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

Monsanto sign
Crop InputsMonsanto Speaks on Dicamba Issues in Arkansas
June 26, 2017
Monsanto’s Chief Technology Officer, Robb Fraley, issued the following statement following the Arkansas State Plant Board’s proposal to ban dicamba, Read More
Corn Field
Seed/BiotechCorn Insect Bt Technologies Offer Cost-effective, Proactive Protection
June 26, 2017
When farm economics are challenging, farmers look for ways to bolster profit margins, including reducing input costs. Some may think Read More
Crop InputsArkansas Plant Board Votes to Ban Dicamba — Now What?
June 23, 2017
The Arkansas State Plant Board has voted to pass a proposed emergency rule to ban the use of in-crop dicamba, Read More
Engenia soybeans
Crop InputsBASF: ‘Closely Monitoring’ Dicamba Situation in Arkansas
June 22, 2017
BASF, whose Engenia herbicide is the target of more than 200 drift complaints in Arkansas, emailed the following statement to Read More
Trending Articles
PrecisionAg Vision Conference
Precision AgPrecisionAg® Vision Conference: Focused on the Future
June 13, 2017
PrecisionAg® is pleased to announce the return of its PrecisionAg Vision Conference, October 10-12, 2017. Based on overwhelmingly positive response Read More
Redbanded-stinkbug-on-soybean-Photo-credit-Thomas-County-Ag
Crop InputsExperts: Mild Winter, Early Planting Will Increase Soybean Insect Threat
June 12, 2017
Higher than average temperatures this past winter affected much of the nation, especially the South and Midwest. The National Centers Read More
Eric SfiligojMonsanto ‘Picks Its Battles’ by Nixing Deere Deal
May 23, 2017
Having been in the trade journalism game since the mid-1980s, I remember several watershed moments during my career. One of Read More
Migrant farm workers
LegislationTrump: Immigration Crackdown Won’t Impact U.S. Agriculture
May 16, 2017
President Donald Trump said he would seek to keep his tough immigration enforcement policies from harming the U.S. farm industry Read More
AGCO Ratliff featured
Eric SfiligojRemembering Robert Ratliff
May 15, 2017
With all the fast-paced happenings in agriculture this spring, with multiple mergers in the works and planting season in full Read More
Case sprayer nozzle closeup
EquipmentSpray Application: A Nozzle Renaissance
May 2, 2017
If you had asked four-decade ag veteran Mark Bartel, President of Wilger Inc., just a few years ago what lay Read More
Latest News
ManagementDow Field Day and More Cooperative Consolidation
June 28, 2017
CropLife Editor discusses his recent attendance at the Dow AgroSciences Field Day in Indiana and shares news on another pair Read More
Young Corn Plants
Eric SfiligojLaunching New Seed Traits: Wait on China . . . Or Else!
June 26, 2017
In life, no one likes the waiting game. In agriculture, however, playing the waiting game is very important – especially Read More
Monsanto sign
Crop InputsMonsanto Speaks on Dicamba Issues in Arkansas
June 26, 2017
Monsanto’s Chief Technology Officer, Robb Fraley, issued the following statement following the Arkansas State Plant Board’s proposal to ban dicamba, Read More
Corn Field
Seed/BiotechCorn Insect Bt Technologies Offer Cost-effective, Proac…
June 26, 2017
When farm economics are challenging, farmers look for ways to bolster profit margins, including reducing input costs. Some may think Read More
Crop InputsArkansas Plant Board Votes to Ban Dicamba — Now W…
June 23, 2017
The Arkansas State Plant Board has voted to pass a proposed emergency rule to ban the use of in-crop dicamba, Read More
Engenia soybeans
Crop InputsBASF: ‘Closely Monitoring’ Dicamba Situatio…
June 22, 2017
BASF, whose Engenia herbicide is the target of more than 200 drift complaints in Arkansas, emailed the following statement to Read More
ManagementConsolidation Update
June 22, 2017
Editors Paul Schrimpf and Eric Sfiligoj discuss progress on manufacturer consolidation, and another big move for Midwest cooperative Central Valley Read More
Palmer pigweed seedhead in cotton
Crop InputsThreat of Dicamba Ban Looms in Arkansas
June 22, 2017
The Arkansas State Plant Board has rejected a proposed ban on the use of dicamba herbicide, but a procedural error Read More
Potash Agrium
Crop InputsAgrium-PotashCorp to become Nutrien upon Merger Complet…
June 21, 2017
Potash Corporation of Saskatchewan Inc. and Agrium Inc. have announced today that once the anticipated merger transaction closes, the new Read More
Crop InputsMidwestern BioAg Hosts TerraNu Fertilizer Plant Opening…
June 20, 2017
Last Friday, Midwestern BioAg was joined by over 80 local farmers, media and staff to celebrate the grand opening of Read More
Soybean Field
Industry NewsAligned Ag Distributors Names New President
June 19, 2017
Aligned Ag Distributors LLC announced this morning the appointment of Mary Tolke to the position of President/CEO, effective July 1. Read More
ManagementPlotting Corn, AGCO/Asmark’s Applicator Training Center…
June 15, 2017
Editors Paul Schrimpf and Eric Sfiligoj talk about their recent visits to Columbus, OH, and Bloomington, IL, along with an Read More
Seed/BiotechDow AgroSciences Announces Launch of Enlist Corn for 20…
June 14, 2017
Enlist corn will be commercially available in the U.S. for the 2018 growing season. Dow AgroSciences announced the launch today Read More
ASMARK AGCO Applicator Training Center
EmployeesAsmark, AGCO Open Training Center for Beginning Applica…
June 13, 2017
AGCO Corp. and the Asmark Institute have opened a new Applicator Training Center, created in a collaboration between the two Read More
Power to Do More Contest Winners
HerbicidesDow AgroSciences Announces Three Winners in Power to Do…
June 13, 2017
Thousands of votes have been cast and three farmers have been awarded the power to do more with a $10,000 Read More
Frogeye leaf spot
FungicidesStrobilurin-resistant Frogeye Leaf Spot Threat Looms wi…
June 13, 2017
Heavy spring rainfall throughout the South and Midwest delayed planting and created the perfect environment for diseases like frogeye leaf Read More
PrecisionAg Vision Conference
Precision AgPrecisionAg® Vision Conference: Focused on the Future
June 13, 2017
PrecisionAg® is pleased to announce the return of its PrecisionAg Vision Conference, October 10-12, 2017. Based on overwhelmingly positive response Read More
CHS St. Paul, MN fertilizer terminal
LegislationICGA Praises President Trump’s Remarks on Waterwa…
June 12, 2017
Illinois Corn Growers Association President Justin Durdan, a farmer from Utica, issued the following statement regarding President Donald Trump’s comments Read More