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

Table 9.
Average U.S. production cost per unit (50 lbs) of hybrid seed corn.
COGS (~)
Field
Grower
Parent seed
Rouging, Detassel ing
Oter
Plant
Husk, SOrt, Dry, Shell
Quality Assurance
conditioning
Freight in
Other
Total
100
45
10
11
9
9
2
9
2
3
The other 5~ of the COGS comprises parent seed costs, transportation, certification, seed
conditioning, bags, tags, and other incidental costs. If rouging, quality control and inPUts
costs are high the resulting COGS can jeopardize the feasibility of the business. In order to
reduce the COGS, an increase in the yield of the female parent through higher seed yields is
essential. In corn, if the female parent is made male sterile through genetic engineering as
demonstrated by Plant Genetic Systems of Belgium, or through the use of cytoplasmic male sterility
(if it is not linked with disease susceptibility) then cost can be saved.
Farmer's benefit
Farmer benefit is a function of the value added to improved seed. seed compani.es can
theoretically change an amount up to, but not exceeding, the value they add. The farmer should
not get less than 3 times (preferably 5 to 6 times) the return on his investment in seed.
Depending upon the complexity of the cross and the amount of value added, hybrid seed is generally
priced at 10 to 30 times the value of the crop's commodity price. This price structure can
give acceptable gross margin to the seed company if COGS is kept at 48-5~ of the net price.
Growth 1imitations
Major constraints to the hybrid seed industry in the developing countries include the
following:
- Hybrid technology constraints. Technology for making some key crops hybrids may not be
economically feasible;
- Low heterosis, low female yield, high input costs;
- Complicated variety notification and registration procedures;
- Complex seed legislation;
- Unfair competition due to seed subsidies to public sector;
- Restrictions on seed exports/imports;
- Restrictive quarantine laws;
- Restrictive investment laws;
- Inadequate sources of long-term financing;
- Inadequate refrigerated storage capacity;
- Infrastructure limits on markets for inputs and outputs.
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