This is the time of year farmers are placing their seed orders for 2013; and that bag of seed is going to cost more. Despite the drought of 2012, most seed companies are going to have enough supply. Purdue Extension Farm Management specialist Allen Miller is forecasting a 5 to 7 percent price increase on seed, “We would have expected prices to go up even if we hadn’t had a drought. We’ve seen seed prices go up year after year for many years. There was a period of time in the early 2000s when producers were transitioning from non-genetically modified-type seed products to GMO types of seed products, which generally are more expensive.” While the drought did impact seed production this year, most companies will be able to make up production shortfalls with winter production in South America. Yet Miller urges producers to order early, “This is especially a concern with soybeans, because farmers might surprise the seed industry by deciding to switch to planting more beans next spring.” The summer drought is contributing to the projected price increases but is not the only factor; Miller said the rise in commodity prices is also contributing to the increase in seed prices.
Higher seed prices following a year of sharply lower yields may put some farmers in a very tight financial situation, “A bag of corn seed would sell for between just under $200 to more than $300, depending on whether it is a conventional or biotech variety. Soybean seed would go for about $50 a bag, with wheat seed priced in the low $20s per bag.” Miller says most farmers will not cut back on planted acreage of seed populations in 2013, “We’ve done some preliminary estimates and we’re looking at some very high levels of return, with the potential to cover all costs next year, even on our low-yield estimates. It’s pretty unusual to cover all costs across all three yield levels – low, average and high – in our estimates.”
Miller projects that a farmer growing rotation corn on average-yield soil would generate $560 in crop returns above variable costs per acre in 2013. Rotation soybeans would bring in an estimated $466 an acre on average-yield soil, with wheat generating $372 per acre on that same type soil. If realized, those margins would represent an increase in revenue from this year of 24 percent for rotation corn, 17 percent for rotation soybeans, and 51 percent for wheat. “The economics at current prices for next fall are very good, even with the higher cost of seed and some of the other inputs,” Miller said. “I’m expecting a good opportunity for profits, if we can avoid another drought.”[audio:https://www.hoosieragtoday.com//wp-content/uploads//2012/11/seedpricewrap.mp3|titles=Seed prices higher]