Oregon grass seed growers and dealers have reached an agreement for the 2009 pricing of perennial ryegrass, one of the state's premier grass species.
The settlement established the lowest price in eight years for perennial ryegrass and reflects current economic conditions. Still, Director Katy Coba of the Oregon Department of Agriculture praised the agreement.
"Both sides have worked hard to find a solution that hopefully will begin to address the industry's immediate challenges," she said. "These growers and dealers spent nearly seven hours in very challenging negotiations under the department's supervision to reach a pricing agreement. This year has been the perfect storm of trouble for the grass seed industry with the housing marketing coming to a halt, golf course activity slowing to a crawl, exports hitting the skids, and the general economic slump all leading to a backup of inventory."
Part of the agreement involved making the tough decision to reduce production of perennial ryegrass in an effort to help the industry.
"We're cutting back," said Mike Hawman of Hawman Farms Monday morning. That's because the price negotiated falls below production cost.
"It's going to mean a reduction in acres over here, that's for sure," he said.
Eastern Oregon grows a small percentage of the state's perennial ryegrass, he said, compared to what's grown in the Willamette Valley. He said this region's production totals 15 million to 20 million pounds.
Even though the new, lower production will result in fewer acres grown, the negotiators reached their goal.
"That was the whole idea - to get acres reduced," Hawman said. "There's probably 1 1/2 years oversupply on hand."
The agreement puts into place a "discount price," effective through Dec. 31, to spur the purchase of perennial ryegrass. Growers have the option of selling at 52 cents per pound or waiting until further negotiations take place in December. At that time, the industry should have a better idea of how much movement of seed takes place because of the pricing and how much additional acreage is removed this fall to counterbalance the inventory pileup.
Turf-type perennial ryegrass is used for a variety of purposes in markets throughout the United States and many foreign countries for lawns, commercial landscaping, sports fields, golf courses, and other applications. Oregon is a leading producer of perennial ryegrass. In recent years, Oregon's grass seed industry has reduced the amount of acres planted in perennial ryegrass as demand has shifted between seed varieties and because of concerns about water and other resources needed to maintain lawns.
"I believe the benefits of turf grass outweigh the concerns some have expressed," says Coba. "Turf sequesters carbon and releases oxygen. It reduces erosion, provides open green spaces, and creates an aesthetic quality of life that enhances the appearance and livability of homes, commercial properties, and recreational areas."
The economic downturn has forced the industry to make some difficult choices.
"Despite all the benefits of grass, buyers are cutting back for a variety of reasons, and our growers and dealers are feeling the pain," says Brent Searle, special assistant to the director, who helped supervise the price negotiations. "The agreement reached ... reflects a drop from 80 cents last year to 52 cents per pound of seed that will be paid to growers for 2009. ... It is devastating to everyone but reflects the reality of the times we are facing. The grass seed industry hopes to remove about one-third of current perennial ryegrass production. The next challenge is what to plant on these acres."
Grass seed acreage ballooned to nearly 500,000 acres in the Willamette Valley in the past decade. With acreage shifts this fall, that figure might fall to 400,000 acres. Despite an increase in valley wheat production the past two years, prices for wheat have fallen and the crop is no longer as attractive to growers. Options are limited to replace the large amount of grass seed acres being removed. Some growers have planted clover seed, oats, hay, mint, and a few have landed contracts to grow vegetables. But it remains difficult to make up the volume of acres that have traditionally been planted in grass seed, and recover the investment in equipment and production practices grass seed growers have developed over several years.
"Oregon will remain a premier place to produce grass seed but not at the same levels as in the past," Coba said.