Biofuels Boost Input $

Input sales are the lifeblood of any successful ag dealership. The spring of 2007 — and into the forseeable future — may prove to be a veritable revenue transfusion compared to 2006 sales, which look to be sluggish. The major catalyst for this shot in the arm is the Renewable Fuel Program of the Energy Policy Act of 2005 (EPAct), which calls for renewable fuel — primarily ethanol and biodiesel — use in gasoline to reach 7.5 billion gallons by 2012.

EPAct creates a healthy focus on corn. “To meet that goal, ethanol plants would use 2.5 billion bushels of corn, an increase in the current usage of 1 billion bushels,” says Otto Deering, Purdue University ag economist, in Ag Answers e-newsletter. USDA estimates 2006 corn production at 10.9 bushels. With more ethanol plantsin the works, the higher corn prices also will encourage growers to plant more corn.

“In the short term, farmers will likely need to increase planted acreages of corn in 2007 by an additional 3 to 4 million acres of corn,” says Es­telle Grasset, public affairs specialist, The Fertilizer Institute. Such an increase “will profit the entire agricultural economy, including fertilizer suppliers, retailers, and Corn Belt farm service centers,” she adds.

Grower reaction to biofuels “has been pretty positive and long-term, it should continue to grow,” says War­ren Hull, vice president of energy at Central Valley Ag Co-op, O’Neill, NE.

Biofuel Benefits

Here’s a quick look at the potential benefits for key input arteries of your business.

Fertilizer: More corn translates into more fertilizer sales. “Depending on the type of cropping system used, it typically takes 1.5 to 2 pounds of fertilizer nutrients to produce a bushel of corn; the net result on nutrient demand will be positive despite the decline in soybean acreage,” Grasset says. “Nitrogen (N) fertilizers will benefit the most from the rise in planted corn acres; yet, increased corn production also will impact phosphate and potash products.

“Using recent application rate data, an additional 1 million acres planted of corn would require 65,000 nutrient tons of N, 23,000 nutrient tons of phosphate, and 27,000 nutrient tons of potash,” she says. “The demand for micronutrients should also increase.”

Seed: The anticipation of higher corn prices paid by ethanol plants than traditional outlets (see graph) should mean increased corn seed sales, along with more biotech plantings of Roundup Ready corn, YieldGard Plus, and stacked trait varieties. It also may persuade some growers to change their crop rotation, even with Roundup Ready corn.

“There will be more corn-on-corn in our area,” says Gabe Saxon, agronomist at Central Counties Cooperative, Kellogg, IA. “We’ll see more stacked genes being used, whether Roundup Ready or Li­ber­tyLink. Our growers will use conventional chemical programs using Liberty or Roundup herbicides as a rescue. And in the next several years, most of our growers will use either triple or quad trait stacks.”

Retailers and growers already can choose from corn hybrids that naturally have higher ethanol yield potential — about 7%. For example, Pioneer Hi-Bred International, Inc. labels such hy­brids as HTF (high total fermentables) as part of its Pioneer IndustrySelect Program. “Among our top 20 hybrid sellers, 17 were designated HTF,” says Jerry Harrington, Pioneer sales and marketing public relations manager. “That says you don’t have to sacrifice yield to get higher ethanol yield.”

Manufacturers are working on hybrids specifically for ethanol production.

Crop Protection: The anticipated increase of ethanol plants coming online begets more corn acres, “which should drive the demand up for herbicides,” says Tom Hall, stewardship and security policy leader, CropLife America.

Many growers, concerned about glyphosate tolerance/resistance in weeds, will utilize a two-pass program, applying a preemergence herbicide followed by glyphosate postemergence, potentially creating further retailer revenues, say experts.

Other Revenue Prospects

As farm size increases, more growers are doing their own application. “We anticipate that will grow, although retailers and custom applicators still do the majority of application,” says Jim Thrift, vice president of regulatory policy and corporate relations, Agricultural Retailers Association.

Retail outlets with grain elevators have another profit opportunity. Central Valley Ag’s Hull points out that ethanol plants need more corn and will purchase it from local grain elevators.

“Producers will be looking for the latest information to value add production for the ethanol or biofuels market; aggressive farmers putting together a crops program will want to maximize production at the lowest cost,” CropLife America’s Hall says. “The retailer that gets this farmer must have crop advisors that are on top of their game to earn their way on to these farms.”

Topics:

Leave a Reply

Crop Inputs Stories

InsecticidesHow To Scout For Corn Earworms In Corn
July 28, 2014
In her weekly report, University of Missouri Agronomy Specialist Jill Scheidt discusses what to look for when scouting for corn earworm. Read More
Soybean field
FungicidesValent Launches New Seed Protection Fungicide For Soybeans
July 16, 2014
The INTEGO SUITE System contains the first new, novel seed protection fungicide chemistry registered in 30 years by the EPA for protection against Pythium and Phytophthora. Read More
InsecticidesEPA Grants Besiege Insecticide Additional Approvals
June 18, 2014
EPA has granted additional registration approvals for the use of Syngenta's Besiege insecticide on sorghum, cereal grains and peanuts. Read More
HerbicidesArysta Touts Burndown Herbicide For Brome Management In Wheat
June 4, 2014
Arysta LifeScience North America recommends PRE-PARE Burndown Herbicide for effective brome management in winter wheat. Read More

Trending Articles

Green Valley Ag facility
Retail FacilitiesGreen Valley Ag Adopts A.J. Sackett’s Precision Fertilizer Blending® Technology At New Facility
July 8, 2014
Sackett's Precision Fertilizer Blending® Technology is making huge strides around the world. Green Valley Ag adopts the technology at its new facility to support its advancing agronomic needs. Read More
Retail FacilitiesWaconia Manufacturing Builds Facility Designed For Speed, Efficiency
July 7, 2014
To make its new hub facility more efficient, Cooperative Elevator enlisted the aid of Waconia Manufacturing. Read More
EquipmentSummer Show Preview 2014: Superior Sprayers Take The Field
July 3, 2014
In this final installment of our coverage of the major categories of Big IRON that retailers can expect to test-drive at this summer’s events, here is a look at 19 sprayers. Read More
Scouting a soybean patch at Green Valley Ag.
EmployeesCropLife Compensation Survey: Battling Talent Drain
July 2, 2014
Retailers too often lose employees to companies outside of agriculture, while recruiting efforts are most often limited to competitors and other ag-focused organizations. Read More
HerbicidesDow AgroSciences Introduces SureStart II Herbicide
June 16, 2014
The enhanced formulation has improved viscosity and increased stability under heat and controls more than 60 high-anxiety grasses and broadleaf weeds found in corn fields. Read More
HerbicidesBASF Investing $270 Million To Expand U.S. Herbicide Production
June 11, 2014
BASF has invested more than $270 million to expand herbicide production capacities in the U.S., including more than 20 new products to be launched over next two years. Read More

Latest News

LegislationUSDA Implements Key Farm Bill Crop Insurance Provision
July 30, 2014
The new Supplemental Coverage Option, available through the federal crop insurance program and set to begin with the 2015 crop year, is designed to help protect producers from yield and market volatility. Read More
CropLife 100Wilbur-Ellis Forms New Organizational Structure For Its…
July 30, 2014
The new structure will provide more responsive internal support and will allow regional vice presidents and area managers to spend more time with customers, on talent development and on operational excellence across branches. Read More
Palmer pigweed in cotton
HerbicidesNew Training Modules On Herbicide Resistance Now Availa…
July 30, 2014
The Weed Science Society of America has announced the availability of three new education modules on herbicide resistance in weeds. Read More
HerbicidesWillowood To Market Glufosinate
July 28, 2014
Willowood USA recently announced that Federal EPA has approved its technical registration for glufosinate. Read More
InsecticidesHow To Scout For Corn Earworms In Corn
July 28, 2014
In her weekly report, University of Missouri Agronomy Specialist Jill Scheidt discusses what to look for when scouting for corn earworm. Read More
Crop InputsDuPont Pioneer, Weyerhaeuser Enter Technology License A…
July 28, 2014
The agreement brings together agricultural and forestry know-how to sustainably improve crop productivity for corn growers around the world. Read More
EquipmentAGCO Launches Global iPad App
July 28, 2014
The free AGCO Global iPad App can be downloaded from the Apple iTunes Store and features the full family of RoGator self-propelled sprayers and TerraGator high-floatation spreaders. Read More
Eric SfiligojYuma Centennial Ag Supply Earns 2014 National Environme…
July 28, 2014
Colorado-based ag retailer receives top trophy in 24th annual DuPont Crop Protection/CropLife ceremony. Read More
CropLife 100Pinnacle Forms Alliance With Wildlife Managment, Seed O…
July 25, 2014
The strategic alliance will provide Tecomate with key wildlife products, processing facilities, distribution centers and sales through Pinnacle’s ever-growing retail network. Read More
ManagementFranken Presses White House On RFS Support
July 25, 2014
Al Franken and a group of Senate democrats recently met with senior White House official John Podesta to urge the administration to change its position on an EPA proposal. Read More
ManagementASA, FarmLink To Launch ‘Operation Benchmark̵…
July 25, 2014
The American Soybean Association (ASA) and FarmLink are teaming up to help farmers close the $11 billion gap between what they harvested in 2013 and what they could harvest annually. Read More
StewardshipNorthey: Farmers Commit $1.4 Million to Try New Water Q…
July 25, 2014
The practices that are eligible for funding include cover crops, no-till or strip till and using a nitrification inhibitor when applying fall fertilizer. Read More
Precision AgFarmers Learn How Changing World Will Impact Iowa
July 24, 2014
Technology and understanding global consumer demand for Iowa farm products brought hundreds of farmers and agribusiness leaders to Ames recently for the annual Iowa Farm Bureau Federation Economic Summit. Read More
HerbicidesPurdue: Late Season Weeds May Require Manual Removal
July 24, 2014
Hand-rouging and pulling late season weeds by hand may be the best way to remove them, more so than using a herbicide, a Purdue Extension weed scientist says. Read More
Soybean Field
InsecticidesTransform WG, Closer SC Insecticides Receive R&D 10…
July 23, 2014
Dow AgroSciences has received the award from R&D Magazine for Transform WG insecticide and Closer SC insecticide with Isoclast active. Read More
EquipmentKinze, Raven Team Up On 4900 Planter Monitor
July 23, 2014
Kinze Manufacturing announces a partnership with Raven Industries to develop a standalone monitor solution for the Kinze 4900 series planter. With this new Read More
LegislationNew Farm Bill Continues To Confuse As Growers Await USD…
July 23, 2014
The new five-year Farm Bill eliminates many of the direct payments previously payed to growers and could benefit from USDA clarification, reports a Toledo Blade columnist. Read More
EquipmentPrecisionAg.com Relaunches With Responsive Design For M…
July 22, 2014
PrecisionAg, the worldwide leader in precision agriculture information and analysis, announces the launch of its completely redesigned website, PrecisionAg.com. Read More