does anyone know how i get the seeds to beat the chicken at tic tac toe? in one walkthrough i read it said they would be on the floor near the newsstand, but i went there and there is nothing! i even waited around, still nothing, --- I said no camels, those are fives camels! Can't you count? -Indiana Jones
As soon as you can take control of Gromit once the Fair starts (i.e. after the cutscene saying that the fair is now open), exit the fair and go into town. There should be a Cutscene at the Newsstand involving Mr and Mrs Gabberly that starts as soon as you enter. Mr. Gabberly is throwing the Birdseed out of the window. Once the Scene finishes head to the newsstand and pick it up.
If it doesn't happen then, try doing the Fortune Telling/Poem Puzzle first.