Forecasting the Future
In today’s environment of rapidly fluctuating markets, it takes shrewd planning to forecast seed demand, and John Latham of Latham Hi-Tech takes this seriously in his business. “We’ve been able to change over the years to stay focused on our customers and what they need,” says Latham.
The biggest change in his company’s territory in recent years, he says, is the dramatic increase in the amount of corn being grown in North America. “We’re really kind of known for soybeans,” he says. “But with all the corn being grown we saw that was a business we should be a part of. In 2004 we got into the corn business, and we’ve been able to grow that business every year since.”
This kind of adaptability and long-term planning, stemming from a customer-centered approach to doing business, is increasingly key for both independent and commercial seed sellers when it comes to forecasting yearly customer demand.
Long-Term Planning
“For most of us in the seed world, especially when it comes to new varieties, you have to plan three years out,” says Michael Mazzocco, director of Verdant AgriBusiness Consultants. “For the larger families of companies like Monsanto and DuPont, they will have optimization models for how much of each variety to be growing at what stage, based on how much they want to have available in the market. It’s a multi-year planning horizon.
“The smaller companies have less territory that they’re trying to cover, so they’re generally trying to grow whatever they can for the next year,” he adds.
However, even smaller companies, if demand peaks for new varieties, need to factor in the extra time required to produce and have large quantities of those varieties in stock. This is especially the case if, like Donald Zeghers of Field to Food Farms Co. based in Manitoba, they are pedigreed seed producers and grow the new varieties from breeders’ seed themselves. “If it’s a new variety it’s usually three years in advance [that we have to plan]. For example, this year, we were growing two new varieties of winter wheat, and we started off with breeders’ seed,” he says. “We plant that and then we get foundation seed, which multiplies. The next year we get certified seed from what we plant, and then we can offer it to customers.”
Despite all the planning, forecasting future seed demand is always “a best-guess scenario,” according to Zeghers. Some parts of the process are entirely out of the seed retailer’s hands, no matter how carefully they select and stock varieties based on trends they observe and customer orders. “When growers don’t pick up what they order, there’s not much you can do. Plans do change—you have to be understanding of that,” Zeghers says. “We’ll take booking orders, we’ll give a discount if the farmer pays cash. But if he decides not to take it in the spring, we have to figure out where to move it.”
Latham has the same philosophy. “It is difficult to forecast what the right products are going to be,” he says. “You’ve got to bring out your crystal ball and figure out what the trends will be in the years ahead. That’s the biggest challenge in the seed business.”
One on One SurveysSeCan has recently launched a “Seed Priority Needs” survey notepad to their retailers—representatives conduct a short survey with their growers, who rank the traits most important to them. “This paper can then be used to make a variety recommendation based on a farmer’s needs, not simply what the latest, hottest variety is,” says Pinkerton. “This helps retailers get to know what their customer base is really looking for so they can source new varieties that meet those needs.” |
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Traits growers can choose from include the following: |
Keeping in Touch
That “crystal ball,” to many seed retailers, is comprised of many things, including market reports and federal data—and increasingly, communications technology. Latham’s sales representatives carry iPads, send out client surveys and use agencies to call growers “and get a read on what they’re seeding.” Others send out mass emails or texts.
No matter what kind of technology or method of communication is used, according to Bradley Pinkerton, Manitoba marketing representative for SeCan, the bottom line is that seed retailers must stay on top of what their customers want. He says that part of the difficulty in planning for the future is due to farmers leaving seed orders until as late as possible. “Our retailers are hearing from their customers later and later each year. That makes it challenging because you can’t clean a whole bunch of seed in 30 days. So our retailers rely on market signals—orders, sales, discussions—to make the decision about how much seed to clean.”
The onus, Pinkerton says, is on the seed retailer to ensure the lines of communication with customers stay open. “The biggest challenge with late orders comes to seed retailers who are order takers rather than order makers. An order maker is someone who gets on the phone and calls all the customers, while an order taker is someone who waits for the customer to call them,” he explains.
Ultimately, if a seed retailer offers the best possible product and service to growers, the odds are they’ll have happy customers who order seed and follow through on the purchase—but communication is key here too. “That’s the type of relationship we’re looking for with our customers—a relationship where they tell us what they’re seeing and what they’re looking for, so we can stay ahead of the trend,” says Latham. “Those relationships are really the key for us in choosing products.”
Julienne Isaacs
