Beginning in 2004, the cotton producer is going to get what he pays for when he buys seed — no more, no less.
That's what Stoneville Pedigreed Seed Co., says about its shift to a 230-K seed count bag, relegating the standard 50-pound bag to the history books.
“It's more fair,” said Don Threet, Stoneville's vice president for U.S. business operations. The change “eliminates variation in seed size from the packaging and pricing equation, “In the past, seed and technology prices were based on a 50-pound bag, and the producer was paying for seed and technology based on an average seed count. With an exact seed count per bag, every Stoneville bag a grower buys will contain 230,000 seeds, and each seed will be valued identically.”
The seed-count bag is perhaps the most significant change in packaging by a seed company since the time the cotton industry went from 100-pound bags to 50-pound bags to make them easier to handle.
The 50-pound bag stood the test of time, but in recent years, cotton varieties containing technologies such as the Bollgard and Roundup Ready traits have exposed problems in standard weight packaging.
The biggest complication is how to price technology.
Each year, seed companies provide Monsanto with average seed counts per pound for each variety containing Monsanto technology.
For example, for 2003, Stoneville reported to Monsanto that its ST 4892BR variety averaged 4,600 seeds per pound or 230,000 seeds per 50-pound bag. Monsanto then computed its technology fee based on how many acres can be planted with 230,000 seeds, using nine different seed drop zone rates.
However, even though the technology fee in this example is based on 4,600/230,000 seeds, in extreme cases there could actually be between 205,000 and 255,000 seeds in the 50-pound bag due to natural variation in seed size.
If the bag contained seed averaging less than 4,600 seeds per pound, the grower's technology fee per acre increased. If the bag contained seed averaging more than 4,600 seeds per pound, the grower's technology fee per acre decreased.
Some growers were starting to “shop” for seed lots with bags that contained more seed than the average count, by noting the approximate seed count stamped on the end of each bag, according to Threet.
By the same token, they shied away from bags containing less than the average seed count. “Retailers have been telling us that someone needs to solve this problem,” Threet said.
Moving to a standardized seed count bag simplifies pricing and inventory for varieties that contain technologies, according to David Rhylander, Monsanto's director of marketing.
“Today, there are 11 different prices on Roundup Ready varieties because of seed size and 10 different prices on Bollgard/Roundup varieties due to seed size. The standardized seed count bag would give one price for Roundup Ready varieties and one price for Bollgard/Roundup Ready varieties.
“From a grower standpoint, seed-count packaging is going to enable him to calculate his seed costs and technology fee per acre before he ever gets into the field. When you buy in 50-pound bags, you don't know how many seeds are in the bag and therefore it's very difficult to calculate your costs.
“Additionally, it addresses future issues in pricing cotton technology. As more traits are put in the cotton seed, such as Bollgard II or Roundup Ready Flex, the price of a single cotton seed will increase. Therefore, as seeds become more expensive, growers will need to manage this input cost more effectively. Stoneville's new 230-K standard seed count bag will allow them to do this.”
The change parallels a shift in grower attitudes about cotton seed, too, according to Threet.
“Just 10 years ago, before transgenic cotton, growers would talk about planting 15 to 20 pounds per acre,” Threet said. “Those same growers today will tell you that they plant seeds per foot of row or cotton plant population per acre.
“The end user for our product is no longer planting pounds — he's planting seeds,” Threet said. “So we need to sell him seeds, not pounds.”
The seed-count bag will allow producers to order exactly what they need to plant their acreage, noted Threet. In addition, “Dealers can order the exact number of bags they need, thereby improving inventory management and reducing the amount of cash tied up in excess inventory.
“It's going to take the shopping out of the equation,” Threet said. He noted that there have been instances where dealers lost sales opportunities because they happened to have large-seeded lots of a variety.
Threet noted that the corn industry implemented seed count packaging several years ago. “We believe establishing 230 K seed per bag as the new cotton seed standard is something the cotton industry needs because it's more fair.”
The machinery needed to convert the company's conditioning plants to seed count packaging “is requiring a sizable capital outlay by our company,” Threet said. “But we're absolutely convinced that growers are purchasing high value genetics and we need to give them what they're paying for. They don't need to be subjected to the average.”
According to Art Simpson, director of U.S. plant operations for Stoneville, modifications to Stoneville's three conditioning plants in Big Springs, Texas, Stoneville, Miss., and Maricopa, Ariz., will begin this fall.
Stoneville will produce three bag sizes for 2004 — less than 45 pounds, 46 pounds to 54 pounds and 55 plus pounds. But there will be 230,000 seeds in each one of them, Simpson stresses. Seed-count packaging will also be available in bulk containers. Each 40-bushel bulk container will hold 9.2 million seeds.