S&W Seed leases more farmland
Ian Gilson, CFA
S&W Seed (SANW) announced on November 22, 2011 that it has leased 1,500 acres of farmland in Madera County, California. Part of the land just leased (450 acres) is currently producing S&W proprietary seeds. The company now has 2,300 acres under lease, 1,700 of which will be used to produce alfalfa seeds for sale in calendar 2012.
Over the past three years the demand for alfalfa hay has fluctuated as cattle herds have shrunk and other crops have been more profitable to grow. In order to ensure seed for existing customers, and for new customers, the company has to have a consistent level of supply. Also, the production of stevia leaves will require direct control of the planting, growing and harvesting processes. This best done on land that S&W can control.
The use of leased land is expected to have a positive impact on gross margins.
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