Most farmers understand that the price of seed corn tends to go up during good economic times on the farm. Gary Schnitkey at the University of Illinois used the state’s Farm Business Farm Management records to quantify this idea.
“What we did was to look at the seed corn cost and two things (stand out). The first is that generally during higher expected revenue periods seed corn costs tend to rise. We saw rising revenues in 2020, and expect this to continue into 2021 and this would lead us to believe seed cost will rise in 2022.”
The ag economist expects seed corn costs to increase by $6 to $10 per acre. Since 1975 Schnitkey says seed costs as a percentage of expected revenue per acre has been increasing. “It started as four percent in 1975. So, in 1975 seed costs as percent of expected revenue was four percent and now we over ten percent. So, the share of gross revenue going to seed costs have increased over time.”
Schnitkey notes that even without increasing revenues the per acre costs of seed corn has trended higher over the years. The increases are simply larger in better times.