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High Commodity Prices Increase Importance of Communication

High commodity prices have many seed producers questioning whether they should hold onto their inventory for sales next spring or dump their seed at the elevator now to reap the profits.

Prices for commodity wheat have reached levels not seen for many years. These high prices, combined with excellent yields in 2007, have many farmers thinking of increasing spring wheat acres in 2008. The number of acres planted to winter wheat this fall has increased and several seed dealers already have sold out of their inventories.

“High commodity prices have many seed producers questioning whether they should hold onto their inventory for sales next spring or dump their seed at the elevator now to reap the profits,” says Steve Sebesta, North Dakota State Seed Department deputy seed commissioner. “This was a frequent topic of discussion at Big Iron and no doubt will continue to be so at local coffee shops. Inventory management has become an important issue this fall.”

Seed producers have benefited from producing a dual-purpose crop. If their product passed all inspections and tests, they could sell it as seed for a premium. However, if their seed field failed field inspection, the seed sample didn’t meet certification standards or they simply were unable to sell their entire inventory, they still could sell the crop as a commodity at the local elevator. However, with the high prices, many seed producers have additional economic concerns.

There is an additional investment in producing certified seed, including higher seed costs for foundation or registered class seed, field inspection fees, conditioning costs, final certification fees and additional labor costs for cleaning equipment, transportation, storage and research fees. All of these add a cost to each bushel the seed producer sells to customers. Good-quality seed is a value-added product.

Obviously, the seed producer needs to charge something for the investment in producing seed. However, how much is the customer willing to pay for high-quality certified seed? Some seed producers are afraid the high price of seed will encourage farmers to plant bin-run seed next year, or worse, to buy or sell seed illegally.

Most varieties are protected by Plant Variety Protection Title V, which means the variety may be sold only as a class of certified seed. Brown-bagging seed is considered by some as a way to circumvent the legal seed sales process. However, those engaged in this illegal practice risk significant penalties. Violators of PVP Title V seed law may be fined. These fines can extend to the conditioner, seller, buyer and anyone who assists in the unauthorized sale of protected varieties.

The buyer’s proof of certification is a valid seed tag or a bulk sale certificate issued by an official seed certification agency, such as the North Dakota State Seed Department. Certified seed retailers are required to provide this documentation with each container of certified seed sold.

“Additionally, North Dakota seed laws require that seed sold in the state be labeled with specific information regarding the quality of the seed in the container,” Sebesta says. “That information must include the name of the kind and variety, lot identification number, origin, weed seed content, other crop seed content, percentage of inert matter, germination percentage and test date. The full name and address of the person who labels or offers the seed for sale also must be included. Proper labeling is required for all seed, whether it is a protected variety or not.”

Here are some things to consider when planning for next year’s production:

  • Seed that is grown for seed usually performs better than bin-run seed. Scientific data from trials across the country demonstrate a yield advantage. Certified seed meets strict standards for seed purity. In certain crops, certified seed must be tested for certain seed-borne diseases that can spread on infected seed. The label (bulk certificate) is the buyer’s assurance that the product has been properly produced, tested and handled according to state certification standards.
  • Tight inventories may mean fewer varieties to choose from. The top-performing varieties usually sell out the quickest. This can make a big difference in profitability next season. Newer varieties are bred to perform better. Today’s varieties have been bred for optimum performance under today's agricultural practices. In addition to higher yield potential, many of today’s varieties have improved disease or insect tolerance, better standability under modern field management practices (fertilizer, irrigation) or other desirable characteristics not available before.
  • Growers need to be aware of seed laws, especially during times when inventories are low. Buyers should understand that sales of “common” seed of some varieties are illegal. For varieties protected under PVP Title V, it is even illegal to offer uncertified seed for sale. Seed certification helps ensure an adequate supply of high-quality seed for today’s farmers. Certified seed has been field inspected and lab tested to help ensure that the varietal characteristics the breeder developed are maintained in the variety and that genetic potential is delivered to your farm for planting.

The North Dakota State Seed Department encourages seed producers to contact their customers soon to determine their planting intentions and seed requirements for 2008. Doing so early can help determine how much seed to condition and certify for the next planting season.

Likewise, farmers are encouraged to contact their usual seed dealers to make sure they will have an adequate supply of the varieties they want to plant next year. If necessary, commit to an early order. It may be the best way to ensure getting enough seed of the variety wanted.

“Seed probably is the most important, controllable input in farming,” Sebesta says. “All of the genetic potential of a variety, which captures years of selection and evaluation by plant breeders and increased by professional seed producers, is delivered in a neat little package. Sacrificing the genetic potential of a variety also sacrifices the farmer’s investment in all other inputs.”

For more than 75 years, the North Dakota certified seed industry has supplied high-quality seed of the best varieties to North Dakota producers. The North Dakota State Seed Department stresses that it may be more important than ever for seed producers, retailers and farmers to communicate with each other in the next few months.


NDSU Agriculture Communication

Source:Ken Bertsch, (701) 231-5415, kbertsch@state-seed.ndsu.nodak.edu
Source:Steve Sebesta, (701) 231-5400, ssebesta@state-seed.ndsu.nodak.edu
Editor:Rich Mattern, (701) 231-6136, richard.mattern@ndsu.edu
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