A Moment, To Change
September 11, 2008
When future ag historians look back on the development of the biofuels movement, I’m certain they will conclude that 2006 was the beginning for what promises to become a much larger agricultural market shift — a Maxwell Moment, if you will.
What’s a Maxwell Moment, you ask? Allow me to explain.
By my definition, a Maxwell Moment is a watershed event in the history of anything — life, business, the world — when things cease being the way they were and start changing into something completely different. Some examples would include the birth of a child, when a company passes the million-dollar sales mark, or the day the U.S. population passed 300 million.
The name comes from my own personal experience with such an event and its cause — a man named Robert Maxwell. After college, I started working at a large corporation — the kind of place you could work at forever given its business scope. Then, a few months into my job, I saw a news report that Maxwell had begun a hostile takeover bid for my employer. To make a long story short, my company successfully fought off the takeover, but not before going so far into debt to do so that hundreds of employees (including myself) lost their jobs. The moment Maxwell began his takeover, my life started down a completely different path.
Ag retail has had its share of Maxwell Moments in the past decade — the planting of the first biotech seed, the day GPS became available to the public, glyphosate coming off-patent. From the looks of it, the trend toward biofuels has all the earmarks of another one. For one thing, it has become a hot topic very quickly. Checking back through CropLife’s January Outlook 2006 issue, I found no mention of biofuels as a trend to watch. During the past few months, however, you would be hard-pressed not to find dozens of seminars, industry conferences, and special magazine editions focusing in-depth on the topic (including the issue you hold in your hands).
The other reason biofuels appear to have a Maxwell Moment feel about them is how different they could eventually make U.S. agriculture. As ethanol and biodiesel plants spring up across the country, demand for the corn and soybeans to supply them is expected to increase grain prices. According to a 2001 study by USDA’s Office of Energy Policy and New Uses in conjunction with Economic Research Services, an average annual increase of the equivalent of 200 million gallons of biodiesel demand could boost total cash crop receipts by $5.2 billion cumulatively by the end of this decade. This would result in an average net grower income increase of $300 million per year. This undoubtedly will mean more money being spent on such retailer-provided items as fertilizer, biotech seed, and precision services to help growers boost yields and their profits.
The message from all this is clear — retailers should begin preparing today for the potential profits biofuels will bring tomorrow. Your company’s Maxwell Moment is probably coming — more corn acreage, higher demand for certain biotech seeds, or something else tied to biofuels growth.
No matter what the cause, the one thing I’ve found about a Maxwell Moment that remains the same — regardless of situation — is it irreversibly changes things. Are you ready?