The world slams its foot on the brake of global grass production

Although the 2023 grass-seed acreage was significantly reduced, and seed yields had been disappointing, it was not enough to bring supply and demand back into balance. Retailers had been hoping that demand would pick up, but the lift never came, which further reduced the risk appetite of traders and producers. With interest rates at their highest level for 24 years, the financial burden of holding additional seed stocks became too great. Across the world the result is historically low acreages devoted to grass growing.

Crop update: Denmark, the EU and overseas
For the 2024 growing season, Denmark will have its smallest grass multiplication area since 2016. Although the floods from the winter and spring of 2023/24 are unlikely to have caused considerable damage, they are unlikely to lead to a bumper harvest. Other factors compound the element of risk. While agricultural production costs have returned to a more normal level, grass cultivation has itself become a bigger challenge. Limits on the use of crop-protection products massively increase the risk of production. To keep grass production competitive, growers expect to be compensated for their increased risk.

Outlook by country
Denmark
The difficult market situation has led to a 25% reduction in the multiplication acreage. The biggest reductions are for perennial ryegrass (down 10 000 ha) and red fescue (down 8 000 ha). Although white clover has earned high prices, the multiplication area has decreased by 15% in Denmark. The poor weather over the past few months suggests that the best yield we can expect will be around the five-year average.

Germany
The area devoted to grass growing in Germany has fallen by 15%. The most striking reduction (down 1 500 ha) is for annual grasses. Although the need for agricultural grasses is there, a wet spring is having a negative impact on demand.

The Netherlands
Grass growing in the Netherlands is under pressure. The sector’s competitiveness is declining while the prices of vegetables and other valuable agricultural products are luring growers away from grass. The figures back this up: in 2021 there were 14 000 ha of grass, this year there are just 7 000 ha.

Poland
Polish farmers have cut production after becoming disillusioned with grass. The largest reduction (more than 15%) is for the turf grasses, perennial ryegrass, and red fescue.

Czech Republic
The Czech market is largely unimpressed by grass multiplication, although the country does have other priorities in propagation. It is notable that red clover propagation is also declining despite increasing demand. The change reflects how great a challenge the growing of red clover has become.

France
The market in France is similar to that in the Czech Republic. Grass multiplication remains the same overall; only red clover and alfalfa stand out due to a reduction in area.

Italy
One of Italy’s most important crops is alfalfa. Following catastrophic certification rates during the last season, Italian farmers compensated by devoting more land to the growing of alfalfa. An area greater than 50 000 ha does not seem impossible. However, there are already reports that the first areas have had to be reseeded following poor post-winter development. For a clearer picture we must wait till the harvest.

USA & Canada
In North America, the notable feature of the 2023/24 winter was a lack of snow cover. This could be a problem for perennial ryegrass production, although it is currently too early to tell. The outlook for the 2024 harvest is okay, even though the area of production has declined by 15%.

New Zealand
A hesitant market in Europe and China has left its mark on grass growing in New Zealand. Perennial ryegrass is down by 35%, and annual grasses are down by 30%. The mass market for white clover is also down by 8%, which reduces mass varieties down to their all-time low.

Stock situation
Stocks are still high, and seed continues to flow into the markets especially some areas are very looking good, which has a positive effect on the stock levels. The availability of legumes (e.g., red clover, alfalfa) is severely limited, and it remains to be seen whether the 2024 harvest will ease the situation. Early data from the New Zealand harvests seems good, but the areas covered are small and cleaning has only just started.

Price situation
Autumn 2023 has ensured good sales of annuals. In the context of this year’s expected low acreage, we see significant price increases for early demand. Unfortunately no relief will come from South America (usually a good source of annuals) because growers have had a poor harvest.
For red clover, a lack of producers for 2024 will continue to keep prices high – and may even rise further. The situation is similar for alfalfa: prices are currently firm and, even if the next harvest is good, the species will remain in high demand. It is the same with white clover: for recommended varieties, the price remains strong.
The situation is completely different for perennial ryegrass. While we see challenges driven by high stocks, inventory costs and cash-flow problems, we can see that good-quality seed and recommended varieties will be in short supply. If your business focuses on high-quality and special varieties of perennial ryegrass, you should act quickly because volumes are limited. Although this applies primarily to lawn varieties, volume pressures also apply to the full range of fodder varieties.

Demand/consumption
A wet spring in the north-west of Europe has held back the hoped-for demand for additional quantities from the agricultural sector. However, where the weather has been good (mostly central and Southern Europe), demand and sales continue to hold firm.
Across Europe, the professional turf sector is a cause for celebration. Demand is good and will, for recommended varieties, exacerbate the situation we have previously described. US consumption is also increasing more than in previous years. While in Europe, consumption of grass seeds for lawns seems to be recovering, although the pace is slower than hoped with retailers not yet reordering in bulk.

Result
The trade in grass remains exciting. While the supply of commodities is secure due to good stock levels, there are likely to be shortages of special varieties and qualities. But do not expect the 2024 harvest to compensate for those shortages. That is why we see the market turning faster in the professional segment than in the commodity segment. Since the acreages involved are small, the big unknown is when that will happen.

See you at the World Seed Congress in Rotterdam 
The ISF World Seed Congress in Rotterdam in late May will be its centenary event. We’ll be there to celebrate that magnificent 100-year achievement, and would love to meet you to share our insights or talk about any aspect of seed or grass that takes your interest.

If you cannot make it, you can always speak to your local DLF representative who will help you navigate your way through an unusual market. We look forward to seeing you.