Agronomy Mimeo No. 98
(Revised August 1996)
BUYING THE CHEAPEST SEED -- PRICE VS. COST
Farmers frequently look at the range in prices of
forage seeds and conclude that seed is a good place to save money.
Retail prices can vary 50 to 75 cents/lb or more, depending on variety.
However, basing variety selection on the cost per pound of seed may be a
mistake that will result in financial losses in the long run.
Farmers should look at variety selection as an investment and look at the
expected return on investment for any given variety. Variety selection
decisions should be based on long-term returns, not on the short-term
price of seed.
To illustrate PRICE versus COST of seed, four varieties were selected
from a recent alfalfa variety trial conducted at the Central Maryland
Research and Education Center, Clarksville Facility. Yield data for
the four varieties are presented in Table 1. Varieties A and B are
proprietary varieties and have the highest total yields in the trial,
C is a commonly grown public variety (Saranac AR), and D is the lowest
yielding variety in the trial. Variety D is an older variety
(Williamsburg), generally having a productive stand life of only two to
three years, but is still commonly grown because of a lower seed price.
Variety A yielded 0.1 and O.8 tons/A more than varieties C and D,
respectively, the first year. Over the 6-year period, variety A
yielded 3 tons/A more than variety C and 8.8 tons/A more than variety D.
Table 1. Annual and total hay yield comparisons for four alfalfa
varieties.
Yield (tons/A 15% moisture)
Variety Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Total
A 6.7 4.5 4.2 5.1 6.4 5.4 32.3
B 6.1 4.7 4.4 5.2 6.2 5.6 32.2
C 6.6 4.5 4.2 4.4 5.1 4.5 29.3
D 5.9 4.1 3.8 3.0 4.1 2.6 23.5
A vs. C +0.1 O O +0.7 +1.3 +0.9 +3.0
A vs. D +0.8 +0.4 +0.4 +2.1 +2.3 +2.8 +8.8
Table 2 lists the retail seed prices for each
variety (as obtained from local seed dealers) along with
seed costs per acre based on a 20 lb/A seeding rate.
Table 2. Seed prices and cost per acre of four alfalfa
varieties.
Variety $/lb lb/A $/A
A 2.93 20 58.60
B 2.82 20 56.40
C 2.44 20 48.80
D 2.20 20 44.00
Table 3 contains the increased cost and return comparisons for
varieties A vs. C and A vs. D. Seed of variety A cost $9.80 per acre more
than C, but A yielded 0.1 ton/A more than C the first year. If the price
of alfalfa hay is $100 per ton, the increased yield the first year alone
more than paid for the higher cost of seed. Over the 6-year life of the
stand, the additional $9.80 investment returned $300 if hay is valued at
$100 per ton and $450 if hay is valued at $150 per ton.
The return on investment is even greater when comparing varieties A
and D. Variety A yielded O.8 ton/A more than D the first year, thus an
investment of $14.60 returned $80 the first year (hay price=$100/ton).
Variety A had a productive stand life of 6+ years while D had a productive
stand life of about 3 years. Over the 6 years variety A yielded 8.8
tons/A more than D and the $14.60 per acre additional investment in seed
returned $880 per acre (hay price=$100 per ton). If we were to take
into account the quality of the hay produced during the last three years,
the returns in favor of variety A would probably be even greater. The
stand of alfalfa in the plots of variety D had largely disappeared by
the beginning of the fourth year, so that much of the yield that was being
harvested the last three years was grass and weeds. Therefore, the
value of hay harvested would have been less because of lowe quality.
Table 3. Increased cost and returns for variety A compared
with varieties C and D.
Inc. Hay Yield Gross $/A Return
Variety Cost Yr. 1 Total Yr. l* Total* Yr. l**Total**
A vs. C 9.80 0.1 3.0 $10 $300 $15 $450
A VS. D 14.60 0.8 8.8 $80 $880 $120 $1320
* Hay price=$100/ton ** Hay price=$150/ton Thus, the HIGH COST of seed may be hidden in a LOW SEED PRICE
for a variety that can no longer compete with more improved varieties
having higher yield capabilities and longer stand life. Low priced seed
may turn out to be the most expensive in the long run.
Alfalfa was used in this example, but the same principles hold true for
other forage species. Forage variety selection, whether grasses or
legumes, should be based on long-term performance, not on the price of
seed.
Prepared by Dr. Lester R. Vough, Forage Crops Extension
Specialist