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Dealing with change can be stressful, but change has created a significant upside in the business revenue of two South Dakota ag retailers. It all started with seed and the value these two retailers add to it.
“Our seed business has at least tripled over the past six years,” says Todd Mielke, seed warehouse manager, South Dakota Wheat Growers (SDWG), Mellette, SD. “We sold close to 30,000 units of soybeans in 2006 and we treated 95% of it, which definitely enhances our profitability.
“In fact, our seed treatment business doubled in 2006 from 2005,” he continues. “Nearly all of our customers treated their soybean seed in 2006.”
Upswing in sales
SDWG's experience is a positive one considering the sales losses ag retailers have experienced with crop protection products in recent years. In South Dakota, as corn and soybean acreage rapidly replaces wheat, farmer-owned cooperatives and farm supply services have experienced a significant upswing in seed and seed treatment sales. When the investment in Roundup Ready soybean seed is factored in, the opportunity to add value through seed-applied crop protection products takes a big jump.
The shift in business also has been recognized at North Central Farmers Elevator (NCFE), Ipswich, SD.
“Our seed business has tripled at this location over the past five years,” says Matt Christopherson, seed coordinator and agronomist. “Overall, NCFE sold about 125,000 units of soybean seed in 2006, with 50,000 units sold through our Ipswich elevator location. Our seed treatment business has increased by about 25% per year, with about 50% of our soybean seed treated in 2006.”
In this area that traditionally treated wheat seed, farmers have quickly seen the advantages of treating their soybean seed with new, higher-value treatments such as Trilex seed-applied fungicide treatments, Gaucho seed-applied insecticide and inoculants.
Darian Browning, the location manager of SDWG at Mellette, is pleased with the shift in his location's business. “The seed business has become a large part of our overall business at Mellette,” he says, noting that his location also buys and sells grain and sells fertilizer and crop protection products. “As generic products de-value the marketplace, we must expand our list of products and services to compensate for decreased revenue.
“That's why we expanded our seed business,” he continues. “We're set up to treat on-demand — from bulk or big bags.”
Seed treatment system
SDWG's seed treatment system is anchored by a Gustafson HC-3000 Accu-Coat Treater, which treats 2,700 bu. of soybeans or 3,000 bu. of wheat an hour. This patented, closed-loop system includes three tanks for products, a 60-gal. pre-mix tank and two additional tanks, plus a viewing window on the discharge end of the treater that allows growers to watch their seed being treated.
“Most of our seed customers don't even talk to us. They go over to the window and watch their seed being treated,” Mielke says. “The speed of the system amazes them.”
SDWG's system is set up for high volume with consistent coverage. When the company expanded its seed facilities before the 2006 season, it incorporated bulk, gravity flow bins, up-to-date seed-handling equipment and a dump system for bulk bags into the plans. Mielke says the system allows even the largest hopper-bottom trailers to be filled with treated seed within 15 to 20 minutes of the time the truck pulls in.
The Ipswich NCFE facility also boasts a new Gustafson HC-3000 Accu-Coat Treater. Gustafson brand CS 1700 treaters are installed at the company's other facilities. The Ipswich facility features new bulk storage bins with Convey-All conveyors and a Hamilton Bulk Seed Handling and Delivery System.
According to Christopherson, the limiting factor in volume per hour at Ipswich is the 6,000-lb. hopper box mounted above the Gustafson treater. “Our expansion goal will be to install a scale at the delivery end of the treater for continuous operation or a double hopper above the treater,” he says, noting that the current system is limited to 6,000-lb. batches. “Either one would greatly enhance our speed.”
Like SDWG in Mellette, NCFE is expanding services and capabilities to serve a dynamic and growing business in seed. Adding value through seed treatments creates an additional revenue stream that is highly beneficial in a changing business environment.
Jerry Duff is the president of The Duff Company, a public relations firm in Kansas City, MO.
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