASA: No Dicamba On Roundup Ready 2 Xtend In 2016
May 16, 2016
While Roundup Ready 2 Xtend (RR2X) are tolerant to dicamba and glyphosate herbicides, no dicamba herbicides will be approved for Read More
Crop InputsGMO Pipeline Features Consumer Targeted Modifications
April 15, 2016
The newly approved GMO Simplot Innate potato, developed to produce lower amounts of the harmful-yet-natural chemical acrylamide, resist bruising, and Read More
Crop InputsReuters: Chinese GMO Seed Espionage Making Iowa Farmers Uneasy
April 12, 2016
Tim Burrack, a northern Iowa farmer in his 44th growing season, has taken to keeping a wary eye out for Read More
Peanut field
FungicidesArysta LifeScience Receives EPA Approval Of Fungicide Seed Treatment
April 5, 2016
Arysta LifeScience North America recently announced it received approval from the EPA of RANCONA V PD, a broad-spectrum fungicide dust Read More
Trending Articles
The Andersons Waterloo
ManagementFirst Indiana Facility Certified Under 4R Nutrient Stewardship Certification Program
June 27, 2016
The 4R Nutrient Stewardship Certification Program has announced that The Andersons, Inc.’s Waterloo, IN, facility has been added to its Read More
Food IT
Industry NewsCalifornia Event Will Mix Ag And Tech Professionals To Explore IT Solutions
June 20, 2016
Silicon Valley is hot on agriculture, and an upcoming event in California will bring together the food and tech industries Read More
Monsanto Luling Plant
Eric SfiligojWhat’s Next For Monsanto?
May 31, 2016
For the folks at Monsanto’s headquarters in St. Louis, MO, it has been an eventful few weeks. Back on May Read More
Soybean Plant closeup
Industry NewsMonsanto Rejects Bayer Bid; Open To More Talks
May 25, 2016
Monsanto Co, the world’s largest seed company, turned down Bayer AG’s $62 billion acquisition bid as “incomplete and financially inadequate” Read More
Eric SfiligojPity The Monsanto Haters
May 23, 2016
An old saying goes thus: “Be careful what you wish for. You just might get it.” Given current events, there Read More
Monsanto Luling Plant
Crop InputsReport: Bayer Eyeing Monsanto For Possible Mega-Merger
May 16, 2016
Bayer AG is exploring a potential bid for U.S. competitor Monsanto Co. in a deal that would create the world’s Read More
Latest News
Industry NewsCompass Minerals Names Protassium+ Sales Director
June 28, 2016
Compass Minerals, the producer of Protassium+ sulfate of potash, has named Scott Johnson director of sales for Protassium+ North America. Read More
Eric SfiligojThe British Leave Vote Impact On EU Agriculture
June 27, 2016
Like virtually everyone else in the world this past week, I’ve watched the global reaction to Britain’s vote to exit Read More
Valent David Nothmann
Crop InputsValent Names David Nothmann Vice President Of Marketing
June 27, 2016
Valent U.S.A. Corp. has announced the appointment of David Nothmann as vice president of marketing. Nothmann will be responsible for Read More
The Andersons Waterloo
ManagementFirst Indiana Facility Certified Under 4R Nutrient Stew…
June 27, 2016
The 4R Nutrient Stewardship Certification Program has announced that The Andersons, Inc.’s Waterloo, IN, facility has been added to its Read More
CropLife 100BRANDT Contributes To Mayo Clinic
June 27, 2016
BRANDT, a leading agriculture retailer and manufacturer of specialty agriculture products, has pledged a sizable donation to the Mayo Clinic Read More
ManagementReport: U.S. Farmland Values On Average Continue Gradua…
June 27, 2016
Land price movement has been in the forefront for farmers, landowners, lenders and land brokers for a decade now during Read More
AdjuvantsPrecision Laboratories Introduces Intact Xtra For Use W…
June 27, 2016
Precision Laboratories announces the launch of Intact Xtra, an adjuvant designed for applicators who want to maximize spray applications and Read More
Key Cooperative’s new liquid fertilizer, crop chemical, and seed facility in Grinnell, IA stores 1.5 million gallons of liquid fertilizer and 120,000 gallons of crop chemicals.
Retail FacilitiesKey Cooperative Facility Features The Latest In Murray …
June 27, 2016
When Key Cooperative wanted to improve the overall efficiency at its new state-of-the-art facility in Grinnell, IA, it turned to Read More
Allen Summers Asmark Institute PSM Training
EmployeesAsmark Institute Sponsors 25 ResponsibleAg Auditor Trai…
June 21, 2016
The Asmark Institute has announced plans to provide 25 scholarships through their affiliated State fertilizer and agrichemical associations to help encourage Read More
Kennebec Elevator
CropLife 100Wheat Growers Celebrates Kennebec Elevator Grand Openin…
June 21, 2016
Over 250 patrons and guests were on hand to celebrate Wheat Growers’ Kennebec Elevator grand opening. South Dakota Secretary of Read More
Land O Lakes
Industry NewsLand O’Lakes To Acquire Ceres
June 20, 2016
Land O’ Lakes, Inc. and Ceres, Inc. have announced that they have signed a definitive merger agreement under which Land O’Lakes Read More
Food IT
Industry NewsCalifornia Event Will Mix Ag And Tech Professionals To …
June 20, 2016
Silicon Valley is hot on agriculture, and an upcoming event in California will bring together the food and tech industries Read More
LegislationVilsack Christens WinField Crop Adventure, Talks Monsan…
June 17, 2016
The WinField Crop Adventure grand opening ceremonies at Fair Oaks Farms (near Winemac, IN) welcomed USDA Secretary of Agriculture Tom Read More
Crop InputsFields of the Future: WinField Doubles Down with Agri-E…
June 16, 2016
Land O’Lakes, Inc., joined by Agriculture Secretary Tom Vilsack, today will host Fields of the Future, a live broadcast about Read More
Bayer sign
Crop InputsMonsanto Turns Back Bayer Again
June 14, 2016
Bayer AG’s bid to buy Monsanto Co. for more than $60 billion has hit an impasse that could pose a Read More
Young Corn Field
Crop NutritionNext Generation Of Nitrogen Efficiency Technology Conve…
June 13, 2016
Commodity price projections indicate farmers will continue to face tight margins again this year. Delivering higher yields and more bushels Read More
Industry NewsLa Crosse Seed Acquires Cover Crop Solutions Brand
June 10, 2016
La Crosse Seed announces that it is the new and exclusive owner of the entire family of brands of Cover Read More