Topic: Are we doing a good job of communicating the value of seed?
Description: We will explore what goes on behind the scenes to increase the cost of seed for suppliers, including freight, taxes, customs, labor, packaging, and more.
Moderators: Robb Baumann and Patty Buskirk

Summary

What are the influences in increasing seed costs?

  1. Labor increases are everywhere. The effective minimum wage (as opposed to the Federal minimum wage) ranges from $11 to $15 an hour. COVID has affected labor costs; many workers are out due to illness or cautious behavior, which necessitates overtime pay for others. In B.C., Alex Augustyniak of West Coast Seeds reported, the government is paying extended unemployment benefits due to COVID, making it difficult to get workers.

  2. Freight difficulties and delays continue to be a problem. Surcharges on packages over 50 lbs have complicated shipping. Members report that they now keep their packages under that weight to avoid the surcharges. In addition, shipment damages are increasingly common. John Wahlert, Wild West Seed, recently began sending a photo of each shipment to the recipient before it ships so that he can better document damages that occur. Patty Buskirk noted that Seeds by Design has had more freight claims this year than in the past 10 years put together.

  3. Seed Industry consolidation means that there are fewer vendors to buy from, i.e. less competition.

  4. Regulatory changes add costs. This will be the topic of the next bi-monthly Roundtable Discussion.

  5. Increased market demand

  6. Shortage of seed inventory

  7. Increases in taxes. There are inconsistencies in the collection of state sales taxes. Some companies collect them, others don’t. This will change in the near future, as everyone will be required to collect state sales taxes. The consequence will be a perceived increase in the cost of seeds.

How can we convey the value of seed?

  1. Are we relying too much on historical pricing, which has changed very little compared to other products over the past couple of decades? Renee Shepherd, Renee’s Garden, believes that packet pricing is driven by what seeds go for in the big box stores.

  2. How can we determine the value of seed packets? And how can we get buyers to understand what distinguishes value seed from low-end products? There are unscrupulous “get-rich-quickers” out there, who determine what is in demand by searching keywords, and then fill those needs by whatever means possible. Mike Lizotte, American Meadows, does not strive to be the low cost leader; he puts effort into good quality and good customer service. As an aside, he noted that some of his marketing costs actually decreased in 2020 due to the surge in demand. More organic traffic from search engines meant that he was able to spend less on marketing. Dennis Kromer, The Seed Den, suggested that customers are not savvy enough to base their buying decisions on germination rate, trueness to type, and other markers for good quality seed. Robb Baumann, Mountain Valley Seed, said, “We need to move customers along. They may start with the low cost option but as they continue to garden they will become more discriminating.” Patty B added that brand loyalty can only come with time.

  3. How important is trialing, asked Travis Key, Hoss Tools? Which is better, to be the first to offer a variety, trusting the vendor, or to rely on trials? Renee S made the point that a customer can get turned off to growing in general after one bad experience. Heather Kibble, Sakata Seed, agreed that trialing is important, but sometimes speed-to-market can take priority, particularly if you know you can trust your breeder’s methods.

Final Remarks:

Mike L, HGSA president, remarked that COVID has shown that the garden is a great place to spend time and rejuvenate the soul. These are unique times, and the surge in gardening has been a benefit. Events like this Roundtable Discussion allow seed industry professionals to learn from each other and leverage each other’s knowledge and skills.