December 2006
Field Crops 28.424-44
Guidelines for Managing Corn Seed Costs
Joe Lauer and Trent Stanger
Corn Agronomist and Graduate Student
PDF Version
Summary
- Current UW recommendations for harvest plant densities range between 26,000 and
30,000 plants/A.
- Corn seed costs are rising for premium hybrids.
- Currently, corn seed:price ratios range from 0.33 to 1.50.
- As seed costs increase and/or corn prices decrease, the economic optimum harvest
plant density decreases.
Recently corn seed costs have dramatically increased due to technology fees. It
is not unheard of for seed of high-performing premium hybrids to cost $160-$180
per bag, whereas 10 years ago, premium seed would cost about $80-$100 per bag. Understanding
what the true value of transgenic hybrids mean to farm profitability is challenging.
The following guidelines help growers adjust their plant densities and maintain
or enhance farm profitability depending upon their farm situation. Not only has
the economics of seed cost been changing, but the yield response of corn to plant
density has been increasing over time. But ultimately, optimum plant density is
affected by both seed cost and corn price.
Placing a value on seed is relatively easy since the price of seed is known
at the time of purchase and the amount used is known after a field is planted. The
realistic value of grain will vary depending upon the producer's ability in marketing
the grain. Corn grain that will be used on farm as livestock feed should be valued
at the price it would cost to purchase if feedstocks run short.
Table 1 describes seed:corn price ratios for seed costs ranging from $40 to $220
per bag and corn prices ranging from $1.00 to $3.50/ bu. As seed costs increase
and/or corn prices decrease the seed:corn price ratio increases. Conversely, as
seed cost decreases and/or corn price increases the seed:corn price ratio decreases.
Currently, most seed:corn price ratios range from 0.33 to 1.50. For example, the
seed: corn price ratio at $2.00/bu corn ranges from 0.50 to 1.13 for $80 to $160
per bag of seed.
Table 1. Price ratio of seed:corn (i.e. $/1000 seeds รท $/bu corn).
|
Price of seed
|
Price of corn ($/bu)
|
$/80 K bag
|
$/1 K seeds
|
$1.00
|
$1.50
|
$2.00
|
$2.50
|
$3.00
|
$3.50
|
$40
|
$0.50
|
0.50
|
0.33
|
0.25
|
0.20
|
0.17
|
0.14
|
$60
|
$0.75
|
0.75
|
0.50
|
0.38
|
0.30
|
0.25
|
0.21
|
$80
|
$1.00
|
1.00
|
0.67
|
0.50
|
0.40
|
0.33
|
0.29
|
$100
|
$1.25
|
1.25
|
0.83
|
0.63
|
0.50
|
0.42
|
0.36
|
$120
|
$1.50
|
1.50
|
1.00
|
0.75
|
0.60
|
0.50
|
0.43
|
$140
|
$1.75
|
1.75
|
1.17
|
0.88
|
0.70
|
0.58
|
0.50
|
$160
|
$2.00
|
2.00
|
1.33
|
1.00
|
0.80
|
0.67
|
0.57
|
$180
|
$2.25
|
2.25
|
1.50
|
1.13
|
0.90
|
0.75
|
0.64
|
$200
|
$2.50
|
2.50
|
1.67
|
1.25
|
1.00
|
0.83
|
0.71
|
$220
|
$2.75
|
2.75
|
1.83
|
1.38
|
1.10
|
0.92
|
0.79
|
For a seed:corn price ratio of 1.0, the economic optimum plant density (EOPD) is
33,000 plants/A and grower return is at a maximum of $159/A for each $1.00 of corn
price (Figure 1). If $1.00 is subtracted from the maximum grower return ($159 -
$1 = $158), the range in plant density is 29,500 to 36,600 plants/A (error bars).
As corn price increases, grower return increases proportionally, but the EOPD of
each ratio does not change. For example, if the seed:corn price ratio is 1.0, the
EOPD is 33,000 plants/A resulting in a grower return of $159/A at a $1.00 corn price.
If the corn price = $2.50 then grower return = $159 x $2.50 = $398/A.
As seed costs increase and/or corn prices decrease, the optimum harvest plant density
decreases, (i.e. EOPD for ratio of 1.50 = 29,800 plants/A). As seed cost decreases
and/or corn price increases (ratio = 0.50) the EOPD increases to 36,200 plants per
acre. If seed cost is not considered (ratio = 0.0), then the EOPD estimates yield
and is 39,400 plants/A.
An Example Bt-ECB Corn Seed
Lodging is a major constraint to maximizing grain yields in modern corn production.
Lodging is one of the hazards of increasing plant densities to get maximum yields.
Current UW recommendations for harvest plant densities range between 26,000 and
30,000 plants/A.
Bt corn hybrids resist European corn borer (ECB) damage and lodge less. From 2002
to 2004, Bt and non-Bt corn hybrids were planted at plant densities ranging from
25,000 to 50,000 plants/A in 5000 to 6000 plants/A increments at 10 locations in
Wisconsin .
Figure 1. Profitable harvest plant densities for seed:corn price ratios of 0.0, 0.5,
1.0, 1.5, 2.0, and 2.5. Symbols represent the economic optimum return to plant density
(EOPD) and error bars are the low and high ends of the range of profitability (within
$1/A of EOPD) at each seed:corn price ratio.
The plant density maximizing yield for Bt hybrids was 42,300 plants/A, while for
non-Bt hybrids was 40,000 plants/A. If plant densities were increased from 30,000
plants/A to 41,400 plants/A, yields increased 4.2%.
At the same plant density, Bt corn hybrids yield more than non-Bt corn but seed
costs of Bt corn are often greater than non-Bt seed. The seed:corn price ratio is
higher for Bt corn.
For Bt and non-Bt corn where the seed:corn price ratios are the same, as seed costs
increase and/or corn prices decrease the economic optimum plant density (EOPD) decreases
(Figure 2). For example, the EOPD for a ratio of 1.50 = 29,600 plants/A for Bt corn
and 27,300 plants/A for non-Bt corn. As seed cost decreases and/or corn price increases
(ratio = 0.50) the EOPD increases to 38,100 plants/A for Bt corn and 35,800 plants/A
for non-Bt corn.
Corn management systems must be justified on the basis of economic returns, rather
than on crop yield alone. Overall, Bt corn hybrids in this study yielded 6.6% greater
and had 22% less lodging than non-Bt hybrids. However, the yield and lodging benefits
for Bt hybrids were offset by the higher seed and harvest costs associated with
Bt corn, adding no economic benefit. This study determined the EOPD to be 33,900
plants/A (regardless of hybrid trait) or 3900 plants/A more than the current recommendation
in Wisconsin . Even though no economic benefit was measured for Bt corn due to higher
seed costs, other benefits such as safety (pesticide handling), insurance (potential
for ECB outbreaks), and "peace of mind" might be important for growers to consider
when using Bt corn.
Figure 2. Profitable harvest plant densities of Bt and non-Bt corn hybrids for seed:corn
price ratios of 0.5, 1.0, and 1.5. Symbols represent the economic optimum return
to plant density (EOPD) and error bars are the low and high ends of the range of
profitability (within $1/A of EOPD) at each seed:corn price ratio.
Guidelines for choosing an appropriate plant density for corn
-
Currently, seed:corn price ratios range from 0.33 to 1.50.
-
The EOPD for seed:corn price ratios between 0.5 and 1.5 is 29,800 to 36,200 plants/A.
The plant density of 32,700 plants/A is within $1.00 of the EOPD for ratios between
0.5 and 1.5.
-
Grain yield continues to increase through plant densities of 39,400 plants/A.
-
In general, silage yield continues to increase as plant density increases. However,
a trade-off exists as measured by Milk2000 where quality decreases with increasing
population. Thus, the EOPD is the same for corn grown for silage or grain. Corn
silage is often more valuable than grain and so the EOPD follows more closely seed:corn
price ratios less than 1.0.