Market conditions as well as the cost of production affect the profitability of grass seed production enterprises. Supply and demand dictate the price of seed. Since seed is an international commodity, the production conditions and seed yields in all regions around the world are important factors affecting seed supply. The size of the carryover stock from one year to the next can effect prices. Low supply or high price of one species of turf grass can lead to substitution in seed mixtures with another species, lower cost or more plentiful species.
Factors that affect demand vary from crop to crop. For perennial ryegrass, cycles in the construction industry affect the price of seed, as well as home landscaping trends, over-seeding market needs, etc. Thus, perennial ryegrass seed crop prices are sensitive to the state of the economy. Economic recessions and significant events such as the bankruptcy of ABT – company that had aggregated many of the region’s perennial ryegrass production entities under one ownership, and the formation of the PRBA (Perennial Ryegrass Bargaining Assocation) have influenced the price of perennial ryegrass seed over time (Fig.1).
Figure 1. Perennial ryegrass price trends. Gray bars represent economic recessions. Click to enlarge.
Recessions and the associated drop in construction and other activities trigger a decline in the price of perennial ryegrass seed. The ABT bankruptcy initiated a decline in perennial ryegrass seed prices but the magnitude of the drop and slowness of the price recovery was exacerbated by the recession in the early 2000s (tech bubble). The establishment of the PRBA precipitated an increase in prices.
At the present time, the price of perennial ryegrass has been climbing in the slow post-recession recovery. That upward trend is expected to continue.
