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

FungicidesReport: Sudden Death Syndrome Symptoms Appearing In Soybeans
July 30, 2015
Last week, symptoms of sudden death syndrome (SDS) began to appear in April 15-planted soybeans at the University of Illinois’s Read More
Seed/BiotechAdvanta Seeds Adds New Phoenix Corn Hybrids
July 30, 2015
Corn growers in the High Plains and Western states have new options available for the 2016 growing season from Advanta Read More
GYPSOIL Blendable Pellets
Crop InputsBeneficial Reuse Management Launches Pelletized Gypsum Product
July 29, 2015
Beneficial Reuse Management (BRM) announced this week at Ag Media Summit that its GYPSOIL Pelletized Products Division will open a Read More
FertilizerKoch Agronomic Services Launches N-TEGRATION Technology
July 27, 2015
Koch Agronomic Services, LLC (KAS) has launched  N-TEGRATION Technology, a process technology platform designed to enable production of enhanced efficiency fertilizers at Read More
Top 100 Articles
CropLife 100Allied 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
CropLife 100Wilbur-Ellis Feed Division Facilities Receive Safe Feed/Safe Food Certification
July 13, 2015
Wilbur-Ellis Co.’s Feed Division, a marketer and distributor of value-added feed ingredients for the aquaculture, livestock and pet food industries Read More
CropLife 100BRANDT Expands To Brazil With Acquisition
July 8, 2015
BRANDT has acquired a majority interest in Target Brasil Fertilizantes Ltda. through its Brazilian subsidiary. Target Brasil manufactures, distributes and Read More
Milan Kucerak, president/CEO, West Central
CropLife 100West Central Cooperative And Its New President Are A Match Made In Deviation
June 29, 2015
To appreciate just how unique West Central Cooperative is in the world of ag retail, an observer need only consider Read More
Latest News
CropLife 100Allied 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
FungicidesReport: Sudden Death Syndrome Symptoms Appearing In Soy…
July 30, 2015
Last week, symptoms of sudden death syndrome (SDS) began to appear in April 15-planted soybeans at the University of Illinois’s Read More
Seed/BiotechAdvanta Seeds Adds New Phoenix Corn Hybrids
July 30, 2015
Corn growers in the High Plains and Western states have new options available for the 2016 growing season from Advanta Read More
ManagementTechnology and agriculture: a Futurist’s Perspective
July 30, 2015
Futurist David Zach, speaking at this week’s InfoAg Conference in St. Louis, shared thoughts on the benefits and limitations of Read More
Biofuels Plant in Lousiana
Industry NewsIdle Biofuels Plant In Louisiana To Reopen As Ammonia F…
July 30, 2015
A Lithuania-based company plans to spend $265 million to reopen an idle biofuels refinery in Grant Parish as an ammonia Read More
FFA at Monsanto Booth at the 2015 National Farm Machinery Show
Industry NewsFive Students Receive The 2015 Monty’s Plant Food Compa…
July 29, 2015
This fall, five college-bound students will have financial support through the Monty’s Plant Food Company FFA Scholarship. All five scholarship Read More
GYPSOIL Blendable Pellets
Crop InputsBeneficial Reuse Management Launches Pelletized Gypsum …
July 29, 2015
Beneficial Reuse Management (BRM) announced this week at Ag Media Summit that its GYPSOIL Pelletized Products Division will open a Read More
StewardshipOhio Water Quality Project To Determine How Much Phosph…
July 27, 2015
Researchers with the College of Food, Agricultural, and Environmental Sciences at The Ohio State University are looking for farmers in Read More
FertilizerKoch Agronomic Services Launches N-TEGRATION Technology
July 27, 2015
Koch Agronomic Services, LLC (KAS) has launched  N-TEGRATION Technology, a process technology platform designed to enable production of enhanced efficiency fertilizers at Read More
HerbicidesExpert: IARC Herbicide Classifications Leading To Confu…
July 24, 2015
Few people in the crop protection industry had heard of the International Agency for Research on Cancer (IARC) before this Read More
ManagementFCI Trade Summit Update & Precision Tank Turns 50
July 23, 2015
Editors Dave Frabotta and Eric Sfiligoj discuss the upcoming FCI Trade Summit in Las Vegas, NV, and how Precision Tank Read More
Palmer pigweed seedhead in cotton
HerbicidesUSDA Deregulates Dow AgroSciences’ Enlist Cotton Trait
July 23, 2015
The USDA today issued its decision deregulating Dow AgroSciences’ Enlist cotton trait in the U.S. The USDA has now completed its Read More
Industry NewsVerdesian Life Sciences Showcases Versatile Product Por…
July 23, 2015
Technology has revolutionized agriculture by bringing farmers, retailers and distributors to the forefront of the digital age. To meet the Read More
FertilizerWSJ: Cf Industries Exploring Merger With Dutch Chemical…
July 23, 2015
U.S. fertilizer maker CF Industries is in advanced merger talks with Amsterdam-listed chemical company OCI NV, the Wall Street Journal Read More
HerbicidesNufarm Releases New Panther SC Herbicide
July 23, 2015
Nufarm has announced the availability of new Panther SC herbicide. Panther SC is the first liquid formulation of flumioxazin available Read More
EquipmentFarmLink Launches Farm Equipment Sharing Program
July 23, 2015
FarmLink has introduced a new online farm equipment sharing community – MachineryLink Sharing – leveraging this new economy business model Read More
HerbicidesCould The South’s Most Troublesome Weed Represent A Thr…
July 22, 2015
Palmer amaranth is undoubtedly the most troublesome weed in the southern United States, taking a devastating toll on both cotton Read More
Industry NewsH.J. Baker Hires New Director Of International Sales
July 22, 2015
Global Agriculture firm H.J. Baker announced today that Steve Langley has joined the company’s Crop Performance Division and Animal Health Read More