SPECIAL FOCUS - TURF SEED: Turf or Consequence?

From gasoline to Tickle-Me-Elmo, the world economy operates on a supply vs. demand basis and in a perfect world, demand is always a little bit greater than supply. After all, would the world want more giggling Elmos than it really needs?

At the same time, many contractors currently are being hit by dramatically increased gasoline prices as a result of decreased supplies. A leveling off in this area, would be a welcomed reprieve from paying $2 per gallon at the pump.

But in terms of the global turf seed market, the industry seems to be caught in a tug-of-war between surpluses in some species and shortages in others. This year, perennial ryegrass supplies are on a downturn and contractors can expect to pay more for their stockpiles than they may have planned. But this may not be a bad thing, according to some industry experts. Turf seed producers and distributors offered their insight on how this shortage will play out and what other aspects of the seed industry might feel its effects.

BYE-BYE, RYE. In 1995, seed company AgriBioTech (ABT) initiated a plan to rapidly consolidated smaller seed companies, striving to reach a goal of 45 percent marketshare. Though the plan was to create a network of seed companies with strong research and development resources,  the ABT consolidation came to a halt in 2000 when the company filed for bankruptcy.

After the company’s downfall, the organization was left with 100,000 acres of turf seed in production that growers had no choice but to harvest. The result: a glut of turf seed that had to be sold at low prices until supply and demand evened out a bit.

That evening out is occurring right now.

“A combination of factors has led to a shortage of several major turfgrass species,” notes Steve Tubbs, president, Turf Merchants, Tangent, Ore. “Several years of overproduction, coupled with the ABT bankruptcy in January of 2000, caused massive inventory problems that led to record low prices. Even the growers who were not directly impacted by the ABT bankruptcy bore the brunt of the low cost of production, mostly in perennial ryegrass and turf-type tall fescue.”

Producers knew that the ABT seed excess  would run down eventually, but Tubbs notes that the ever-unpredictable Mother Nature added to that reduction in inventory.

“We entered the 2003 harvest with the lowest production acres of perennial ryegrass we had seen in more than 10 years – more than 30,000 acres less than in 2000,” Tubbs says. “But wouldn’t you know it – we had a bad crop. Excessive, above-normal heat at the critical time of pollination reduced yields by 25 to 35 percent in some cases.”

As a result, contractors can expect seed prices to climb. “It is predicted that prices will be about 10 percent higher for turf-type perennial ryegrass in the fall of 2004 compared to the fall of 2003,” says Evelyn Dennis, seed project manager, LESCO, Strongsville, Ohio, adding that increased prices may not be a bad thing. “The higher prices do have some advantages. They will encourage production companies and seed growers to maximize the quality and yield of their crops,  as well as continue growing reygrass into 2005 and beyond.”

PLAN FOR DEMAND. While these increases actually bring turf seed prices back to levels seen in the mid-1990s, producers understand that the price spike will come as a shock to some contractors. “When you have a spike, particularly after two or three years in a row of prices being flat or less expensive than before, people get used to that,” comments Bill Dunn, general manager, Seed Research of Oregon, Corvallis, Ore. “It’s very much like the low interest rates that homeowners are seeing now. They’re rising to 6 percent and that’s seen as a big increase because it’s no longer 5.25 percent, even though 6 percent is still historically low.”

Still, to take the edge off the higher price tags in shortage situations like these, some producers see landscape contractors using modified seed mixtures on clients’ lawns. “Industry response to the shortage has been formulation shifts where contractors use more of another species in blends and mixtures,” Dunn says. “If they use a Kentucky bluegrass/fine fescue/perennial ryegrass mix, for instance, they’re probably going to use a higher percentage of fine fescue in the ratio and pull back on the ryegrass a bit.”

Dennis agrees. “There are many alternatives to turf-type perennial ryegrass,”she says. “Turf-type tall fescues, Kentucky bluegrasses and fine fescues are in good supply and prices are stable. Seed customers should consider these alternatives, which in today’s market, may offer better prices and a higher quality product.”

Also, producers recommend that contractors work closely with their suppliers to keep future shortage possibilities at bay. “Contractors should order and purchase their seed as soon as they know what they need,” comments Susan Samudio, plant breeder, Jacklin Seed/J.R. Simplot Co., Post Falls, Idaho. “Their suppliers will be able to let them know if what they request is not available and give alternative options.”

Also, “Some distributors will allow contractors to book seed for a season as a way to lock in prices so the contractor will know their price is flat through a period,” Dunn says. “The key is to work with your distributor and communicate.”

Though Dunn notes that more people are paying closer attention to inventories and buying just the seed they need, Samudio notes that buying seed in advance is an option in some cases. “Seed can be purchased in advance and stored with little change in seed quality for a year or two if the purchaser’s warehouse has controlled temperature and humidity,” she says. “If not, contractors should only purchase what they can use in a few months.”

But contractors shouldn’t have to worry about offsetting higher seed prices for too long, according to Dennis. She expects the shortage of perennial ryegrass in particular to be relieved later this year. “Major seed producers have expanded production of turf-tupe perennial ryegrass by about 20 percent for the 2004 crop,” she says. “If the weather cooperates and the harvest meets or exceeds estimates, the shortage of turf-type perennial ryegrass should end in August or September of 2004.”

Likewise, Dennis adds that the worst of the shortage will come between June and July while the industry waits for the new crop to be harvested. This means that contractors should already have on hand any seed that they plan on using this summer, but it also means that the industry is already headed for greener pastures.

Samudio agrees. “Producers are trying to get seed production more in line with demand,” she says. “This summer, they should be closer to achieving this.”

The author is associate editor of Lawn & Landscape magazine and can be reached at lspiers@gie.net.