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1) Low or negative profit margins in the hard red winter and hard red 

 spring wheat seed businesses because of the minimal pricing flexibility 

 and loss of market opportunity due to "brown- bagging." 



2) In the six years between 1984 and 1989, financial losses were 

 experienced annually in hard red winter and hard red spring wheat, 

 except for one year in which hard red winter wheat broke even. Losses 

 totaled nearly $6 million over this period, and projections for the future 

 did not show prospects for improvement. 



3) Farmers in the areas where hard red winter and hard red spring wheat 

 are grown typically save some of their crop to use as seed rather than 

 purchasing new bagged seed. Specifically, 80 percent of the farmers in 

 the hard red winter wheat area and 70 percent in the hard red spring 

 wheat area did not purchase new bagged seed from a commercial seed 

 company. It did not appear that this trend would change. 



4) Plant Variety Protection laws designed to encourage proprietary 

 varietal development were not effective. 



Here are some more specific facts: 



Official Kansas agricultural statistics published in February 1989 

 indicated that 9.5 percent of the acres planted to hard red winter wheat 

 in Kansas were planted with Pioneer Variety 2 157. While one might 

 expect us to be pleased at having such a successful variety, our sales 

 statistics for the same period show that in that growing season, we sold a 

 total of 100,600 units of Variety 2157 wheat seed in the states of Kansas, 

 Nebraska, Colorado, and part of Wyoming combined. We know that not 

 all of the seed was planted in Kansas. However, even if it had been our 

 market share based on sales would have been 0.8 percent, not the 9.5 

 percent suggested by the planting data. 



Looked at another way, these figures mean that Pioneer sold only 8.4 

 percent of the seed necessary to plant those acres of our own proprietary 

 2157 variety. Brown-bagged seed and saved crop accounted for the 

 other 91.6 percent! 



After our decision was announced, a story on the Knight-Ridder 

 Financial wire service contained these comments: 



Steven Graham, Kansas Wheat Commission administrator: "We're 

 now beginning to understand what we're up against. It [the 



