Our latest special report looks at regional seed pricing, also known as “zone pricing,” and what it means for U.S. corn farmers. In it, we explore the confusing and often complex variability in corn seed prices between zones, as well as within zones, and what the practice ultimately costs farmers.
Highlights in the FBN Zone Pricing in Corn Seed Report:
- The seed industry practice called “zone pricing” is widespread among major ag input manufacturers, but little understood by farmers.
- Due to zone pricing, Nebraska and Kansas farmers have lower corn seed costs per bushel of yield than the rest of the Corn Belt—about 48 cents per bushel.
- We estimate that regional seed price variability is costing the average American corn farmer $13 per acre, and a total of $1.1 billion dollars of lost income in 2017 alone.
- Farmers are ultimately limited in their choices when it comes to where and how they buy seed.
What is "zone pricing?"
Regional seed pricing, also known as “zone pricing,” complicates the degree of variability in corn seed prices. Because of zone pricing, farmers pay different prices for the exact same seed depending on where they live or farm—their agronomic zone.
Zone pricing began in the late 1990’s when Monsanto® first released corn varieties with Mon810 branded as YieldGard®, giving them resistance to European corn borer. In order to encourage adoption of the new technology, Monsanto® sold the seed along with a yield guarantee: the new seed would do at least as well as the USDA average yield in that agricultural district, or Monsanto® would reimburse farmers for the difference. The net price was set in each district to correspond to the guaranteed yield. After the YieldGard® trait became established, Monsanto® dropped the yield guarantees and the practice of setting their zones based on USDA agricultural districts, but kept the idea of zone pricing.
Today, zone pricing maps are hard to find publicly, and the method through which Bayer® (now including Monsanto®) creates their modern zones is unclear. Through a careful analysis of publicly available data, we were able to deduce an estimated Bayer-Monsanto® zone map.
Many of the zones cover vast regions spanning multiple states, though some states, such as Illinois, Indiana, and Iowa, are sliced into multiple zones. This makes it difficult to assign a specific agronomic rationale to the construction of their “zones.”
How Much Does Seed Price Vary by Zone?
We wanted to find out just how much price of seed varies by zone, and which farmers ultimately pay the most for seed. It’s important that farmers know what variances exist in the price they pay for seed by zone, especially because farmers are limited in the freedom they have to buy outside of these zones.
In the maps above, we show the median list price of seeds with the VT Double PRO® trait package (a Bayer-Monsanto® product) as sold by Dekalb®, Channel®, Agrigold®, and Beck’s Hybrids® in each zone. (Dekalb® and Channel® are both owned by Bayer®, and now include Monsanto®.)
Zone colors are based on the median list price of all VT Double PRO® traited varieties from a given brand. This does not necessarily mean that these brands are available in every part of each zone. For example, Beck’s Hybrids® seed is not usually available in North Dakota, but they are available in Michigan, and Michigan and North Dakota are in the same zone.
We observed the highest prices for corn seed in the zone covering central Illinois and Indiana. Most likely, that is the zone where Bayer-Monsanto® charges the highest royalties for selling the VT Double PRO® trait package. That said, all four companies have priced their products very differently, suggesting that they still have a great deal of flexibility when it comes to setting their prices.
Burrus Hybrids is a registered trademark of Burrus Seed Farms. Beck’s is a trademark of Beck’s Hybrids. Agreliant, Agrigold, Golden Acres Genetics, Great Lakes, LG Seeds, Producers Hybrids, Pride and Wensman are registered trademarks of Agreliant Genetics LLC or their respective owners. Monsanto, Dekalb, Asgrow, Fontanelle, Gold Country Seed, Jung, Hubner, Kruger, Lewis, REA Hybrids, Specialty, Stewart, Stone and Channel are registered trademarks of the Monsanto Company. AcreMax, Corteva Agriscience, Pioneer, Agventure, Curry, Hoegemeyer, Nutech, Rev, Dairyland, Mycogen, Pfister, Brodbeck and Prairie Brand are registered trademarks of DowDuPont, Pioneer or their respective owners. AgriPro, Agrisure, Syngenta, Enogen, Innotech, Phoenix, Golden Harvest, and NK are registered trademarks of a Syngenta Group company. RoundupReady, SmartStax, DroughtGard, VT Double PRO and YieldGard are registered trademarks of Monsanto Technology LLC. LibertyLink is a registered trademark of Bayer. DuPont is a trademark of E. I. du Pont de Nemours and Company or its affiliates. DOW is a registered trademark of The Dow Chemical Company. BAYER is a trademark of Bayer Aktiengesellschaft. Legend is a registered trademark of Legend Seeds. FS is a registered trademark of Growmark, Inc. Dyna-Gro is a registered trademark of Crop Production Services, Inc. Croplan is a registered trademarks of WinField Solutions, LLC. Wyffels is a registered trademark of Wyffels Hybrids.