New Drought Resistant Seed May Expand Corn Belt

The April 29, 2010 issue of Bloomberg Businessweek had a good article on how the seed companies are developing drought resistant corn seed that may expand the corn belt farther into Kansas, Nebraska, and Oklahoma.

Another benefit of the seed is a reduction in the amount of irrigation that is needed.  This can lead to reduced crop insurance premiums and can boost the value of this crop land.  Also, the article states that agriculture accounts for 70% of global freshwater use and the single biggest issue facing agriculture is the availability of water.  By creating seed that uses less irrigation water or requires less natural water, a farmer can increase their net income, and in some cases, substantially.

Dupont indicates that in their test trials, the new seeds are creating yields that about 6% better than the old seeds.  Syngenta is aiming for a 10% increase in yields.  The seed companies believe that by 2020, over 55 million acres of corn will be planted with the new drought resistant seed. 

If a farmer’s old corn yield was 120 bushels per acre and they can create a 10% yield increase at $3.50 bushel price, this would increase the net bottom line by about $42 per acre less any increase in seed cost plus any reduction in irrigation costs.  This can be a substantial increase to the bottom line.