Biofuels: Future Challenges & Opportunities

You can’t pick up a newspaper or watch the news these days without seeing something about biofuels. The Midwest, with its concentration of current and proposed biofuel processing plants, has been a hub of discussion about the impact investments in biofuel processing capacity will have on agriculture in general, and on the retail dealerships’ businesses specifically. This year, growers are betting on higher prices with corn acres projected to jump dramatically, but what does that mean for retail dealers — both this season and in the future?

As part of the 12th Annual Precision Agriculture Survey sponsored by CropLife magazine and Purdue University’s Center for Food and Agricultural Business, retail dealers were asked what impact they thought the additional investment in biofuel processing capacity would have in their markets — both this next year as well over the next three to five years. The following results are based on responses from the 388 dealerships who responded from the Midwestern states.

To get a better feel for what dealers expected in the short term, survey respondents were asked to indicate their agreement or disagreement with several statements about the impact the increase in biofuel processing capacity was having in their markets this year. Their responses are shown in Figure 9. Almost three-quarters of the respondents agreed or strongly agreed that this year there would be a major impact on grower input purchase decisions in their market. Almost as many respondents (71%) were expecting fertilizer supplies to be tight this year with potentially some supply shortages. Two-thirds of the dealers (67%) agreed that, due to the increased investment in biofuel processing capacity, growers were more interested in maximizing yield this year compared to a year ago.

Finding Where Precision Fits In

Respondents were less likely to agree that there would be an increased demand for precision services this year (28% thought there would be increased demand while 44% disagreed). And respondents were evenly split on whether or not the interest in biofuels would be a short run phenomenon (three years or less), with one-quarter of the respondents agreeing it would be short-term and one-quarter disagreeing (with the remaining neither agreeing nor disagreeing). Because of the uncertainty of the long-term impact, over half of the respondents (55%) said they would not be purchasing or leasing additional application equipment this year and only 16% agreed that they would purchase or lease more equipment as a direct result of the investment in biofuels processing capacity.

To get a better understanding of what impact Midwestern dealerships expected biofuels to have on their businesses in the longer term, respondents were asked to comment in an open-ended question on what they were expecting in the next three to five years. Their comments were coded in order to get a better summary of what the group as a whole was saying and the summary is shown in Figure 10.

In addition to the direct impacts of more corn acreage, either through more continuous corn production or changes from other crops to corn production (mentioned by 37% of the respondents) and continued increased fertilizer demand (mentioned by 28% of the respondents), the range of expected effects was diverse, probably reflecting the wide range of discussions going on throughout the Midwest (Figure 2). Though some dealers were expecting a positive overall impact with increased profits for both crop input dealers and growers, there was plenty of doubt expressed about the long term benefits of the increased production of biofuels, from the effect on grain storage requirements to the impact on livestock production and the costs of producing other crops.

Some of the comments respondents made included the following:

■ It will be a positive influence more than likely. Demand for nitrogen products will be the biggest factor. Agriculture may be fun again?

■ Better markets, more profits to the farmer, more money to spend with me.

■ Growers’ net worth will increase, many will try to expand. Cash rents will go up, land values will increase, corn acres will expand, growers will spend money to try to store more fertilizer and chemicals on farm. More growers will purchase their own application equipment.

■ Where are we going to store all this corn?

■ It has the distinct possibility of chasing livestock production out of the U.S. We are staring at a huge train wreck.

■ Tight fertilizer supplies in ALL areas for ALL crops. Corn and beans are not all that we should think about. What about small grains and hay that are affected by all of the above?

As interest in biofuels continues to grow, the overall impact on specific areas of agriculture will continue to become more clear. Crop input dealers’ challenge will be how to respond to changes in customer needs while remaining flexible enough to continue to respond to an uncertain, evolving future.

 

Topics:

Leave a Reply

Crop Inputs Stories

FertilizerFall-Applied Phosphorus: A Rooted Investment
August 28, 2015
As commodity prices decrease and input prices continue to rise, farmers are seeking more efficient strategies for meeting a high Read More
Monsanto Sign
Crop InputsWhat’s Next For Monsanto, Syngenta?
August 28, 2015
After dropping its $47 billion bid to take over Swiss agribusiness firm Syngenta, Monsanto may be turning its focus to Read More
Golden Harvest Corn stalks
Crop InputsMonsanto: Syngenta Not The Only Horse In Crop Protection Acquisition Race
August 28, 2015
Monsanto Co, having ditched an audacious $46 billion (£30 billion) offer for Syngenta AG, may downshift to a humbler strategy Read More
Corn Field
MicronutrientsHuma Gro Introduces New Boron Liquid Nutrient Formulation For Crops
August 28, 2015
BORO-MAX, a new boron (B) 10% liquid nutrient formulation, has been added to the Huma Gro product line. This new Read More
Top 100 Articles
Crop InputsLand ‘O Lakes, United Suppliers Finalize Merger
August 24, 2015
According to a press release on August 24, owners of United Suppliers, Inc. and members of Land O’Lakes, Inc. “have Read More
West Central Cooperative, Jefferson, IA
CropLife 100Iowa Cooperatives To Explore Unification
August 19, 2015
The boards of directors at two of Iowa’s leading farmer-owned cooperatives yesterday signed a letter of intent to study the Read More
CropLife 100Southern States Coop Hosting Drone Flight This Friday
August 3, 2015
Southern States Cooperative — No. 9 on the CropLife 100 — is hosting an FAA-approved drone demonstration at Grandview Farms Read More
CropLife 100Aligned Ag Distributors Adds Four New Owners
July 30, 2015
Aligned Ag Distributors LLC has announced the addition of four new customer/owners to Franklin Holding Co. LLC. They are: The Read More
CropLife 100Pinnacle Purchases California-Based Specialty Crops Retailer
July 20, 2015
Pinnacle Agriculture Holdings has successfully acquired California-based NH3 Service Co.  Operating as part of Pinnacle’s Performance Agriculture brand, the new locations Read More
Asmus Farm Supply liquid fertilizer facility features 20,000 square feet
CropLife 100Slideshow: Asmus Farm Supply Shows Off Its New Liquid Fertilizer Facility
July 15, 2015
Asmus Farm Supply, Rake, IA, recently added a new liquid fertilizer facility to its company operations. The new liquid fertilizer Read More
Latest News
EquipmentDeere Announces Soucy Track Distribution Alliance
August 28, 2015
John Deere announces an alliance with Soucy Track to sell and distribute products through the John Deere dealer channel. “This Read More
FertilizerFall-Applied Phosphorus: A Rooted Investment
August 28, 2015
As commodity prices decrease and input prices continue to rise, farmers are seeking more efficient strategies for meeting a high Read More
Monsanto Sign
Crop InputsWhat’s Next For Monsanto, Syngenta?
August 28, 2015
After dropping its $47 billion bid to take over Swiss agribusiness firm Syngenta, Monsanto may be turning its focus to Read More
Golden Harvest Corn stalks
Crop InputsMonsanto: Syngenta Not The Only Horse In Crop Protectio…
August 28, 2015
Monsanto Co, having ditched an audacious $46 billion (£30 billion) offer for Syngenta AG, may downshift to a humbler strategy Read More
ManagementConsolidation hits and a miss; And a look at China’s ch…
August 28, 2015
As Monsanto suspends its pursuit of Syngenta, consolidation news at the retail and distribution level heats up. CropLife magazine’s Executive Read More
Corn Field
MicronutrientsHuma Gro Introduces New Boron Liquid Nutrient Formulati…
August 28, 2015
BORO-MAX, a new boron (B) 10% liquid nutrient formulation, has been added to the Huma Gro product line. This new Read More
Crop InputsNFU: Monsanto Decision To Withdraw Syngenta Bid ‘…
August 26, 2015
National Farmers Union (NFU) President Roger Johnson said the organization was very pleased by the news that Monsanto has withdrawn Read More
Crop InputsMonsanto Withdraws Bid For Syngenta
August 26, 2015
Monsanto Co. abandoned its latest effort to acquire Syngenta AG, the world’s top maker of pesticides, after a sweetened bid Read More
Syngenta Sign
Crop InputsSyngenta Comments On Monsanto Announcement
August 26, 2015
The Board of Syngenta confirms that it received a verbal proposal from Monsanto to acquire the company at a price Read More
Case IH Patriot 2250 Sprayer
EquipmentHigh-powered Case IH Patriot 2250 Sprayer Pushes Throug…
August 26, 2015
Engineered with more muscle, the new 660-gallon-capacity Patriot 2250 sprayer features best-in-class horsepower, along with the fuel efficiency that comes Read More
Crop InputsLand ‘O Lakes, United Suppliers Finalize Merger
August 24, 2015
According to a press release on August 24, owners of United Suppliers, Inc. and members of Land O’Lakes, Inc. “have Read More
TMX-2050 In-Cab Display Launch Run Screen
Eric SfiligojPrecision Ag Could Shine In Increased Spotlight On Agri…
August 24, 2015
By any measure, 2015 is turning into one of the most challenging years agriculture has ever experienced. All throughout good Read More
ManagementCrop Conditions In Minnesota and Traveling Time
August 21, 2015
Editors Paul Schrimpf and Eric Sfiilgoj discuss the crop outlook from a field trip to Minnesota and upcoming travel plans. Read More
HerbicidesREUTERS: Anti-GMO ‘Scientist’ Calls For New…
August 20, 2015
EDITORS NOTE: We feel that it is important to note that there are those that believe one of the lead Read More
Rendering of Syngenta Seedcare Institute expansion
Seed/BiotechSyngenta Announces Seedcare Application And Resource Ce…
August 19, 2015
Syngenta recently announced the Seedcare Application and Resource Center, a collaborative new website designed exclusively for Syngenta Seedcare customers to Read More
Winter Wheat
Industry NewsArysta LifeScience Announces Two New Regional Sales Man…
August 19, 2015
Arysta LifeScience North America recently announced Steve Vining and Phil Reding have each accepted new positions as Regional Sales Managers. Read More
West Central Cooperative, Jefferson, IA
CropLife 100Iowa Cooperatives To Explore Unification
August 19, 2015
The boards of directors at two of Iowa’s leading farmer-owned cooperatives yesterday signed a letter of intent to study the Read More
Golden Harvest Corn healthy leaves
Industry NewsAligned Ag Distributors Names Vice President, Crop Prot…
August 18, 2015
Aligned Ag Distributors LLC have appointed Warren Hragyil to VP Crop Protection. Hragyil comes to Aligned Ag Distributors LLC with Read More