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.

 

Leave a Reply

Crop Inputs Stories
Crop InputsPlatform Specialty Products To Acquire Arysta LifeScience
October 20, 2014
Once the acquisition is complete, Platform Specialty Products will combine Arysta LifeScience with previously acquired companies Agriphar and Chemtura Crop Solutions. Read More
MicronutrientsMicronutrients Going Macro
September 9, 2014
Between 2014’s fantastic growing conditions and a heightened awareness on plant nutrition, the major players in micronutrients are gearing up for another big year. Read More
FertilizerFall Fertility 2014: Forecasting Fertilizer Use
September 7, 2014
Great crops this year have tapped the soil, and fall work is definitely called for, but how challenging will that get? Read More
FungicidesSudden Death Syndrome, Brown Stem Rot Reported In Indiana Soybeans
September 3, 2014
Farmers and retailers should be watching for symptoms of these two diseases over the next few weeks as they are best managed through preventative methods. Read More
Top 100 Articles
Growmark Group
CropLife 100GROWMARK In 2015: Back, To The Future
March 2, 2015
The nation’s third largest ag retail organization is simultaneously moving forward while remembering its past. Read More
CropLife 100Pinnacle Expands Sanders Brand In The South
February 27, 2015
Pinnacle has acquired Hopkins Seed and Chemical in Qulin, MO, which expands the company's Sanders brand to nine Southern states. Read More
CropLife 100Pinnacle Launches New Providence Agriculture Location In Indiana
February 27, 2015
Pinnacle Agriculture Holdings — ranked No. 6 on the CropLife 100 — has established a new retail location in New Castle, IN, which will operate as part of Pinnacle's Providence Agriculture brand. Read More
CropLife 100Cooperative CHS Returns $518 Million To Owners
February 23, 2015
The 2015 cash return to owners is based on CHS net income of $1.1 billion, the company's second highest on record. Read More
corn field
CropLife 100The Andersons’ Humic DG Now Available In Canada
February 13, 2015
The Andersons, Inc. Turf & Specialty Group has announced its Humic DG product is now available to customers in the Canadian turf, agriculture and horticulture markets. Read More
Farmer on tablet
CropLife 100Southern States Co-op: An Inside Look At Our Aerial Imagery Program
February 8, 2015
Now is as good a time as any to explore the basics of what a retail aerial imagery program looks like today. Read More
Latest News
EquipmentNew AGCO Website Helps Customers Shop For Certified Pre…
March 3, 2015
RoGator sprayers are among the wide range of CPO equipment available through AGCO's site. Read More
Enlist spray Demo
HerbicidesGuiding New Herbicide Systems’ Launches
March 3, 2015
Under careful watch, the new 2,4-D- and dicamba-tolerant crops hit more acres this season. Read More
Eric SfiligojCommodity Classic 2015: Playing The Waiting Game
March 2, 2015
There was plenty of future-talk at this year’s event as companies (and growers) are largely in a holding pattern of sorts. Read More
Industry NewsHighway Equipment Appoints New Director Of Business Dev…
March 2, 2015
Cory Venable, who joined Highway Equipment Company (HECO) in 2013 as OEM Account Manager, has been promoted to Director of Business Development. Read More
Prairieland FS employees
Eric SfiligojWorkforce Worries
March 2, 2015
Finding good employees almost always ranks as the No. 1 or No. 2 problem for ag retailers in our annual CropLife 100 survey. Read More
Growmark Group
CropLife 100GROWMARK In 2015: Back, To The Future
March 2, 2015
The nation’s third largest ag retail organization is simultaneously moving forward while remembering its past. Read More
CropLife 100Pinnacle Expands Sanders Brand In The South
February 27, 2015
Pinnacle has acquired Hopkins Seed and Chemical in Qulin, MO, which expands the company's Sanders brand to nine Southern states. Read More
CropLife 100Pinnacle Launches New Providence Agriculture Location I…
February 27, 2015
Pinnacle Agriculture Holdings — ranked No. 6 on the CropLife 100 — has established a new retail location in New Castle, IN, which will operate as part of Pinnacle's Providence Agriculture brand. Read More
2,4-D Celebrates 70 Years; GROWMARK Uses Super Bowl Ad To Share Positive Message
Management2,4-D Celebrates 70 Years; GROWMARK Uses Super Bowl Ad …
February 27, 2015
Jim Gray, executive director of the 2,4-D Research Task Force, lays out planned activities to mark the chemistry’s 70th anniversary. Read More
HerbicidesUniversity Of Arkansas Flag The Technology Program Adds…
February 27, 2015
Started in 2010, the Flag the Technology program provides a visual reference for applicators to distinguish between fields planted with different herbicide-tolerant trait technologies. Read More
Luckey Farmers, Inc.’s Berkey Farm Center
Industry NewsLuckey Farmers’ Berkey Branch Certified In 4R Nut…
February 26, 2015
The 4R Nutrient Stewardship Certification Program has announced Luckey Farmers Inc.’s Berkey Farm Center in northwest Ohio has been added to its growing list of nutrient service providers to achieve certified status. Read More
Crop InputsWinField Unveiling NutriVision Technology, Ascend Dry F…
February 24, 2015
New for 2015 are NutriVision Technology, a unique tool for monitoring in-season plant nutrient availability, and Ascend WSG plant growth regulator, a new dry formulation of Ascend plant growth regulator. Read More
FertilizerNew Formulation Of NutriSphere-N Protects High Volume U…
February 24, 2015
Verdesian Life Sciences is launching NutriSphere-N HVTM, a new polymer formulation of the proven NutriSphere-N Nitrogen Fertilizer Manager that protects high-volume applications of UAN. Read More
EquipmentIowa Ag Secretary Northey Names Hagie Water Quality Lea…
February 24, 2015
Iowa Secretary of Agriculture Bill Northey has named Hagie Mfg. as a recipient of the Secretary’s Water Quality Initiative (WQI) Leader Award. Read More
FungicidesEvito Fungicide Gives Canadian Wheat Growers New Diseas…
February 24, 2015
EVITO fungicide from Arysta LifeScience North America gives Canadian wheat and barley growers a new option for disease control. Read More
Eric SfiligojThe Commodity Classic Turns 20
February 23, 2015
Two decades in, this annual gathering of all things agriculture has become a must-see event. Read More
CropLife 100Cooperative CHS Returns $518 Million To Owners
February 23, 2015
The 2015 cash return to owners is based on CHS net income of $1.1 billion, the company's second highest on record. Read More
CropLife Retail Week: On The Road Edition
ManagementCropLife Retail Week: On The Road Edition
February 20, 2015
Editors Paul Schrimpf and Eric Sfiligoj discuss their recent trips to the National Farm Machinery Show in Louisville and the Read More