S&W Seed Company (NASDAQ:SANW) Q2 2023 Earnings Call Transcript

So he converts everything to one herbicide and hopefully that’s what we’re going to start seeing in the next couple of years. So this current year that we’re in where we’re estimating our 750,000 acres, it’s more than acres we want to get out with a lot of farmers because we want next year to also be another big year and it’s really just people excited about the product and willing to, if you’re a distributor, take it and put it on your — in your flat storage so farmers can come and get it if they need it. And then if you’re a farmer, it’s sort of lining up your supply because everyone, as we said before, knows that we’re still short on seed for this year. And so they’re trying to make sure they have a supply.

Ben Klieve: Got it, got it. Very good one. A great start to the year on that then. Alright, well plenty more to talk about. That’s probably a good place to leave it. I’ll get back in line. Thanks for taking my questions here.

Operator: Our next question is coming from Gerry Sweeney from Roth Capital. Gerry, please go ahead. I’m sorry, Gerry. Pardon me. Gerry, are you there?

Gerry Sweeney: I am, yes. Can you hear me now? No worries, no worries. Mark, Betsy, thanks for taking my call. Just one more question or two on the Shell JV, is there any type of exclusivity in terms of regions or crop type or anything with Shell, anything that we should be aware of?

Mark Wong: We actually — VBO actually has the right to sell camelina grain to other companies, other international oil companies if they see an opportunity there. So it’s sort of the reverse of exclusivity, but it’s our belief that these markets are so vast and Shell, if such a huge footprint in the diesel market that will be producing four Shell for the next decade and there won’t be any extra grain left over to sell to anybody else. So practically it’s an all Shell deal and we’re more than pleased with that because as I said before, we basically develop seeds and then sell grain to farmers and now we’re going to accumulate that grain and buy it back from the farmers and then get it crushed and then sell the oil to Shell and has just this vast network of conversion plants, the diesel and jet fuel, and so we’ll be hard pressed to VBO will be hard pressed to supply that demand that shell’s creating.

Gerry Sweeney: Got it. Switching gears to DT sorghum. In the past, we’ve talked about, I think number of acres planet on — sorghum planted in the United States, could you go over where that is? And we also talked about the economics of corn versus sorghum and how that also plays into some of those acres and what farmers are planted?

Mark Wong: So I think last year, USDA said, we had around these, around number six million acres of grain sorghum. There are additional also acres of sorghum, and we mentioned that DT will also we believe provide a big financial improvement for farmers in Ford sorghum. So we think that’s our next DT market in the US is to introduce the gene into forge sorghum lines. But the big forge, the big grain sorghum states are the drier states. So sorghum requires about 25% less water than corn to make a crop. So the states like Kansas, Nebraska, Texas, Eastern Colorado, those are the big sorghum states. Sorghum is used for both animal feed and ethanol feed stock in in those states. I think the USDA is projecting that acres are going to go up maybe to $7 million this year in sorghum just because of water issues.