Resilient Ag Retailers Talk Seed in a Year to Forget

As we watch and wait for the light at the end of the crop price tunnel to show, there are tariffs, the unknowns that come with the mega-merger wave, and frustratingly difficult weather that has presented every challenge under the sun (make that rainclouds) to the ag retailer.

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But if we know one thing, it’s that ag retailers are tougher still.

There are many reasons for optimism, such as the point made that these economic times have given growers that final push that some needed to take advantage of the technology at their disposal, including on seed.

“Our customers are focusing more on data to make decisions based on ROI even more closely than in the past,” says Brock Frasch, Seed and Crop Protection Products Director with Ceres Solutions Cooperative, Crawfordsville, IN. “We offer Climate FieldView, which gives them the ability to crunch data and provide answers as we are going through harvest and the seed ordering season a lot quicker than we’ve been able to in the past.”

Growers have focused increasingly on data on the corn side, where growers are more emotionally invested compared with soybeans, says Jason Weirich, Director of Agronomy with MFA Inc., Colombia, MO.

Ceres is also in year two of a three-year plan to onboard all 31 of its agronomy locations and seven seed distribution sites to its e-business platform, which Frasch defines as a “digital collaboration with our customers and making processes easier by utilizing technology.

“Increased connectivity and interactivity are not just about seed — it’s really that whole relationship we have with the grower, from crop protection and seed recommendations to ROI on products and yields vs. input costs. We’re evolving to track and communicate all of that digitally.”

Frasch expects that in 2020 the industry will see increased bundling of seed and crop protection as a result of the mergers.

“I think it’s definitely a good thing,” he says, pointing out that manufacturer consolidation has led to broader portfolio offerings, encompassing options like pre-emerge, post-emerge residuals, and fungicides for both corn and soybeans, providing more opportunity for discounts. “By being more strategic on purchases, customers will be able to get greater discounts by bundling of seed and crop protection, which for us is great. We can offer them both chemistry and seed options.”

Rory Olerud, Owner, Agri Partners, Clear Lake, SD, offers a counterpoint. He believes that the mega-mergers pull those companies involved further away from what is going on at the farm level. A veteran of the seed industry, having worked for Syngenta for 24 years prior to starting his company a decade ago, Olerud prefers not to buy grain or provide custom application, in favor of concentrating on fewer areas and doing them well. Agri Partners, ranked No. 77 on the 2019 CropLife 100, derives 60% of sales from seed.

“We don’t believe in being a Walmart; we want to work with the regional companies and be successful with them and continue to work with the people that treat us well,” he says. “I think that people want choices. We really provide on service; we deliver 99% of product right out to the customer. … We scout a lot of acres, so we know what’s going on, and that gets passed to our customers as well. We run pretty lean, but we do quite well.”

Agri Partners is ramping up its private-label business on the crop protection and fertilizer side, and for seed, new for 2020 is its own AP Select brand (soybean and alfalfa products). “Along with REA Hybrids full corn and Roundup Ready Xtend lineups, we can cover a lot of acres,” he says. “We don’t care what’s on the bag — we care what’s in it.”

Customer preferences vary widely and, as such, demand will be strong for a diverse lineup of products, from GT27 to conventional to the next hot item, Enlist. “We’re not going to get involved in this tug-of-war match that they’re having in the industry now with the soybean traits,” he says. “That’s why we brought on the AP Select line, and we’re going to handle all our Enlist, GT27, and conventional lines through that company and Xtend through REA Hybrids. We have a choice of selecting products we want, instead of another company selecting products and offering them to our customers.”

Joey Caldwell, Regional Director with GreenPoint Ag, Covington, TN, shares that his company, like many others, puts priority on providing the grower with the best value proposition.

“There are a lot of seed companies and a lot of choices. Sometimes wading through that can be challenging,” he explains. “We do know that all growers don’t necessarily buy based on that value proposition, so therein lies why you have other programs that have absolutely nothing to do with that. There’s a full gamut,” he says. “Some people respond to promotions, coupons, trinkets, or the color of the bag.”

Hot New Item, Not The Weather

Corteva Agriscience’s Enlist E3 soybean system, no doubt, has generated substantial interest in the marketplace, in no small part due to the high level of regulations and drift issues surrounding Bayer’s Xtend. The major issue for 2020 is supply.

“Enlist is going to cover more acres going east,” especially east of the I-29 corridor, while Xtend will have more acres west of I-29, Olerud predicts. “Then it comes down to, ‘How much supply will Enlist have?’ I was at a meeting, and they said around 15% in 2020.”

For MFA Inc., Weirich sees the shift to Enlist happening not from Xtend platform but rather from the LibertyLink platform, which makes up around half of its soybean acreage currently.

“This is the first year we’re looking at the Enlist trait, so we’re going to see how it performs going into 2020. I think a lot of people are looking forward to getting the combines running,” Weirich tells CropLife® magazine.

Jeff Rippentrop, Co-Owner of Tri Ag Sales in Hurley, SD, expects Enlist to take over 20% of its soybean acreage in 2020. In two to three years, he expects it to far outstrip Xtend with up to 90% of its soybeans, driven by the wider application window for the 2,4-D-resistant system and its reputation for staying better on target.

“I think it helps that Corteva is an American company, and I think producers like that — to say they’re buying from the United States instead of Germany or China, where the other Big Two are from,” he adds. He also expects Corteva’s (Pioneer-branded) Qrome technology to make inroads in corn next year, citing its more consistent yields even in the absence of rootworm pressure.

Corteva reports that Qrome products have consistently delivered an average 5.5-bushel yield advantage over legacy triple-stack technology in multi-year research trials. In 2018 on-farm trials, Qrome products held an average 10.2-bushel-per-acre advantage over all competitive products tested.

Rippentrop started Tri Ag Sales with business partner Shay Kayser 20 years ago. Since that time, he has seen farm sizes get larger, and with that has come bigger expectations on retail operations. In the past 10 years, faster planters have enabled Tri Ag to double its acreage covered in a day to between 600 and 800.

We spoke with him on a recent late September day as he was driving through a heavy rain, which was appropriate, as it sums up the season in South Dakota. The state led the nation with 3.86 million unplanted acres in 2019, according to USDA. Rippentrop calls it the worst year he has experienced in his career. “We’re so saturated in the fields right now, that if it continues, even normal winter and spring weather will prevent acres from being planted, and that will affect us again (in 2020) as well as every other ag retailer,” he says.

Throughout these tough times, Rippentrop notes the rise of smaller, home-grown, regional seed players, like Beck’s Hybrids out of central Indiana and his state’s own Hefty Seed Co., whose most recent claim to fame is Georgia-based yield champ Randy Dowdy, who used Hefty 49X7S soybeans to break the world record with 190.23 bushels per acre.

As Weirich puts it, seed for this year, as in every year, is about providing options to the customer. “I don’t know that any one technology is going to win out,” he says. “The main thing is we want to make sure we keep technologies for growers across all platforms, and we’ve got to be consistent in that message that we need to have options for our growers.”

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