In recent years, returns from forage seed have been bright spots in the balance sheets of many prairie farmers.
But this year, forage seed producers have steeled themselves for low prices as a glut of seed weighs down their markets.
There are more than 200 million pounds of alfalfa seed sitting in North American warehouses, said Kurt Shmon, production supervisor for Pickseed Canada Inc.
Annual demand for the seed is only 60 to 70 million pounds in the United States, and 10 to 14 million lb. in Canada, he said.
Read Also
Strong canola exports expected to tighten supply
Canola exports will end up the third strongest in the past 10 years, according to recent Canadian Grain Commission weekly export data.
Excess supplies built up over the past couple of years as AgriBiotech Inc., a U.S.-based company, embarked on a strategy of expansion and acquisition.
The strategy failed. The company filed for bankruptcy last January. Competitors have been buying up the pieces since.
Sales have been slow as buyers wait for prices to find their bottom, seed trade experts told the annual meeting of the Manitoba Forage Seed Association here last week.
Already, alfalfa and perennial ryegrass prices have dropped by 30 percent from last year’s levels.
Farmers were prepared for the price crash, and are prepared to hang on for better times, said association president Linda Loewen of Riverton, Man.
Besides, even at poor prices, forage seed returns are better than those from grains and oilseeds, she said.
The 650 farmers who grow forage seed in Manitoba have lived through price valleys before, said Loewen. They believe the crop have a bright future in the long term.
Paul Gregory, a producer and buyer in Fisher Branch, Man., said forage seed farmers can’t shift in and out of crop as easily as grain producers. Forage seed crop are planted one year and harvested the next.
Manitoba producers are experienced and dedicated, he said, and many use production contracts to manage risk.
Fortunately, strong cattle prices will mean good demand for alfalfa seed, said Jack Zimmer, president of Seed Specialists, a forage seed broker and marketer in Hayden Lake, Idaho.
But Zimmer told Manitoba growers that prime European alfalfa seed buyers won’t be in the market for Canadian seed this year. For the first time in several years, European production of the crop has been excellent.
Zimmer said he thinks it will take 12 to 18 months for the industry to use the supplies left in the wake of the AgriBiotech bankruptcy.
Much depends on the weather. A spate of cold temperatures, a long dry spell or flooding in North American growing areas would kill alfalfa stands and spur demand for seed for replanting.
Weather will also affect seed supply, he said, noting parts of the Pacific Northwest states have only half of their normal snowpack.
The new American farm bill, scheduled to be passed in 2002, could also have a big impact on demand for the seed. The bill includes set-aside programs, where farmers are paid to plant land to forages for 10 years.
Some think the new bill may include shorter set-aside programs, said Zimmer.
More farmers might be attracted to the program if they have to keep land out of production for only two or three years.
That will mean more turnover of forage crops, and more demand, he said.
