BROOKINGS, S.D. - When 4 million acres of the South Dakota's crops couldn't be planted in 2019, there was a powerful need for cover crop seeds.
Millborn Seeds Inc. of Brookings was one of the players in the region's seed business that scrambled to cover prevented-planting acres for their customers.
Justin Fruechte, sales director, says his company's response started in May when the calls came in for forage options on prevented planting acres. The company held their own meetings with growers and with crop insurance and corn seed companies.
On June 20, the federal Risk Management Agency moved up to Sept. 1 - from Nov. 1 - the date after which farmers could hay, graze or chop cover crops.
The "floodgates" swung open. Millborn's forage and hay seed sales tripled for June and July, helping the company post an above-average seed sales year, overall. Despite the demand, many farmers who wanted to plant a forage crop couldn't get into sodden fields, Fruechte says.
In 2001, Matthew Fenske, of Fulda, Minn., was studying at South Dakota State University, and became a part-time and then full-time employee and rose to became president in 2018 and in September became sole owner.
In February 2018, the company had moved into their new 53,000-square-foot, climate-controlled warehouse, office complex and welcome center in northeast Brookings. Fruechte says the company employs 22 people in Brookings, plus part-timers, and two more at a separate, smaller leased warehouse/office and shipping point at Black Hawk, S.D., that was added in January 2019.
The business is diversified into three business units. By volume they are:
1) forage and cover crops
3) commercial and turf
Typically, those account for a 40/40/20 split, but 2019 was not typical.
Heart of the hurt
This year, the forage and cover crops expanded to about 65% of the company's business.
"We make projections and forecasts every year," Fruechte says. "Obviously (the prevented planting situation) blew the doors off, as far as a forage need. We had to keep going. Our customers - they needed the seed."
March and April were extremely slow because of excessively wet conditions.
After the RMA decision, Millborn ran out of their German millet supplies in three days. Challenged with orders triple their normal for that period, they went to their contract growers and other seed suppliers. Prices on key seed items went up roughly 20%.
"If a BMR (brown mid-rib) forage sorghum typically cost $1.25 (per pound) at the start of the season it went up to $1.50," Fruechte recalls. With a market bump, seed suddenly became available.
"You'd be surprised how many farmers had seed sitting in their bin (in reserve) for the next couple of years," Fruechte says.
Each seed has its own dynamics and source.
Texas produces much of the sorghum and sudangrass. That region had been long on supply for the past few years, so those producers were able to clean out their supplies. They typically get their sorghums, millets and sudangrasses from the same sources, year after year.
"A lot of our suppliers ran out," Fruechte says. "So it took a lot of digging just to keep finding more seed."
They reached out to new suppliers and marketing companies to supply them with those seeds to "capture that market share."
Demand was met.
Seed comes into the Millborn plant primarily from five states. Most of it comes in 2,200-pound totes.
"Quality control stays the same, whether you're bringing in one load of German millet or 25 loads," Fruechte says. "Every load needs a seed test. It still needs to make specifications that way."
Millborn has its own germination and purity standards. The state has standards that prevent "noxious" weeds. Millborn sends samples from every "lot" of seed - from an individual field or harvest source on a farm - to one of several seed testing laboratories. The American Seed Trade Association oversees the test labs. NST Labs at Bridgewater, S.D., SGS's Agriculture and Food Testing Laboratory in Brookings, and South Dakota State University all do some of this work; and SoDak Labs in Brookings are among those they use.
When the prevented planting rush came, Fruechte says these labs were busy but were not overwhelmed because it was a typically slow period for seed testing.
Millborn has standard mixes on hand that typically satisfies customers, but they routinely do custom-blends for seeds.
"We can be 15 species deep in these mixes and still have a reasonable price point," Fruechte says.
Orders go out in bulk, in totes or 50-pound bags, mostly through dealers in the Upper Midwest. Some online sales go into 35 states.
Uncle Sam's say
The RMA's Sept. 1 deadline change was just the latest in an industry that is often heavily influenced by government policies.
"We've seen huge ups and huge downs as far as what the CRP (Conservation Reserve Program) market has done," Fruechte says.
In the 1980s and 1990s, there was huge demand for bromegrass and switchgrass for CRP.
In 2016 and 2017, the pollinator type grasses were the hot sellers among conservation grasses. "We had high-diversity seedings with lots of flowers, lots of pollinators, lots of forbs, lots of pollinator-attracting plants," Fruechte says.
The Natural Resources and Conservation Service has offered incentives in the past five years. The Environmental Quality Incentive Program and Conservation Stewardship Program both influenced how and where acres go into cover crops. Farmers who use the incentive programs then were influenced to stick with them, even when incentives run out.
"The biggest thing we've seen in the last couple of years is the increase of winter annuals, especially south in the 'I' states," Fruechte says, referring to Iowa, Illinois and Indiana.
Rye grain and winter triticale help capture nitrogen that otherwise could harm groundwater, and they help prevent soil erosion. Forage and alfalfa crops are more "farmer-driven," and influenced by weather and production needs.
Millborn typically sources seeds from "100 to 200" seed growers in the Dakotas, who are suppliers for rye, oats, wheat and barley seed.
Native grass seeds are "finicky" to grow. Many of the forbs and flowers in the mixes are hand-harvested.
"There's more people doing it," Fruechte says of the seed production. "We've had to take on other growers just to meet our demand of those seeds as well."
The new Black Hawk warehouse and specializes in grasses that are more hardy and drought-tolerant. Most of those seeds come from western South Dakota, Wyoming and Montana.
Girded for spring
"We're wet enough now that if we have regular snowfall and a regular amount of moisture in the spring, it's still going to be a big challenge for a lot of farmers to get their typical crops planted," Fruechte says.
The company has contracted more than the usual seed supply for the millets in anticipation of demand.
"Our millet market share has grown. We know we're going to have more warm-season forages if we have more PP next year. We're able and capable of getting more if that hits," he says.
He says the biggest opportunity will be hanging onto customers who had great experiences planting forage seeds on prevented planting acres last year.
Many customers tried chopping sorghum silage for the first time.
"It tonned-up very well," he says, getting favorable yields of 15 to 20 tons per acre. "The feed tests are coming back very good. If that's a lower-input crop that they can capture similar yields for corn, that's a good option for them. The same thing goes for hay."
Sometimes there must be substitutions, but Fruechte doesn't expect anything significant this time around.
"We were able to serve the needs of those customers in a week's time of knowing this hit," he says. "If we know it's coming within a few months, we'll be even better prepared."