By MATEUSZ PERKOWSKI
Capital Press
The robust growth in ryegrass seed exports seen in recent years has likely peaked due to diminished European demand and higher domestic prices, experts say.
“The party is over,” said Steve Tubbs, president of Turf Merchants, Inc., in Tangent, Ore. “In general, there’s not much good news at the export desk now.”
The value and volume of ryegrass seed exports surged in 2011, stayed strong in 2012, and saw a healthy uptick during the first quarter of 2013, according to federal trade data.
Higher sales in early 2013 likely represented the tail end of the upswing in exports, said Tubbs. The dimming prospects for exports are largely due to the market outlook in Europe, a major buyer of perennial ryegrass seed for turf.
Unseasonably low temperatures and adverse weather in Europe have hampered demand for perennial ryegrass seed, said Aaron Kuenzi, vice president and marketing manager at Mountain View Seeds in Salem, Ore.
“Spring business is weather-driven, even more than economy-driven,” he said.
Of course, the economic situation within the European Union continues to be troubled and the dollar has grown stronger against the euro, making U.S. grass seed more expensive in Europe, said Bill Dunn, executive vice president and general manager of Seed Research of Oregon in Corvallis, Ore.
“That may be the real sleeper in the deal,” Dunn said of the currency fluctuation.
Even without the change in currency values, grass seed has risen in price due to limited availability, he said. Growers in Oregon’s Willamette Valley have been planting more wheat and other crops that compete with grass seed.
“It seems like a lot more of everything and a lot less of grass,” Dunn said.
Fortunately, sales of grass seed in the U.S. are strong enough that companies won’t have to rely on exports to clear out inventories, said Tubbs.
“We think the good news is the supply and demand are very much in equilibrium,” he said.
While domestic demand for ryegrass seed appears sufficient, it’s strongest during the fall and spring seasons, said Sam Cable, export and seed position manager at Barenbrug USA in Tangent, Ore.
Exports, on the other hand, provide an outlet for grass seed throughout the year, he said. “It’s critical for cash flow for the entire industry.”
The prognosis for exports isn’t entirely negative, as the demand for annual ryegrass seed — primarily used for livestock forage, rather than turf — is healthy in emerging markets like China that are consuming more meat and dairy, Cable said.
“They get on buying streaks,” he said. “China needs a lot of milk. More milk than they ever thought.”
However, changes in Chinese regulations could cramp exports due to stricter permitting requirements that represent a “major shift in how they buy seed,” said Tubbs.
The fundamentally solid reputation of Oregon grass seed remains unchanged, though, so overseas buyers will continue to rely on the region for at least a decent portion of their supplies, Kuenzi said.
“They know they can count on the quality and consistency,” he said.
Published 6/12/13 in the Capital Press
