Prior to working with the UNL TAPS farm management program (Testing Ag Performance Solutions), I had not fully understood the economic impact that the seed selection decision potentially has on farm profitability. Sure, I knew that paying too much for seed relative to its return results in a reduction of profit, and yes, I recognized that a certain degree of productivity is required to cover expenses and have a healthy cash flow, but it was a surprise to me to find out just how large the decision using the right seed at the right price is and that it can significantly alter profitability.

When TAPS competitions started, I assumed that most competitors’ seed choices would not play as a major role in determining the economic winner as they have and that seed selections would likely result in somewhat similar yield outcomes. After examining and analyzing the 2018 TAPS results, it became evident to me that I have underestimated the impact and value of this choice. A solid-performing hybrid at the right price makes a considerable difference in both costs and returns.  

In the next few pages, an economic analysis of the 2018 TAPS seed decisions is presented. This comparison is made using the profit relationship, measured by the change in revenue due to the yield difference in hybrids, minus the change in costs due to planting a different hybrid.

A side note is this same method is appropriate, useful, and needed for many of the production decisions. The planting cost difference among the various hybrids is straightforward and easy to determine since seed costs are known at the time of planting and each competing farm’s planting populations are known. The planting cost difference is simply the costs of planting hybrid A1 versus the currently planted hybrid B#. There are 11 B hybrids, identified here as B1 through B11. For practical purposes, seed costs are reported on a per acre basis. It is further recognized that all other costs of planting are constant and don’t change by hybrid, since they are planted using the same equipment, in the same field.

Seed costs are priced by the bag. A bag of corn seed is standardized to contain 80,000 seeds, making it easy to determine cost in terms of cost-per-1,000 seeds. Each hybrid has unique technological components, distribution and development history with many different pricing schemes. Hybrid A1 was selected as the base hybrid for this analysis since it has the largest number of replications and observations which are helpful in creating a statistically viable model used as the basis to determine yield differences among hybrids. This model was used to simulate yields of the base hybrid (A1) based on irrigation quantities; and N fertilizer applied by the various competing farms that planted B# hybrids. These simulated A1 yields were compared to the planted B hybrid yields by farm #. Coincidently, the A1 hybrid… (continue reading)

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