The Economics of Seed Production

CHESTER O. MCCORKLE, JR., AND A. DOYLE REED.

THE PRODUCTION of seeds in the United States has evolved from the simple procedure of saving part of a crop to plant the next year into a highly specialized enterprise.

Today's producer of seeds must have special equipment, follow rigid production methods, and observe scientific cleaning and testing procedures.

The early farmer was little concerned with prices or markets. Today's producer is faced with a highly sensitive price mechanism and, for some kinds of seeds, a complex marketing structure.

Seed production was formerly an art, which consisted of knowing which seeds to select from a field. Seed production today is dependent on scientific knowledge of the transmission of hereditary characteristics, an understanding of supply and demand, and a high level of managerial ability.

Much seed is still produced for use locally by the grower or for sale to other farmers in the area. There is increasing demand, however, for seeds of improved varieties and disease-resistant strains and for plants with characteristics adapted to specific uses or localities.

Seeds of a large number of crops cannot be produced satisfactorily in the areas of major production because of weather, diseases, and difficulties in isolating fields to prevent cross-pollination.

Sometimes a seed crop cannot compete economically with other crops in the area or with the production of seeds in other areas.

The part of the plant used commercially sometimes is different from the seeds or includes more than just the seeds. Production of seeds from these crops may require more specialized production methods and equipment that a farmer who produces the crops for their primary use does not have.

Four main types of seeds are grown in areas where production is concentrated. The production of seeds of vegetables and flowers tends to concentrate in rather limited geographical areas. Seeds of grasses and field crops are produced more widely. Climatic factors, such as atmospheric humidity and seasonal distribution of rainfall, are critical in determining location.

The area suitable for production of seeds is far greater than that required to meet the needs, but concentration within adapted districts takes place as the growers gain experience and processing and marketing facilities are established.

Specialty production of crop seeds was centered originally in the Eastern States, but it has moved west. Further westward movement is not possible. Therefore, barring unforeseen disease or pest problems, the location of production of many seed crops may be stabilizing. This is not to say that specialty seed production is adapted only to the West or that profitable production can be undertaken only in the West.

A meaningful economic analysis of specialized production in the United States must consider the kinds of farms on which seed crops are grown; the interrelationships between seed crops and other enterprises with which they are combined; the nature of production practices; and the inputs, costs, and returns from seed production.

There is no "typical" organization of seed farms. The company-owned seed farm and farms that produce only seeds and the general-crop farm on which an occasional small acreage of a seed crop is planted are the extremes in organization.

In between are such growers as those who grow Ladino clover primarily for seed but have a minimum of crops for rotation purposes. Very often a sheep enterprise is combined with Ladino clover to take advantage of the supplementary and complementary relationships that exist. Growers of seed of melons are primarily field-crop farmers who work a small acreage of melon seed into their organization.

Still another use of seed crops within the total farm organization is illustrated by the producer of "common" alfalfa, who may let a crop go to seed if he expects the price to rise high enough to make the seed more valuable than the hay crop. Nearly all seed crops (except flowers) are grown by farmers as one enterprise in a total farm organization.

When he considers a seed crop for his farm, the farmer must determine how well that crop fits into his total farm organization. Physical considerations include its machinery, labor, water, and management requirements relative to the needs of the other enterprises and the total quantities of these resources available at various times during the year.

Economic questions he must think of are the capital requirements of the crop, the expected price, and probable net returns compared with alternative enterprises. Of utmost importance in the farmer's mind are the possible yield, price, and income variations he may experience from year to year.

In terms of farm organization, seed crops are considered as cash crops. This is particularly true with- specialty seed crops, which have no use except for sale as seeds. In that, specialty seed crops are unlike corn and wheat, which can be fed if the seed price is unsatisfactory. Relative profitability of other crops, limited total demand for seed crops, and possible extreme fluctuations in one or more of the components of net income with seed crops have led farmers interested in growing seeds to limit the proportion of the total resources of the farm going to the production of seed crops.

An elaborate system of contracts between specialty-crop seed producers and seed companies has emerged.

Given the abundance of resources capable of producing seed, the contract system, together with other institutional constraints, have been necessary to avoid chaos in the seed market. Much of the potential fluctuation in production and prices of seeds from year to year has thus been eliminated.

FLOWER SEEDS are produced almost entirely by the seed companies on land they own or lease. The entire supply of domestically produced seeds is grown each year on a few thousand acres. In terms of value, it is estimated that more than 85 percent of the seed is produced in two counties in the central-south coastal areas of California.

Since total requirements can be met from such a small acreage of seed, it is only logical that individual companies have gone into seed production to achieve close coordination between production and marketing.

Exacting technical requirements of the production of flower seeds also encourage company production. The need for continuous and exclusive development of new varieties through breeding and selection in order to compete with other companies for the home gardener's interest further supports the growth of seed production by the seed companies.

Producer markets comparable to those existing for other types of agricultural production therefore do not exist. Were they to develop, individual growers, aware of occasional high prices, would be tempted to plant limited acreage to seed. The obvious result would be widely fluctuating prices from year to year, and many growers would find it impossible to realize even harvest costs in some seasons. Annual quantities required of some seeds are sufficiently small that no acreage is planted in some years if the seeds remain viable.

A small amount of flower seeds is produced by individual growers. Before planting, the grower signs a contract with a company to assure a market outlet. Contracts commonly specify isolation distances, kind and varieties to be planted, and division of responsibilities in the production and harvesting.

Contracting to produce flower seeds has not been prevalent among growers, however, because of the heavy labor inputs, the constant attention required for seed crops of flowers, and the small acreages. A few varieties of seeds have been grown under contract mainly in California. Among them are zinnias, pansies, sweetpeas, petunias, and larkspurs, but even for them the amount contracted by any one grower seldom exceeds 10 acres.

Major expense items are cultivation and thinning, control of diseases and pests, roguing, fertilization, and harvesting. Expenses of irrigation may also be sizable in some places.

Land preparation includes preparation of seedbed, usually a preirrigation, and sometimes prefertilization. Costs of preparing the seedbed, including working up beds, approximate 6 dollars an acre. Preirrigation costs of labor and water may be 5 dollars to 7 dollars an acre, depending on water conditions and amount applied. When fertilizer is applied before planting, the cost including application varies between 25 dollars and 50 dollars an acre, depending on the material and quantity.

Even when grown under contract, the seed company supplies the seeds and often does the planting. These costs are relatively minor for the common flower seeds; the total seed cost seldom exceeds 5 to 7 dollars an acre.

Additional fertilizer usually is applied as side dressing or in the irrigation water during the period of early growth. Fertilizer materials usually contain relatively higher amounts of phosphorus and sometimes potash than those used in general crop production. Excessive growth of foliage that would result from heavy nitrogen application is to be avoided in seed production.

When used, the applied cost of fertilizer approximates 5 to 15 dollars an acre.

Weeds must be controlled in the production of flower seeds, particularly during the early period of flower growth, when mechanical cultivation can be practiced. Hand cultivation often is necessary later and is extremely costly. If thinning is required, hand cultivation is accomplished at the same time. Costs of weeding vary according to the practices employed. Mechanical cultivations may number between 4 and 12, depending on the weed growth, type of flowers, and other factors. Each cultivation at today's prices costs approximately 2 dollars an acre. Total cultivation costs per acre can vary between 8 and 24 dollars. Hand hoeing and thinning may vary from 40 dollars to more than 250 dollars an acre, depending on weed conditions and the particular crop.

Irrigation is necessary throughout the western growing areas, but the total requirements depend on the season of growth, soil conditions, and the particular crop. Timing of irrigation is critical to the production of high yields of quality seed. Irrigation must be stopped as the seeds begin to mature. Individual crop requirements are best determined through experimentation on each site. Water costs may be 15 to 20 dollars an acre; irrigation labor may add 15 to 30 dollars. Total irrigation costs, excluding pre-irrigation, typically are 30 to 50 dollars.

Control of pests and diseases is essential in the production of high yields of good flower seeds; otherwise, growers have no chance to recover the large cash outlays required to grow them.