Seed Drop Rates and Technology Fees

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Monsanto has recently announced a new method for calculating the acres on which the technology fees for its Bollgard, Roundup Ready and Bollgard/Roundup Ready cotton products will be based in 1998. Beginning this spring, the number of acres where the technology fee is charged will depend on the cotton variety chosen and a factor Monsanto is calling the Seed Drop Rate (SDR) for specific areas of the Cotton Belt. The Seed Drop Rate is the number of seeds dropped from the planter to achieve a final stand count or plant population.

Monsanto has also divided the cotton varieties containing its Bollgard and Roundup Ready genes into categories of 4,200, 4,700, or 5,400 seeds per pound, based on seed size. The number of seeds per pound for a variety will be multiplied by the number of 50 pound bags purchased and the result divided by the Seed Drop Rate to give the number of acres on which the technology fee will be charged. This new method will allow growers to calculate technology costs up front--at the beginning of the growing season--rather than having to wait to reconcile their acres after planting season as under the old system. Another benefit involves reducing the overall complexity of tracking new technology acres. The SDR also allows for differences among seed varieties and keeps Monsanto cotton technologies priced on a per-acre basis, and the SDR method also addresses exceptions with ultra-narrow-row cotton.

Here are two examples of how the SDR approach will work. Assume a grower in Alabama has a Seed Drop Rate of 52,000 seeds per acre and the cotton variety is in the 4,700 seeds per pound category. In this case, the grower would pay a technology fee on 4.5 acres per bag (4,700 seeds per pound x 50 pounds (one bag) = 235,000 seeds per bag divided by 52,000 SDR = 4.5 acres per bag). In North Carolina, which has a Seed Drop Rate of 62,500, a grower buys a 50 pound bag of Roundup Ready cotton in a variety that is in the 4,200 seeds per pound category. In this case, the grower would pay a technology fee on 3.36 acres (4,200 seeds per pound x 50 pounds = 210,000 seeds per bag divided by 62,500 SDR = 3.36 acres per bag).

The Seed Drop Rate should not be confused with recommended seeding rates for different varieties, which should still be based on the number of plants per linear foot of row. The recommended seeding rate should still be based on the number of seed required to get the stand that a grower desires. However, growers will reduce their technology fees if they use a lower seeding rate than the published Seed Drop Rate. Monsanto representatives visited with many producers while trying to develop accurate, representative seeding rates for each cotton production area.

Monsanto has decided to leave the technology fee for its Bollgard cotton at $32 per acre in 1998 to try to be fair to cotton producers since the price of cotton is down. The Roundup Ready technology fee for picker and stripper cotton was increased, but Monsanto is also offering other inducements such as the new stand guarantee that is included in new Technology Value Package. In most cases, Roundup Ready cotton and Roundup Ultra herbicide should be at a parity with 1997 prices. The proposed SDR approach is an attempt to be fair to growers in different geographical areas based on what is agronomically best for those farmers.

Missouri, northern Arkansas, west Tennessee, Virginia, North Carolina, and South Carolina -- 62,500 seeds per acre.