Hybrid85 passes profits onto farmers
At the very top of the Nebraska State Capitol building stands a 32-foot tall bronze statue of the Sower, a figure representing agriculture’s vital role in the development of modern civilization. Maybe it wasn’t the best fit for the state license plate, but the Sower is an undeniable symbol of Nebraska. According to the Nebraska…
At the very top of the Nebraska State Capitol building stands a 32-foot tall bronze statue of the Sower, a figure representing agriculture’s vital role in the development of modern civilization. Maybe it wasn’t the best fit for the state license plate, but the Sower is an undeniable symbol of Nebraska.
According to the Nebraska Agriculture Fact Card, one of every four jobs in the state is related to agriculture. The same report reveals Nebraska was third in U.S. corn production last year, producing 1,785,420,000 bushels. While that sounds impressive, many farmers struggle to make ends meet. In fact, farmers’ economic strife is so great that U.S. government handouts were expected to make up nearly one-third of net farm income in 2019.
Where others saw an uncertain agricultural future, Mike Ackerman and Nate Belcher saw an incredible business opportunity and a chance to put money back in farmers’ pockets. Together, they started Hybrid85, an online independent seed company that aims to serve farmers instead of shareholders.
“I never thought I’d sell corn seed,” Belcher said. “But farmers are facing high input costs and low returns. With an industry standard of $200-$300 per bag of seed, it’s hard for them to turn a profit.”
Hybrid85 can help. The company buys corn seed from independent breeders and sells it directly to farmers for $85 per bag. There are no broker commissions tacked onto the seed price, no trait royalties or marketing gimmicks. Hyrid85 operates on a system of automated back-end operations, sales, and logistics. This automation (developed by Ackerman) allows the company to maintain low overhead costs and transparent pricing.
Wait. Lower seed prices? No marketing gimmicks? Are these guys making money?
“We’ve been profitable since day one,” said Belcher. “We’re totally self-funded. We have no investors to fall back on, so it was important to provide a fair price to farmers, while making enough money to grow our business.”
Growing up in Lincoln, Nebraska, Belcher and Ackerman admit they had virtually no agricultural background. A self-proclaimed city-slicker, Belcher’s hobby of gardening quickly transformed into a passion for regenerative agriculture. Ackerman’s education and experience was in computer engineering and software/web development. But research into the economic history of Nebraska agriculture led to some troubling discoveries.
From 2001 to 2010, the Consumer Price Index (CPI) rose 23 percent. In that same period, the cost of corn seed rose 135 percent. How is that possible?
Since the introduction of genetically modified food technologies in the 1990s, commercial agriculture has witnessed a rapid consolidation of seed distributors. Powerful chemical and biotech businesses began acquiring smaller seed companies, and these acquisitions snowballed through the start of the 21st century. In 2017, the Swiss giant Syngenta was acquired by ChemChina. The next year, the U.S. Justice Department approved the merger of Bayer and Monsanto, already two of the largest players in global agribusiness. Today, four major companies dominate the seed industry: ChemChina, Corteva (created by a merger of Dow and DuPont), Bayer, and BASF, a German company.
These mergers have been widely criticized for raising costs and cutting farmers’ profits.
In a highly concentrated seed industry, farmers have few alternatives if one of the Big Four decides to raise the price of corn seed. Furthermore, the few competitors of that company are readily motivated to raise their prices accordingly, in order to maximize profits across the industry.
Another powerful tool corporations use to maximize profits in the seed industry is pressure applied through patents and licensing agreements. In 2013, Monsanto sued a small Indiana farm for planting regenerated Roundup-resistant soybean seed. And they won. The farmer had signed a licensing agreement designed to protect a patent on Monsanto’s genetically altered, herbicide-resistant seed. The contract required him to plant all that he purchased and not to use any seed that was regenerated. Such an agreement guarantees more frequent purchases for the company.
Before approving the Bayer-Monsanto merger in 2018, antitrust regulators in the Justice Department warned the deal would give Bayer incentive to raise the price of another popular seed treatment, since farmers would have access to fewer suppliers. Regulators also noted that “America’s farmers rely on head-to-head competition between Bayer and Monsanto.” So, why did the Justice Department approve the merger?
Makan Delrahim, who was confirmed as the Trump administration’s assistant attorney general for antitrust issues, believed a mandatory sale of a portion of Bayer’s assets (totaling $9 billion) was an effective solution to the anticompetitive merger. But those assets were sold to BASF, already an agribusiness powerhouse, causing widespread concern among analysts and fueling doubts about the future.
“Most of our clients ask us ‘where were you the last 10 years?’” said Belcher. “They’re excited about our prices and willing to take risks on a new seed.”
Ackerman and Belcher want to encourage a new tradition of farming.
They believe Hybrid85 will not only save farmers time and money, but it will encourage other entrepreneurs to start small seed companies. In order to break the Big Four’s extraordinary control of seed prices, the market needs more competition. And if Belcher can help farmers lower chemical inputs and incorporate sustainable, regenerative farming practices, that’s a bonus.
“We’d love it if the U.S. was so far down a path of regenerative agriculture and fair market practices that Hybrid85 was no longer necessary,” said Belcher. “Even if a farmer is simply looking to experiment with new seed—at $85 per bag, Hybrid85 is the cheapest research they can buy.”
To learn more about Hybrid85, visit their website.
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