Smart businesses manage themselves by figuring out how to get the most revenue at the lowest cost. The same logic applies to your farm when managing your seed investments. A less expensive seed might be more profitable for your farm, even if it has a slightly lower yield. One way to think through your seed buying decision is by considering your net revenue.
Maximizing profit means more than maximizing yield. Profit has two components: Revenue and Cost.
You can perform the calculation above for every type of seed you are considering, and compare each variety's expected net revenue.
Are you able to generate a revenue premium from the seed you choose? For example: From a non-GMO production contract? Are you going to incur increased chemical costs to manage pests or other issues by planting one variety versus another?
1. Consider crop rotation when selecting traits. Based on our analysis, the yield advantage, if any, you might see from traits over conventional varieties can depend on your crop rotation.
2. Variable management decisions matter in your seed selection. When a trait package provides a positive yield effect in a particular cropping scenario, it may not necessarily provide a better overall option for net revenue (depending on numerous other factors, such as seed cost, chemical cost, number of herbicide or pesticide applications, commodity price, potential premium and other variable costs per acre based around management decisions).
3. Understanding the cost of traits alongside seed performance can help you optimize your seed selection for net revenue, rather than yield alone. Ask yourself if the expected increase in yield by planting seed with a particular trait technology will outweigh the potential cost increase of doing so.
Look for overall profit potential in your seed selection, which comes from a combination of high yields (through high-performing genetics as well as trait technology) and low prices.
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