Insights and Trends - United States Seed Industry
The eastern corn belt has witnessed increased adoption of genetically engineered stacked seeds (80% for corn), drought-tolerant corn (22%), and organic corn (growing at 34.8% CAGR). A deep dive into the trends has been presented below.
Adoption of Genetically Engineered Seeds
- The use of genetically engineered seeds of the herbicide-tolerant (HT) variety in soybean farming grew from 17% in 1997 to 68% in 2001 to 94% in 2014 and plateaued thereafter (in terms of acreage).
- The use of genetically engineered seeds of the herbicide-tolerant (HT) variety in corn farming is currently 90%. The use of genetically engineered seeds of the insect-resistant (Bt) variety in corn farming grew from 8% in 1997 to 19% in 2000 to 83% in 2019.
- The share of stacked seeds--seed with both HT and Bt characteristics-- in corn farming grew from 40% in 2008 to 80% in 2018.
- The share of stacked corn seeds grew by only 3% between 2017 and 2018. The slow rate of growth can be attributed to low corn prices and the fact that a high percentage of corn seeds are already stacked type.
- As of July 2018, stacked soybean seeds were not commercially available in the United States.
- According to Tack and Ariel Ortiz-Bobea of Cornell University, genetically engineering corn "may be a fruitful strategy for counter-balancing climate change". In the future, genetic engineering techniques such as CRISPR can play a significant role in combating climatic effects.
Drought Tolerant Corn Seeds
- Drought tolerant (DT) corn became commercially available in the United States in 2011. Drought resistant varieties produce healthy yields even when there is a limited supply of water (corn is sensitive to water availability).
- There are two varieties of DT corn: genetically engineered and conventional (non-GE). The GE variety is created by inserting a gene from the Bacillus subtilis bacteria.
- The use of DT corn increased from 2% in 2012 to 22% in 2016. Most of the DT corn varieties in the United States are produced through conventional breeding.
- The eastern corn belt (16-21% in 2016) has been slower to adopt DT corn than the western corn belt. However, Iowa (2.2 million acres) and Illinois (2.1 million acres) have the largest area of DT corn plantations in the United States.
- The disparity in adoption rates between the western and eastern corn belt can be attributed to the fact that late-stage testing and initial marketing of DT corn were done in the western corn belt and eastern corn belt being less drought-prone.
- The price of a bag of corn seeds with DT, HT, and Bt was $264 in 2016 and the price of a bag of corn seed with only HT and Bt was $254. The drought-resistant characteristic comes at a $10 premium.
- A report by ERS economists Jonathan McFadden, Seth Wechsler, David Smith, and Steven Wallander--much of the aforementioned data is derived from the report--estimates a DT corn adoption rate of 18% in Illinois, 21% in Indiana, and 20% in Ohio.
- According to the report, "the decision to plant DT corn can be likened to farmers’ decisions to purchase insurance. Under mild-to-moderate drought conditions, planting DT corn can ‘pay out‘ in the form of reductions in drought-induced yield losses. Farmers who adopt DT corn value the expected avoidance of such yield losses at least as much as the premiums they are willing to pay for the DT technology".
- The "continued diffusion of DT corn and further development of drought tolerance in other field crops could result in cost savings to farmers, private insurers, and the Federal Government through reduced indemnity payments".
Organic Corn Seeds
- In 2016, only 533,000 acres (0.3% of the total) of corn farms in the United States were certified as organic. However, while the total corn acreage grew by 2% between 2011 and 2016, the organic certified corn acreage grew by 55% in the same period.
- The growth in organic corn acreage was 29% in 2016. The United States produced $170 million of organic corn and imported $160 million of it.
- The majority of the organic corn in 2016 was grown in Wisconsin, Iowa, Michigan, Minnesota, and New York.
- The fall of the price of regular corn from a high of $6.89 in 2012 to $3.36 in 2016 and the strong demand for organic livestock feed boosted the production of organic corn. The price of organic corn is two to three times that of regular corn; the premium makes it more profitable.
- While farmers rely on existing networks for support and guidance on conventional farming, such resources for organic farming are scarce.
- According to J. Peter Golbitz, CEO of Agromeris, organic poultry production increased over two times in 2016 and by 50% in 2017. The compounded growth rate for organic poultry production in the United States over the four years leading to 2019 was 46%. Over the same period, organic corn and organic soybean acreage grew at a rate of 34.8% and 27.6%, respectively.
- Organic corn and soybean acreage amounted to 639,000 acres in 2018. Mr. Golbitz estimates that 1.3 million acres of additional organic soybean and corn farms will be required over the next five years to meet demand and reduce dependence on imports.
Data specific to seed sales trends in the eastern corn belt is limited in the public domain. However, we have provided trends specific to corn and soybeans, the two major crops in the eastern corn belt. Wherever possible, our research team has highlighted regional differences in the trends. The trends have been identified on the basis of USDA data.