On July 14, citing farmers' right to know, the Arkansas Seed Dealers Association unanimously passed a resolution calling for soybean varieties to be printed on seed bag labels. Currently, state law allows seed to be designated “Variety Not Stated (VNS).”

“It did pass without a nay vote,” said Danny Ladd, president of the Arkansas Seed Dealers Association. “But several members abstained. There wasn't total agreement.”

Ladd, who insisted he remained open while helping craft the resolution, said there are legitimate arguments from both sides.

But the key issue, he said, is how best to remove the potential for producers to plant duplicate varieties.

“Say I work for (ABC) and we launch a variety with genetics we've bought from someone else. At the same time, (John Doe from XYZ) buys the same genetics. Doe might market his as (XYZ666) and we'd market ours as (ABC666).

“The genetics of those two varieties are exactly the same even though they came out of different bags with different names. The farmer doesn't know that, though, and that's a problem.”

Asked why this is a pressing concern, Mary Smith, who heads the Arkansas Plant Board Seed Committee, said the impetus isn't something novel. “This has been going on for a long time. When you buy something according to brand — when you have a VNS bag, most are branded to identify the source — and don't know the variety, you could be buying the exact same variety under a different brand name. You may think you're spreading risk but you aren't. Or, you may buy a brand this year. Next year, you go with another brand thinking you're getting a different variety. But you aren't.”

Smith is “for truth in labeling. This would be a step in that direction, I would think.”

How it works

Many breeding companies — Monsanto, Pioneer, D&PL, and Hornbeck among others — are bringing new seed varieties to market. To get the maximum bang for their buck, such breeding companies license out their varieties. And the license isn't always to seed companies without breeding programs.

“Breeding varieties has a lot of the ‘luck of the draw’ in it,” said Ladd. “A company may go through a two-year or four-year variety drought. Try as it might, it can't get a better variety in the company program. In such a situation, they'll go to the genetic superstores and purchase varieties to bring in. Lots of companies do that.”

Regardless, with different diseases, nematodes, and fungi encountered while raising a soybean crop, a farmer needs to know if he's diversifying or not.

“Spreading the risk is just smart farming,” said one prominent Delta-area seed dealer who fears angering fellow dealers if identified. “Unfortunately, there are numerous examples of farmers planting VNS beans from different companies, but assuming they're different varieties. Only later does the farmer figure out that wasn't the case. Truth is, it may happen a lot more than we know.”

“There are too many diseases out there not to finally address this,” said Jim Craig at Stratton Seed in Stuttgart, Ark. “Stem canker can wear a crop out. Sudden Death Syndrome (SDS) is another bad one — it can take out half a crop. If you've had a problem with canker or SDS, you want to make sure you pick several varieties in case those diseases hit. The farmer should have the right to do that without any guess-work.”

Anyone against?

Ladd won't name anyone but, he said, those against labeling varieties are principally smaller seed dealers.

“They have an alternate viewpoint and they're not necessarily wrong. They say Dealer Jones goes to the genetic supermarket and buys a variety for a large amount of money. He spends even more advertising and promoting the variety, putting it in state tests and everything else that costs money. After launch, it does well and it's selling a lot.

“Well, down the road, Dealer Smith has the same variety, spends nothing promoting it, but is able to tell customers, ‘This is the same variety Dealer Jones is selling. But I'll sell it to you for $2 a bag cheaper.’ That's the business side of the thing.”

Showing little sympathy for this particular argument, several Delta seed dealers say in-house breeding programs are the best way for a company to distinguish itself. “Seed variety brokers against this do put money into promoting their brand and name,” said a dealer spokesman. “That's true. But if they want something different, take that ad money and put it into their own breeding program. Let them launch their own breeding program and develop their own varieties. Then they won't have to worry about any of this.”

Can the two sides be reconciled?

“I don't think there's a way to do it without disappointing someone,” said Ladd. “The only way to reconcile it is if the first dealer to buy the variety gets an exclusive use. Such agreements do happen although they cost a lot more. But even then those against this point out larger companies with greater market share will have more access to exclusives.”

If a dealer has to pay more to get an exclusive, will the farmers' price rise?

“That would be a reasonable conclusion,” said Ladd. “Or, the dealer will just have to sell even more seed to make the bottom line come out.

“If this passes, another argument says it will limit the availability of the best varieties to the larger companies. If you were a breeder and you had a new, really good variety, you wouldn't give an exclusive to a small company. It's more likely a small company would have limited distribution. A large company has major distribution channels and more of the variety would be sold.”

Asked if that's why some larger seed companies are lining up behind the variety labeling law, Ladd said, “I don't think so. I do think it explains why some of the smaller companies are against it. Most of the larger companies have in-house breeding programs. The great bulk of what they sell is developed within company programs.”

Surrounding states

According to proponents, another reason Arkansas needs variety labeling is to be in agreement with regulations in other Mid-South and Southeastern states.

“Let's say an Arkansas seed company ships to multiple states,” said Ladd. “They make up 1,000 bags of beans and ship them to Missouri, which doesn't require variety labeling. A month later, the Missouri contact calls and says, ‘Hey, the season here has gone to pot. We can't sell this seed.’”

A truck is sent to pick up the seed and then turns toward Louisiana.

“Well, Louisiana is one of the states with the variety labeling laws. In that scenario, without the bag being stamped properly there would be a stop-sale.

“The point is, when you're involved in interstate commerce the states you're dealing with need to be on the same regulatory page, because when the bags are packaged it's rare that anyone knows exactly where they'll wind up.”

Smith said the majority of states in the South require the variety to be stated on the bag. Among them: Louisiana, Mississippi, Alabama, North Carolina, Georgia and Kentucky.

“Some states to the west of Arkansas — Texas and Oklahoma — don't require the variety be stated,” said Smith. “Missouri also doesn't require it.

“I'd say two-thirds of the company labels I see already have the variety stated. That's because they're selling into multiple states, including states that require varieties be named. Instead of printing two tags, it's easier to just state the variety.”

Hurdles?

What will it take to get a new labeling regulation in place?

“The Plant Board Seed Committee hasn't been set up to hear this yet,” said Smith. “We try and meet once a quarter, but we haven't set a date for this quarter yet. Maybe a date in late August or early September will work.”

If such a resolution passes the seed committee, the next step will be before the full Plant Board.

“I believe their next quarterly meeting is toward the end of September. After that, it would have to go before a public hearing, probably at the next quarterly board meeting in December. After that hearing, if it passes a vote, it will have to face the legislative council.”

With those hurdles to jump, does Smith believe the new regulation has a shot to be in place for next season?

“If everything goes smoothly, it could be in place. Many companies will begin labeling in November. Maybe, based on what they think will happen, they could go ahead and label varieties (accordingly). But they may wait.”

Another organization pushing for variety labeling is the Arkansas Seed Growers Association.

“I'm fully behind the resolution passed by the dealers,” said Scooter Hodges, president of the growers association. On Aug. 8, Hodges presided as the seed growers board adopted a resolution similar to the dealers' resolution.

There was a twist, though. As well as soybean seed, the growers want other crops covered. “We want rice, wheat and oats included in the variety disclosure. A lot of different regional companies are selling the same varieties of wheat. The farmer needs to know that. All this is for the farmers, period.”

In the end, said Ladd, “the farmer has to be the priority…My belief about this is if you take care of the customer long-term, the business will be taken care of too.”


e-mail: dbennett@primediabusiness.com