FBN disrupting the US Seed Market
- By: "Farm Tender" News
- Cropping & Grain News
- Oct 23, 2018
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In 2008, Aaron Combs diversified his corn lineup by including one hybrid from a large national seed company and a lower-priced hybrid from a smaller regional company. Including these hybrids along with others helped slice his agronomic risk, just in case one hybrid would flounder.
Still, the Kankakee, Illinois, farmer had a nagging feeling about his strategy that summer. He surfed seed industry websites and finally found one that confirmed his uneasiness: the two seemingly different hybrids were actually the same.
“Fortunately, that number was also my best corn that year,” says Combs.
Still, he exposed himself to significant agronomic risk. Had he known, Combs also would have bought the less expensive hybrid from the regional company.
“Look-alike” hybrids have been a seed industry open secret since 1988. Back then, Pioneer Hi-Bred International, now part of Corteva Agriscience, blew the whistle that its hybrid corn with the same or similar genetics was sold under many different names and brands by other seed companies.
Still, it took some sleuthing for farmers to ferret out these kissin’ cousins of the seed world.
In the seed industry, variety and brand definitions differ. A variety’s originator assigns the variety a name, but different brand names are used by the firm and by the companies to which it may license the variety. In many cases, both brand and variety name appear on the seed tag. In many company marketing efforts, though, only the brand name is discussed.
In 2012, Combs again used the web to decipher two differently branded hybrids from two companies that were the same variety. This time, though, he bought the less expensive hybrid.
“It took a lot of doing to find that out,” he says.
Disruptive Report
It’s easier to detect corn and soybean varieties sharing the same genetics these days, say officials for the Farmers Business Network (FBN). The San Carlos, California-based farmer-to-farmer network first published a 2017 report showing shared genetics between seed brands.
FBN officials and some FBN members say the report also pierces the opaque world of corn and soybean seed pricing.
“Price transparency is something that nobody had ever wanted to touch,” says Doug Palen, a Glen Elder, Kansas, farmer and FBN member. “The seed industry had never had a disruption like this in regard to its pricing and marketing components.”
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FBN officials say its efforts found a couple of eye-opening practices.
A significant amount of corn hybrids and soybean varieties share the same genetics. In 2017 and 2018, FBN collected 8,000 seed tags for 4,200 unique seed products sold by 155 seed companies from its 7,000 farmer-members.
“We cross-matched the variety IDs (from the seed tag) with our seed database,” says Charles Baron, FBN cofounder. “We found 45% of corn and 53% of soybean seeds analyzed were sold by multiple companies. In one case, one corn hybrid was sold by 15 companies.”
FBN also found 6% of farmers who submitted seed tags bought the same variety from multiple brands.
Farmers may be overpaying for seed. “The network allows farmers to share price data on seed,” says Baron. “This enables members to see the range of what they are paying for seed products.”
FBN found prices between brands of the same seed variety may differ significantly.
On a per-bag basis, FBN found the widest range for corn was $97 that two farmers in the same state paid for the same corn hybrid. (One 80,000-seed bag can plant 2.5 acres at a 32,000-plant-per-acre seeding rate.)
On a per-bag basis, FBN found the widest range for soybeans was $19 that two farmers paid in the same state for the same soybean variety. (One 140,000-seed bag can plant 1 acre at a 140,000-plant-per-acre seeding rate.)
Morgan Holler, an FBN member who farms with his father, Kevin, near Pierpont, South Dakota, has used FBN seed data to help negotiate seed purchases.
“I told one salesman, ‘You do realize I could buy this variety from 13 other companies?’ ” he says. “There are all sorts of different seed companies, but they are all getting their genetics from the same places.”
Company Grid
FBN used the seed tag information to build a grid that profiled 77 companies selling corn seed and 58 firms selling soybean seed. For a seed company to be included in the grid, FBN needed to analyze at least five of its corn or soybean products.
FBN uses the term relabeling to denote a seed variety sold under multiple brand names. In the grids, FBN lists the seed company and the relabeling percentage.
The corn seed breakdown includes:
* One firm with 100% relabeled seed
* Three firms with 90%-plus relabeled seed
* Thirty-seven firms with 60% to 89% relabeled seed
* Sixteen firms with 30% to 59% relabeled seed
* Seven firms with 2% to 29% relabeled seed
* Thirteen firms with 0% relabeled seed
The soybean seed breakdown includes:
* Three firms with 100% relabeled seed
* Three firms with 90%-plus relabeled seed
* Thirty-five firms with 60% to 89% relabeled seed
* Seven firms with 30% to 59% relabeled seed
* Five firms with 4% to 29% relabeled seed
* Five firms with 0% relabeled seed
The seed tags compiled by FBN do not include all hybrids and varieties marketed by seed companies.
“It is crowdsourced information and is only as good as what growers provide to FBN,” says David Thompson, director of marketing for Stine Seeds.
Baron acknowledges this. “As we get more seed tags and better data coverage, though, we find the percentage of relabeled seed never goes down,” he says. “It only goes up.”
Seed Industry Reaction
“The seed industry is upset with us for doing this,” says Baron. “We are not saying to use one seed company vs. another. Instead, we are saying farmers can use this information to find seed that’s best suited for their fields at potentially lower prices. That is how an open and competitive market should work.”
The American Seed Trade Association (ASTA) does not comment on a company’s marketing program like that of FBN’s, says Andy LaVigne, ASTA chief executive officer. However, ASTA officials disagree with the connotation that companies are not following state and federal seed laws, he says.
“The seed companies are evaluated (by farmers) on a very regular basis, so I really do take exception when people say that seed companies are not being honest or straightforward or transparent with their farmer customers,” LaVigne says.
Other seed industry executives object to FBN’s relabeling terminology.
“FBN should be very careful with that,” says John Sorby, general manager of Thunder Seeds, Dilworth, Minnesota. “That is almost slanderous as far as I am concerned. We do not relabel anything.”
Instead, he says, Thunder Seeds buys genetics and traits from multiple suppliers. He says the firm then uses this material to produce seed that goes through a rigorous conditioning and testing process before Thunder Seeds sells it to farmers.
Despite industry consolidation, more than 100 seed companies still exist. Along with buying genetics, these smaller companies still develop and improve varieties with proprietary genetics that fit their regions, says LaVigne. Universities still develop public varieties that often feature specific disease-resistance characteristics, he says. Meanwhile, more seed companies have come online in the past three to five years using techniques like gene editing to develop and license varieties, he says.
“We’re seeing constant evolution of who is providing genetics and how they are coming to market,” says LaVigne.
Still, a handful of companies – Corteva Agriscience, AgReliant Genetics, Stine Seeds, Syngenta, Bayer Crop Science, and BASF – commercialize most genetics and traits, says Jeff Hartz, a seed industry consultant.
“There is a lot less competition on that level, compared with the seed brands that are sold at the farm gate,” he says.
Some of the larger companies that generate original genetics and traits often will not license genetics from a flagship brand. FBN found no overlapping corn varieties out of 220 Pioneer (owned by Corteva Agriscience) seed tags submitted by farmer-members.
“A Pioneer hybrid is only in a Pioneer bag sold by a Pioneer sales representative,” says Amanda Rinehart, Pioneer U.S. marketing leader for Corteva Agriscience.
Some of these trait and genetic providers will provide certain licensees with potential “limited” or “exclusive” genetics or products, says Hartz. “Still, it can be difficult to document just which products those are,” he points out.
Performance Differences
Just because corn hybrids or soybean varieties share the same genetics does not mean they will perform identically, says Kevin Cavanaugh, director of research for Beck’s Hybrids. He recalls a 1990s hybrid, easily identified by its white cob, that was a top yielder in Illinois. Numerous companies bought the genetics and marketed the hybrid under their own brand names.
$97: The biggest price-per-bag difference within a state between the same corn varieties, according to FBN data.
“One year, this hybrid was entered 45 times out of 80 entries in a University of Illinois (yield) trial,” Cavanaugh recalls. “It did appear at the top of the trial.” However, less-than-desirable seed quality and production differences by some companies caused the same hybrid to place in the middle and bottom tiers of the trial, he says.
“Raw genetic potential is only one component of the product’s performance,” adds Hartz. “Where that seed is planted matters. Production standards matter. How the seed plant is treated matters. The company that sells that seed can have a dramatic influence over those components – and, therefore, performance – regardless of whether the two products contain the same genetics.”
FBN’s analysis found slight yield differences when two varieties sharing the same genetics were planted (often by accident) in the same field. Average yield differences between varieties were 2.6 bushels per acre for corn and 2.1 bushels per acre for soybeans. “If one company says it has better production or sorting or seed storage or better seed treatments, that should show up in the yields,” says Baron.
Genetics remain a big yield driver, says Stine’s Thompson.
“Genetics account for 100% of potential yield,” he says. “Seed production can impact it, for sure, so farmers have to pay attention to that, as well. But at the end of the day, it is good for growers to understand there are similar (genetic) products out there from different companies.”
Price Differences
“As a farmer, I was like, ‘Wait a minute, you mean you’re selling the same seed that different companies offer at different prices?” says Jerod McDaniel, a Texhoma, Oklahoma, farmer and FBN member. “I understand from a business standpoint why it happens. It’s more that as a producer, I had no clue.”
Services offered by companies explain why price differences may result between varieties with the same genetics offered by different companies, says Cavanaugh.
“There are farmers who just want the lowest price possible,” he says. “Others want the largest amount of value they can get for the dollars they spend. That is the type of customer who is attracted to us. We offer farmers a free replant program and exclusive seed treatments on all our seed. There are also financing programs that accompany seed purchases, and also our Practical Farm Research (an agronomic testing program offered to customers).”
These services and others cost money and are reflected in the seed price, he adds.
Varietal popularity can also impact pricing, says LaVigne. “Did they (farmers) come in late (to buy) a popular variety of which there was not a lot of supply left? Those kinds of things can all come into play,” he says.
So far, FBN’s analysis hasn’t swayed McDaniels’s seed-buying strategy.
“It has changed some of the varieties I’ve looked at within Pioneer, but it hasn’t shifted me away to another seed company. Most of that has to do with the relationship I have with a local dealer. In good times, the value of that relationship you have with a dealer will have more priority than the cost of seed. But as margins get thinner, and if I can get the same performance for a $200 bag of seed (corn) vs. $300, the price of seed becomes a bigger issue.”
“I haven’t had any big ‘aha’ moments that have saved me lots of money,” adds Palen. However, he used FBN’s analysis to avoid varietal overlap when planting a corn variety trial.
“It ensured we did not unknowingly enter the same variety from two different companies,” he says.
For Combs, the transparency brought by efforts like FBN’s report gives him the ability to better select seed and evaluate seed prices.
“My dad did not farm,” he adds. “I had to start on my own, 18 to 19 years ago. I have grown from 79 to 2,000 acres. I didn’t get there by giving money away.”
Relative Maturity Differences
Prices aren’t the only factor that can differ between seed varieties sharing the same genetics. The Farmers Business Network (FBN) analysis found that when multiple brands sell the same variety, relative maturities differ 55% of the time.
In soybeans, relative maturities may range from early-maturing Group 000 varieties to late-maturing Group 9 ones. Corn relative maturities may range from early-maturing 79-day hybrids to late-maturing 120-day hybrids.
“When seed brokers present products to companies, they have a relative maturity rating for them,” says David Thompson, Stine Seeds marketing director. “But after it goes into their testing programs, companies can assign their own relative maturity ratings.”
“It’s not unheard of for a company to step up or drop a relative maturity,” adds Shawn Conley, a University of Wisconsin Extension agronomist. “Say they need a Group 2.6 bean to fill a hole in their lineup. “They can call a 2.2 (or a 3.0) and move it up (or down) to fill it,” he says. In the case where a later-maturing variety is moved downward, the variety can still be green when nearby soybeans with the same relative maturity are ready to harvest.
Weather and the environment in which seed is tested can influence product performance, says Jeff Hartz, a seed industry consultant. “This can lead to different maturity interpretations,” he says.
“It is not like creating a bolt and a nut that will perform the same way anywhere you put it,” says Andy LaVigne, American Seed Trade Association chief executive officer. “That is why seed companies spend such a large amount of time testing genetics in an area to help farmers make informed decisions.”
In Stine Seeds’ case, it’s led to labeling soybean relative maturity as a range, such as from Group 2.4 to 2.6 soybeans, Thompson points out.
Hartz advises farmers to study how specific products perform on their own fields.
“That’s the best way to interpret any brand and its relative maturity rating,” he says.
What is the Farmers Business Network?
Agricultural entrepreneur Amol Deshpande and Google veteran Charles Baron started Farmers Business Network (FBN) in 2014.
For a $700 annual fee, Baron says members can access features like farm benchmarking, seed performance, and pricing analytics based on member-submitted records.
$19: The biggest price-per-bag difference within a state between identical soybean varieties, according to FBN data.
Members may purchase chemicals and fertilizer online, but not seed. Baron says FBN has a standing invitation to seed companies to sell online but, so far, no takers exist, he says.
FBN is also getting into the seed business. FBN officials say the F2F Genetics Network will offer its 7,000 members online purchases of conventional seed in corn, soybeans, and other crops. FBN officials say their seed prices are transparent: $99 per bag for corn and $29 per bag for soybeans. This includes a standard fungicide and insecticide seed treatment for corn. FBN members may order treated soybeans for an extra $5 per bag or order untreated seed that may receive custom seed treatments.
“Through our network, we can make actual product performance transparent to farmers, says Ron Wulfkuhle, FBN head of seed who will lead the F2F Genetics Network. “It really helps us find seed varieties and hybrids that will fit farmers and their fields.”
Look at the Label
Normally, companies selling corn and soybean seed list both the variety and brand name on the seed tag.
In certain states, though, it’s legal for companies to replace the variety name from the seed label with the wording “Variety Not Stated” (VNS) .
Thirty-four states permit this for corn seed, while 30 permit it for soybean seed, according to data collected by the Association of American Seed Control Officials.
Through its members sending in seed tags, the Farmers Business Network (FBN) found that 39 seed companies – 25% of all seed companies in its data set – omitted the variety name from some of their products. Overall, 189 products – or about 4.2% of products examined – had VNS labeling.
With VNS seed tag labeling, farmers cannot know if the variety is the same as offered by other companies, says Charles Baron, FBN cofounder.
Different marketing and licensing reasons are why some companies use VNS terminology, says Andy LaVigne, American Seed Trade Association chief executive officer. He adds that farmers who wish to diversify their seed lineup may work with their seed companies to ensure they plant the best performing seed varieties. If they have a question about a variety that is labeled VNS, the seed company will provide the information to meet the farmers’ needs, LaVigne adds.
Seed purchase transparency may be enhanced if the U.S. adopts a varietal registration process akin to Canada’s, says Denise Thiede, Minnesota Department of Agriculture section manager for seed, weed, hemp, and biotechnology.
Such a repository would include a record of which firm originated the variety and varietal characteristics.
“In rare cases, there are people trying to pull the wool over someone else’s eyes when they put a variety name on a seedlot,” she says. “As a regulatory official, I don’t have the resources to determine if it is a valid variety or not. A varietal registration process would do this, in my opinion.”
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