Proceedings of the Fifth Asian Regional Maize Workshop - Search ...

use of single-cross hybrids, which are more expensive to produce than other types of
per sa can also contribute to high seed prices. In the USA, seed production costs comprise
only about 3~ of the final sales price; the remaining 7~ consists of R&D, marketing, and
promotion costs (Table 7). By contrast, over 80% of the final sales price in Zimbabwe
consists of production and on-farm processing costs; until recently, R&D, marketing, and
promotion costs borne by the seed companies were negligible, since these services were
provided largely by the public sector. In Mexico, where seed prices are somewhat higher
than in Zimbabwe, seed production and processing costs account for about ~ of the final
sales price (Table 8).
It is interesting to note that wherever hybrid maize has been widely adopted by
small-scale farmers, seed-to-grain price ratios have been in the range of 4:1 to 6:1. This
would appear to indicate that low seed-to-grain price ratios (probably on the order of
10:1 or less) are necessary to encourage farmers to adopt hybrids during the development
phase of the seed industry, when the market for hybrid seed is first established. At these
low seed-to-grain price ratios, seed costs contribute only a small share of the variable
cost of production. As will be discussed in the next section, various policy measures are
available to stimulate a competitive hybrid seed market with prices at these levels.
Although low seed prices may be necessary to encourage farmers' initial adoption of
hybrids, it is important to recognize that low seed prices can be undesirable if they
discourage private companies from investing in seed production activities. For example in
India, public and parastatal seed corporations produce and market OPVs and hybrids, which
they are able to sell at low prices with the help of government subsidies. Many private
seed companies in India are reluctant to produce and market seed of the public materials,
Table 7.
Breakdown of hybrid maize seed price, USA.
Percent of sale price
Seed production
Processing
Marketing
Research and development
OVerhead
Gross profit
Sale price
30
15
15
10
15
15
100
Source: Based on Pioneer (1992) and Segha1 (1992).
because profit margins are negligible. Although most private companies continue to produce
and sell seed of the more popular public OPVs and hybrids, these materials are often
carried as "loss leaders," i.e., products sold for 1ittle or no profit in order to attract
and retain customers who will purchase other more profitable products such as fertilizer
and agricultural chemicals.
3.2. Seed rate
Another important variable which can greatly affect the cost of using hybrid seed is
the seed rate. Although seed rates for monocropped maize average around 25 kg/ha across
Asia as a whole, in some instances they are much higher. In East Java, for example, seed
rates average over 40 kg/ha because farmers overp1ant in order to compensate for expected
losses from insect attacks during the seedling stage (Krisdiana et a7. 1991). In hill
areas of northern Pakistan, farmers frequently sow 80-100 kg/ha of seed in order to
provide both grain and fodder from thinnings (Byerlee et a7. 1991). In some parts of India
and Thailand, early season drought can lead to poor emergence, creating the need to
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