Seed Shortage Could Dampen 2012 Outlook
January 9, 2012 A few weeks ago, I wrote in one of my columns about the hidden dangers that might derail or dampen the overwhelming enthusiasm in agriculture for 2012. At the time, I speculated if the collapse of grain trader MF Global could be the culprit, negatively impacting the overall grain markets. However, it looks like a more immediate threat is looming slightly larger.
Last week, an article in The Wall Street Journal talked about how corn seed production for the U.S. ahead of the 2012 planting season was off 25% to 50%. The major reason for this was the severe weather that impacted the marketplace during the spring of 2011, which also kept seed corn from being produced in the volumes needed to keep pace with the anticipated demand for corn plantings this year. In fact, according to the article, growers in North Dakota were expected to plant up to three millions acres of corn in 2012 to take advantage of the near-record prices corn is currently fetching. Instead, because of the seed shortage, this number is expected to be revised downward to approximately 2.5 million acres.
As many ag observers have told me over the years, seed represents the heart of agriculture. “Growers start out with the seed, and make all their other purchase decisions from there,” says Sano Shimoda, president/founder of BioScience Securities, Inc.
According to seed producers, seed shortages are not uncommon, with some growers annually having to accept their second or third choices to plant. Also, they say that some seed corn could be imported from countries such as Argentina or Chile to make up any shortfalls in the domestic market.
Even so, I would like to see as little disruption in the ag pipeline as possible this early in 2012. Inevitably, there will be those unexpected events or trends that land a few blows to the body of agriculture’s work this year. I would like to see the heart of the industry, seed, not be one of them.
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