OMAHA (DTN) -- Luke Lauritsen has an interesting perspective of the seed industry as 2016 begins. The corn and soybean farmer of Arlington, Nebraska, is also a Syngenta seed adviser.
Lauritsen's seed customers have talked with him quite extensively about their seed choices and how much they want to spend on seed. Lower commodity prices are leading to tight margins for most grain growers, and they're considering cutting back on their input costs for their upcoming crops.
"Everyone wants Cadillac seed for a Yugo cost, which is extremely tough to do," Lauritsen told DTN.
Seed costs in 2016 should be generally flat compared to last year, according to Clarke McGrath, Iowa State University Extension field agronomist for west-central Iowa.
He said most mainline corn seed is in line with last year; some high demand and hot new genetics are costing 5% more than last year.
"Soybean seed seems to be in that same range with maybe a slightly lower increase of around 3% to 4% for the high-performance genetics and most everything else being essentially flat," McGrath told DTN.
(In September, Purdue University Extension put out its own estimates on how much seed cost represents as a part of total inputs for 2016 in Indiana. Check it out at http://bit.ly/…)
Stephanie Porter, a sales agronomist for Burrus Seed in Jacksonville, Illinois, said that, in general, seed costs are tied to seed traits. Newer traits in seed can be more expensive, she said.
While specific seed costs are hard to predict, Porter said seed costs in 2016 should fall in a range similar to 2015.
YOU GET WHAT YOU PAY FOR
Farmers might be tempted this year to save money by planting seed that has fewer traits or hasn't been genetically engineered, but the cheaper seed might lead to lower yields.
DTN Contributing Agronomist Daniel Davidson said farmers have to be willing to use the best genetics. "Sure, you could cut back and use less-expensive seeds, but to push yields higher and higher, you have to be willing to invest in the best seeds," he said.
Drew Porter, DuPont Pioneer director of product marketing for the U.S. and Canada, told DTN his company offers growers many choices when buying seeds with traits. This makes it more complex for the seed company, but it's good for growers to have different options for trait packages and price ranges, he said.
Porter stressed it's important for farmers to place the right product on the right acres. "We want growers to discuss their seed options with their local sales reps to maximize their yield potential," Porter said. He added that Pioneer has not seen a noticeable shift by farmers to buy seed with fewer traits.
Burrus' Porter said she has had quite a few questions about seed choices so far this winter. She said farmers want to increase profits in 2016: Some will use cheaper seed, but other farmers will turn to stacked traits as the better way depending on the pests found on their individual farms. She said about 15% of Burrus' seed is non-genetically engineered.
One of the things she is hearing from farmers is they are considering not planting refuge in a bag (RIB) technology to save on costs. Farmers would then need to plant 20% of their acres to refuge hybrids.
Some farmers may think this is too much of a pain to plan out where their refuge acres would be and like the RIB technology convenience because the refuge is integrated in the bag. Some may decide the less-expensive, structured refuge seed could save them some money, she said.
Syngenta's Lauritsen said he has been peppered with these types of questions since harvest last fall. On his own eastern Nebraska farming operation, he has been pushing populations from 27,000 seeds per acre just a few years ago to 32,000 per acre on dryland corn. In turn, he has seen yields push as high as 220 bushels per acre in the last two years.
"I have been selling seed for eight years now, and I always hear these types of question as they try to save some money," Lauritsen said. "We talk about it and I show them the yield data we have seen in recent years, and then most are very leery about changing hybrids."
MORE LIBERTYLINK SOYBEANS?
Burrus' Porter said she has been asked more about LibertyLink soybeans this winter than ever before. As farmers continue to battle weed resistance, LibertyLink soybeans offer them another option against weeds such as waterhemp and Palmer amaranth.
"This would be a different (site of action) herbicide, which explains why growers are thinking about planting them," she said.
Clarke McGrath, ISU field agronomist, said he also has fielded many calls from farmers who wanted to know more about LibertyLink soybeans. He even had an informational meeting last fall about the subject.
Soybean growers would want to spray a residual herbicide first and then come back with Liberty over the top of growing beans. A different mode of action is being utilized here with no glyphosate being used, he said.
McGrath believes farmers have much interest in this subject and believes farmers will plant more acres of LibertyLink soybeans in 2016, although how much more is hard to pinpoint. "We are trying to plug the holes in the weed resistance dike, and LibertyLink is another tool in this process."
NEW SOYBEAN TRAITS
The question many farmers have had is which new soybeans traits will be introduced in 2016, depending on whether they are approved for planting.
Roundup Ready 2 Xtend, which is a trait resistant to glyphosate and dicamba, has not been approved for import into China, which is a major U.S. soybean importer.
Pioneer's Porter said his company was prepared either way when it comes to Roundup Ready 2 Xtend and its approval in China. The seed company stepped up its Roundup Ready 2 Xtend supply as well as glyphosate-tolerant soybeans, he said.
The other new soybean seed trait which could come into play in 2016 is the Enlist technology. This trait is resistant to glyphosate and 2,4-D Choline. The trait would come in two forms, the Enlist Roundup Ready 2 Yield soybeans and the Enlist E3 soybeans, which will have a new glyphosate trait.
Burrus' Porter said the Enlist and Roundup Ready 2 Xtend soybeans are approved in the U.S., but their over-the-top herbicides awaited approval in the U.S.
It is speculated over-the-top dicamba herbicide approval could come in 2016. Some companies are taking orders for Roundup Ready 2 Xtend soybeans, but they may need to be substituted if herbicide is not approved.
Meanwhile, this week the U.S. Ninth Circuit Court of Appeals struck down the U.S. Environmental Protection Agency's (EPA) motion to pull the plug on the registration of Enlist Duo herbicide. As a result of the court decision, the current U.S. registration for Enlist Duo remains fully intact for all labeled uses, Dow AgroSciences has told DTN. EPA has acknowledged to DTN that "Enlist Duo remains in effect and the product can continue to be sold at this time."
After being in meetings with and talking individually with farmers, McGrath said he believes farmers are not as excited as one might expect about these new soybean traits. Issues with the regulatory side and the looming higher cost of this new soybean seed may have combined to mute farmers' interest in these new technologies.
AGCHEM PRICES FLAT
McGrath said the outlook for the ag chemical market is a mixed bag. Brand-name products are essentially priced flat compared to last year. Much like seed, some higher-demand value products are up maybe 2%, while some brand-name products saw some price drops, he said. "Overall, the chemical market is flat in general."
Growers and retailers said they expect "name brand" chemicals to slip in 2016 while their generic counterparts will gain acres.
"If you pin down dealers on what the shift will be comparing '15 to '16, they are thinking it could be the biggest shift to generics since generic glyphosates became available," he said. "It will be interesting to see what chemical programs look like after the dust settles this summer," McGrath said.
Each year, DTN presents an outlook series on what is expected for the year ahead in various areas of agriculture. This is the 16th story in a series DTN is running that looks at what farmers can expect as the hot topics for 2016 in areas such as farm finance, land prices, ag and the environment, agricultural policy, crop inputs, livestock, transportation and others. We welcome your feedback on what you think the year will be like at email@example.com.
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