When farmers buy seed, what they’re really buying is the potential to make a bushel of corn. So one key question we asked in our recent report on Zone Pricing in Corn Seed is, “How much did the farmer have to spend on seed to produce a bushel of corn?”
We wanted to find out just how much price of seed varies by zone, and which farmers ultimately pay the most for seed. Because you are limited in the freedom you have to buy seed outside of these zones, it’s important to know the variability in seed prices in order to realize the best price for your operation.
The map below shows median cost of seed per bushel of yield.
Large differences exist even within states with many farmers paying as much as 15 to 20 percent more per bushel of yield than their neighbors.
The most striking feature in this map is the difference between the green southwestern Corn Belt (covering southwestern Iowa, Nebraska and western Kansas), and everywhere else. Many Nebraska farmers are paying as little as 45 cents per bushel of yield compared to 55 to 65 cents (20-45 percent more) in most of the rest of the Corn Belt.
Some of that difference is because the southwestern Corn Belt is getting lower prices per bag, and some of that difference is because farmers there are getting relatively high yields at relatively low seeding rates. But regardless of whether it is because of low prices, low seeding rates, high yields or a combination of the three, the net result is that those farmers are getting a much bigger bang for their buck when it comes to what farmers pay for seed per bushel of yield.
What if every farmer paid the same cost per bushel of yield?
The map showing how cost per bushel varies across the Corn Belt raises an obvious question: What if everyone paid the same cost per bushel of yield?
In particular, since Nebraska farmers are paying the lowest costs per bushel, what would farmers be paying if everyone paid the same as the median Nebraska farmer?
Looking at the difference between what farmers paid and what they would have paid if they had been given Nebraska-like prices, we find that zone pricing cost U.S. corn farmers approximately $1.1 billion in 2017 alone, for an average of $13 per acre.
Seed pricing remains inconsistent regionally—higher yielding areas tend to pay more for seed, but regional pricing is not consistent with regional yields.
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