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Seed costs seen rising 7% to 10% for 2013

Seed corn's going to cost you quite a bit more, but the investment will in most cases be well worth it, one expert says.

Seed corn could increase in price by up to 7%, and soybean seed could cost you 10% more than a year ago, according to Purdue University farm business management specialist Alan Miller.

That puts seed corn in a range between $200 and just beyond $300 per bag, Miller says. Soybean seed will likely run around $50 a bag.

Though the drought did trim seed production in some areas, many of the seed increases were likely already in the cards. "We would have expected prices to go up even if we hadn't had a drought," Miller says. "We've seen seed prices go up year after year for many years."

Blame advances in genetic technology and rising corn and soybean prices -- not the drought -- for the bulk of the increase. "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," Miller adds. "Then we had the rise in commodity prices. And, recently, we've had two extremely difficult seed corn producing years in a row in the Corn Belt."

Then there's the question that's been practically on a loop for the last few years: Will there be enough seed for next year?

"Seed supplies could be tight," Miller said. "This is especially a concern with soybeans because farmers might surprise the seed industry by deciding to switch to planting more beans next spring."

So, the quantity may be slightly short, but still hinges on variables like planting decisions. What about the quality? This variable's been affected much more than the amount of seed out there heading into 2013.

"No one could have planned for a drought of that magnitude," Miller says. "Seed quality could be a concern next year."

What's the best way to handle issues like these? Craig Petersen, who's a DuPont Pioneer seed sales representative in addition to raising corn and soybeans near Sumner, Iowa, says he's advised his customers to pause before making dramatic crop rotation changes just because of factors like this year's drought or a potential seed cost increase. He says seed supplies still are "pretty good" and the issue will be more about getting the right seed for your farm. And, getting your order in goes a long way to making that happen.

"Don't change your crop rotation dramatically just because we're in a dry fall. Don't change your rotation because, with the genetics nowadays and different practices of farming, we're seeing different yields because of that. As far as seed goes, our supplies have been pretty good," Petersen says. "I've been telling people to take advantage of early orders. Get your orders in with your seed supplier because anytime an early order is taken, that usually holds precedence compared to waiting until springtime. Usually your better quality seed is your earlier ordered stuff."

So, in the long run, will farmers be able to make 7% to 10% more expensive corn and soybean seed work on the balance sheet for the 2013 crop? Based on prices right now, Miller says farmers could see an average return on rotational corn of just over $550 an acre and $466 an acre for soybeans. Those are 24% and 17% higher than 2012, Miller's research shows.

"The economics at current prices for next fall are very good, even with the higher cost of seed and some of the other inputs," he says. "I'm expecting a good opportunity for profits, if we can avoid another drought."


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