Monday, November 24, 2008

You think you want prices to move up...

My guess is the seed industry is even more anxious to see double-digit beans and corn with a 5.  The reason:

Table 4. Net revenue from different herbicide programs.
Herbicide Resistance Trait Gross Revenue/A Net Revenue/A One POST application Net Revenue/A Two POST appilications
non-GMO $520 $415 $394
Liberty Link $450 $353 $336
Roundup Ready $450 $344 $327
Roundup Ready 2Y $450 $319 $302

We can complete the comparison by showing how much less the net revenue is for each system relative to the one with the highest revenue. The nonGMO system has the highest revenue here, and for a one-postemergence system the others are the following amounts lower: LL - $62; RR - $71; RR2Y - $96. For a two-postemergence system, the others are the following amounts lower than nonGMO: LL - $58; RR - $67; RR2Y - $92. It might be most appropriate to compare the one-postemergence system for the LL and RR soybeans to the two-postemergence system for nonGMO. The nonGMO revenue is still $41 to $75 higher for this comparison. It’s also possible to credit the RR2Y soybeans with a 6% higher yield (we have no idea whether this is actually the case – we’re just weed scientists). Doing so results in the RR2Y coming in about even with RR soybeans, because the higher seed price offsets the potential increase in yield. [More][My emphasis]

Seed pricing - currently an item of some discussion in farm country - was based on marketing meetings held before The Fall, as it were.  It's really hard to back down, too.  But unless we see some bounce in commodities soon, the hot products will be capturing all the value they deliver for the seller - not the user.

1 comment:

Anonymous said...

non gmo premiums are being offered for 2.50-3.50 bu. for soys by AGRIS co-op in ontario...interesting too read there website chat-blogs about what guys think of IP programs...would work great if you could use your own seed...monsanto has done a great job marketing RR products...and I have too agree it makes growing soys a pretty easy life