Inputs Lesson Plan
Retailers' experiences with this year's corn surge will serve them well in 2008.
September 15, 2008
To find out, a mix of large and midsize CropLife 100 dealerships and cooperatives in both the Midwest and South were canvassed — areas where many grower-customers took out soybean, cotton, and wheat acres in favor of corn. In fact, corn acres reached 92.3 million — the most since 1944 and exceeding the 2006 planted area by 19%. These retailers share what they experienced and learned this season, and how they'll use that information in the upcoming season.
Happy Cash Cows
Not surprisingly, that increase in nitrogen-greedy corn acres translated into higher fertilizer sales for the majority of these dealerships, including Van Horn, Inc. and Myers, Inc. in corn-rich Illinois. Sales of the basic three — nitrogen, phosphate, and potassium — were up across the board for Cerro Verdo-based Van Horn, whose growers planted 10% to 12% more corn and purchased more triple stack trait hybrids because of corn rootworm concerns. "Growers weren't skimping on their applications," says Dan Mogged, vice president. The additional corn acres boosted UAN and anhydrous ammonia (NH3) sales by close to 25%, according to Denny Myers, president of Myers, Inc. in Lexington.
Further west in Juda, WI, Landmark Services Cooperative also saw increased nitrogen sales, topped by UAN, which is preferred by the region's growers over NH3, in part because the grower's larger planters play to UAN's strength (a longer application window), says Jim Shelton, agronomy division manager.
Preventive fungicide applications led the charge as many retailers increased crop protection product sales, including Maple Park, IL-based Hintzsche Fertilizer, Inc., which saw a "significant increase in crop protection usage for plant health issues in corn," says Jeff Eggleston, general manager. The dealership, which saw its growers add 25% more corn acres this year, also increased its grass herbicide business as growers utilized full or nearly full application rates.
To counter reduced postemergence herbicide profits as genetically modified and triple-stack trait hybrid sales went up, Myers, Inc. stressed the use of an atrazine premix in front of glyphosate in a two-pass resistance management program on its corn acres. "That's where we also offset both our loss of insecticide revenue and the fewer dollars put on with Roundup Ready corn," says Myers.
Taking Lessons To Heart
Early indications for these retailers are that — despite the growing ethanol demand — their corn acres will level off or even decline slightly in 2008. Combined with the high costs of input inventory, retailers feel pressured to know their grower-customers' plans as early as possible to not only get the materials, but purchase them at the best prices possible.
"I think with the high demand for corn in 2007, we learned we had to make sure that we had our inputs positioned correctly going into the year, make sure we had things bought early to be able to be in the market and to even have the products," says Van Horn's Mogged. He plans to purchase fertilizer early and get growers' seed commitments in early November to "make sure that we get the varieties that they want," he says. "We're trying to really target the soybeans this year to get them locked in earlier."
An Easter freeze that forced a replant of 50% to 70% of its corn acres provided some hard lessons for Ritter Crop Services in Marked Tree, AR. "The corn season was tight already, and that just made it worse," says Ben Branch, warehouse manager. More than half the growers had planted corn for the first time. "Some went back to cotton, but the majority tried to go back with corn. We had a hard time finding chemicals — that didn't cost $15 or $20 per acre — that would kill the now-volunteer Roundup Ready corn."
"We need to do a better job of sourcing our seed early and getting our hands on it," adds Dan Kennedy, Ritter's general manager.
"We have to communicate with our growers, because inventory is too expensive to overbuy or underbuy," says Myers, who hopes to meet with each of his growers by mid-January. "You have to be on top of things, and fine-tune your buying by the end of January."
Landmark Services' Shelton says his growers' 20% increase in corn acres in 2007 may drop by 5% in 2008, "but if you get a good uptick in the corn market in March, they could jump back in from beans to all corn. So it's just a pretty fluid thing, making it difficult to determine inventory needs. With the crops going out of here perhaps somewhere between 5% and 10% on corn, we just won't buy it all. We just kind of wait and let it play out until March and see if we have to buy some of the higher priced product."