Seed growing in cost

Derek Smithin Industry News

The autumn consumption has created a lot of optimism within the grass seed industry. Significant increases are seen, not only in essential markets like Germany and the UK, but also in markets like France, Poland and Russia, where sales have been much better in autumn 2010 compared to the same period in 2009. The first half-year of the present season is somewhat better than last year in terms of sales, and it looks as if the demand for grass seed for the coming months will be strong.

Furthermore the herbage seed production in both 2010 and 2011 will be less than consumption, resulting in declining stocks of most species. This is likely to create a good market balance for most species.

CCO of DLF-TRIFOLIUM, Søren Halbye, estimates that the forage and private turf market really have regained their balance, whereas the professional market (construction industry and golf courses etc.) have taken their time to get out of the crisis, and sales within this segment are not yet back on track. However, we see a positive trend.

Even though grain and grass seeds are sold in different and separate markets, the increasing cereal prices will, no doubt, influence the grass seed prices, both in the short and long term. Production prices for herbage seed have to increase to be competitive against other production alternatives, e.g. wheat, barley and oil seed rape.
"As a consequence, we are now facing price increases on grass and clover seeds," explains Søren Halbye.

Henning Otte Hansen of the Institute of Food and Resource Economics, Copenhagen University, has made a review based on marked statistics of market prices, consumption, production and stocks of grass seed. He reaches a similar conclusion.

- It is a fact, that international cereal prices have increased by 75% since July 2010. History shows that cereal prices have an impact on grass seed prices, even in the short term

- Higher cereal prices will lead to larger acreages and relatively smaller acreages of grass seed. As a result supplies will decrease and prices will go up in the longer term

- Stocks are low for some of the major grass seed species. History shows that decreasing stocks or small stocks will result in higher prices

- The financial crisis, as well as the economic crisis, is about to cease. Demand will thus be stimulated again, which will encourage higher prices.

Article Tags:
Industry news