Grass-seed demand back to normal in a world that's far from normal

The increased demand began during the drought year of 2018/19, and continued during the Covid-19 lockdowns when people spent months at home in their gardens. Now that daily life has returned to normal, so has the demand for seed.

A slowing market with high stock levels

In the northern hemisphere, roughly two-thirds of seed sales take place during spring. But this year, the pace has been slower than usual for the following reasons:

• Global inflation is high, driven mainly by food and energy prices – and to a lesser extent by the war in Ukraine. Consumers with less money in their wallets are buying less, and buying cheaper. As a result, customer numbers were down during autumn and spring in DIY stores across most of Europe, and people bought fewer turfgrass products. Nevertheless, spring warmth and sunshine in northern Europe encouraged a small uplift in seed sales from early April.
• In southern Europe, widespread drought is discouraging people from planting seed. And in some regions, a cold spring has delayed the sowing season.
• The North American market has in recent years experienced record growth in seed demand combined with a lack of supply. The situation has since eased: seed supply is adequate and demand for imported seed has slowed.
• The Chinese market has been badly affected by Covid-19. With so many cities and ports closed, sales were way down. Chinese wholesale customers have been sitting on large inventories, and there’s been little movement of seed. Luckily the market has recently started to pick up.

Demand remains strong for professional turf and forage seed

On a more positive note, demand remains good within the professional turf segment, a trend that we expect to continue. Drought and the need for robustness in the face of climate change have driven strong demand for 4turf^® varieties. Although our excellent creeping bent varieties are short, we do have good stocks of our well-performing browntop bent varieties.

The forage-seed segment is also performing well as dairy producers benefit from a significant increase in milk prices. Despite the recent downward adjustment, milk prices are still higher than they were in previous years. We have seen strong demand for legumes such as DLF Alfalfa, red clover and the ROKALI variety of crimson clover. Prices for annual ryegrass varieties are firming because production costs are high in Europe and less seed is coming from South America.

Global price pressure on seed production

During the past year, the world has seen unprecedented price increases for commodities such as cereals and oilseed rape. At the same time, farmers are facing higher costs for fertiliser, chemicals, machinery, salaries and energy. Some of these costs have recently dropped, but the overall cost of seed production has increased and growers are expecting a higher price for the crops they grow.

Seed growers can easily respond to poor prices by swapping to alternative crops. If their price expectations aren’t met, more farmers will follow by growing alternative or more traditional crops instead of grass seed. We see these factors at work in Denmark, Germany, France and the Netherlands, especially among growers of grass-seed. And we see a similar effect for annual ryegrass and other forage species in the Czech Republic and Poland.

Production down for the next two crop seasons
Crop 2023: A slower market has led to a significant build-up of stock.

Europe’s grass-seed production area in 2023 is about 15% smaller than it was during the previous year. Cost pressures and high commodity prices have persuaded farmers to grow other crops. Luckily a carry-over of stock from the 2022 harvest means that supplies of most species are good. The exceptions are alfalfa, red clover and annual ryegrass, all of which have limited stocks. The cold and late spring across northern Europe has not so far affected grass-seed production, so we expect an average yield from the 2023 harvest.

North America expects a 10% decrease in the grass-seed acreage for crop 2023. Observers report that winterkill and spring damage have affected many fields, which will inevitably lead to lower yields.

In summary:

• The area devoted to grass-seed production in Europe is down by 15%
• In the Netherlands, the area is down by about 20%
• Alfalfa, red clover and annual ryegrass may well be in short supply
• The North American area devoted to grass seed is down by 10%
• In the USA, it’s down by 7%; in Canada, down by 12%
• Damage in many fields will affect the 2023 seed yield

Crop 2024

Contracting for seed production for the 2024 harvest is determined by commodity prices and by the seed industry’s need to adjust the production area to the demands of the market. We estimate that seed production in the EU and North America for the 2024 crop will be reduced by 20% to 25%. In Denmark we’ve already decided on such a reduction  for the 2024/25 season. By growing less seed we hope to restore the balance between supply and demand.

Oceania and South America

Supply and demand in the southern hemisphere are in better balance. In New Zealand, things are back to normal for 2023 after a wet harvest in 2022 led to a large drop in production of white clover and perennial ryegrass. A dry year in South America has firmed up prices of locally produced seed, which means that more will be retained for local sales and less released for export.

See you in Cape Town

A market report like this is no more than a summary of how the global grass-seed market is developing. If you’d like to know more or need help planning ahead, talk to your local DLF representative. Even better, if you’re planning to travel to Cape Town for the ISF World Seed Congress (June 5th to 7th), we’d love to see you there. Reach out to your local DLF representative for a chat about any aspect of grass-seed science, production or distribution.

We look forward to seeing you.