Continuing The Winning Streak

Chances are, 20 years from now market observers of the crop protection product business will look back on their performance in 2007 and 2008 with great affection. Truthfully, this category of the crop inputs industry has received a lot of market love — to the tune of several billion dollars — at a time when many analysts were instead forecasting the category would be entering an ever-quickening death spiral.

Remember back in 2006? During that particular annual CropLife 100 survey, many respondents shared the view that crop protection products were in danger of becoming “yesterday’s news.”

“In 2006, we finally saw what we had been fearing — a mass shift and decrease in crop protection,” wrote one CropLife 100 retailer. Overall that year, crop protection product sales were off more than $800 million with little hope for the coming years.

Yet, a funny thing happened to the crop protection product category on the way to poverty — it started growing again. In 2007, revenue for the category increased 3.8% to $5.5 billion. More importantly, this figure represented a $300 million increase over the category’s 2000 $5.2 billion amount, back in the days when crop protection products still represented the lion’s share of crop input/services sales.

Based upon this data, conventional wisdom going into 2008 was that the crop protection product business couldn’t easily top this performance.

However, conventional wisdom was anything but smart on this matter. According to figures compiled in the 2008 CropLife 100 survey of ag retailers, crop protection products sales grew an incredible $1 billion this year, topping $6.5 billion. If there was a negative to this tale, it was that the category still dropped market share vs. fertilizer and seed. Still, a sales figure of $6.5 billion for crop protection products would have seemed as unlikely as an African-American winning the White House just a few short years ago.

Yet both events have occurred within the same calendar year.

All Up

To appreciate just how deeply this tide of good fortune has reached in 2008, consider the performances of the three sub-segments of the crop protection products category — herbicides, fungicides, and insecticides. In an average year, one of these three would have an exceptional sales year at the expense of the other two. In a good year, two out of the three would have positive sales. But all three being up at the same time is a rare occurrence.

Except these past two years. In 2007, for instance, more than 50% of CropLife 100 retailers said their herbicide, fungicide, and insecticide sales increased 1% to more than 5% during the year. The high percentage was 81% for fungicides, with insecticides bringing up the rear at 59%. Herbicides were up for 74% of respondents. Despite these numbers, 20% of respondents said their herbicide sales dropped 1% to more than 5% in 2007. Likewise, 15% saw their fungicides sales decline and 26% had drops in insecticide sales.

According to the data, 2008 was a much, much more positive year. In the herbicides segment, 90% of CropLife 100 retailers saw their sales grow 1% to more than 5%. More importantly, only 6% recorded sales declines.

Fungicides followed a similar path. In 2008, 84% of respondents had sales increases in this segment. Only 7% had declines.

Insecticides had the roughest year of the three, comparatively speaking. For 2008, 67% of respondents had sales growth in this segment, up 8% from the 2007 totals. Twenty-one percent had revenue drops, but this was a 5% improvement over 2007 figures.

Generic Value

As has been the case the past few years, one of the reasons for the crop protection product category’s success rests in the post-patent sub-group. More than 60% of CropLife 100 retailers currently sell post-patent products. According to data from this year’s survey, the average CropLife 100 retailer gains 21% of its annual income from the sale of generic products. Of course, this doesn’t tell the whole story. Whereas some retailers get as little as 3% to 5% of their annual sales from post-patent brands, others say that these products represent closer to 30% to 50% of their revenues in crop protection. One CropLife 100 retailer even claims that 75% of the company’s annual income derives from post-patent sales.

“Generics provide real bargins for growers and earnings for retailers,” said Greg Musson, general manager for Gar Tootelian, Inc., on his CropLife 100 form.
Of course, it wasn’t that many years ago that post-patent products were viewed in an entirely different light. Indeed, back in 2006, generic products were listed as the No. 1 reason ag retailers weren’t able to turn a profit in the then agricultural economy. “The percentage of generic product entries is causing price erosion,” wrote one retailer on the 2006 survey form.

On the 2008 form, however, price pressure from post-patent products didn’t even make the list of key concerns. Instead, more recent challenges such as rapidly rising fertilizer prices, logistics and transportation costs, and finding/keeping good employees lead the list.

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
CropLife 100Pinnacle Agriculture Acquires Minnesota Retailer
April 14, 2015
Pinnacle Agriculture Holdings, LLC, ranked No. 6 on the CropLife 100,  has successfully acquired Liebl Ag, LLC in Ada, MN.  Read More
CropLife 100CHS, Aurora Cooperative Complete Fertilizer Storage, Grain Shuttle Loading Facility
April 13, 2015
CHS Inc., the nation’s leading cooperative and ranked No. 5 on the CropLife 100, and Aurora Cooperative (ranked No. 21) Read More
CropLife 100GROWMARK Acquires Missouri Refined Fuels Terminal
April 2, 2015
Bloomington, IL-based GROWMARK and Magellan Pipeline Co. have entered into an agreement in which GROWMARK will acquire the refined fuels Read More
CropLife 100Wilbur-Ellis Acquires South Dakota Retailer
April 2, 2015
Wilbur-Ellis Co.’s Agribusiness Division, a recognized leader in precision agriculture technology and the distribution and marketing of plant protection, seed Read More
CropLife 100The McGregor Co. Closes Smith-Kem Acquisition
April 2, 2015
The McGregor Co. — ranked No. 16 on the CropLife 100 list of largest U.S. ag retailers — has completed Read More
CropLife 100BRANDT Commemorates National Ag Day
March 20, 2015
The Illinois agriculture community gathered at BRANDT global headquarters on March 18 to celebrate National Ag Day behind this year's theme Sustaining Future Generations. Read More
Latest News
Eric SfiligojThe Need To Defend Production Agriculture
April 27, 2015
Last week, I spent the better part of my time on the road visiting with ag retailers and market suppliers Read More
FertilizerStarter Fertilizers Show Value In Stressful Spring Cond…
April 27, 2015
From wet, cold conditions in the eastern Corn Belt to excessively dry, cool soils in the Plains states, spring field Read More
StewardshipTFI Announces Renewed Financial Commitment To Fertilize…
April 24, 2015
Today, The Fertilizer Institute’s (TFI) President Chris Jahn announced that TFI and over 100 partners will more than double existing Read More
Industry NewsMACA Names New Ambassador Coordinator
April 23, 2015
The Mid America CropLife Association (MACA) has named Michelle Kilper as its new Ambassador Coordinator. Michelle is a graduate of Read More
ManagementAg Retailer’s Role In Local Policy Making; Raising The …
April 23, 2015
CropLife’s Paul Schrimpf and Eric Sfiligoj review their recent travels, precision ag efforts in Washington, DC, and the role of Read More
TMX-2050 In-Cab Display Launch Run Screen
Precision AgIn-Cab Computing 2015: Connectivity, Compatibility Take…
April 23, 2015
In terms of in-cab computing solutions for the agriculture market, companies like Case IH, Topcon, Trimble, John Deere and Raven Read More
USDA
StewardshipUSDA Outlines Building Blocks For Climate Smart Agricul…
April 23, 2015
Today, the USDA has announced a comprehensive and detailed approach to support farmers, ranchers, and forest land owners in their Read More
Industry NewsArysta LifeScience Welcomes New Territory Sales Manager
April 23, 2015
Arysta LifeScience North America recently announced the addition of Kaitlyn Acaster to the Canadian sales team. Acaster will fill the Read More
Crop InputsMarrone Bio Innovations Opens New Research Greenhouse
April 23, 2015
Marrone Bio Innovations, Inc. (MBI), a leading provider of bio-based pest management and plant health products for the agriculture, turf Read More
Crop InputsDuPont Acquires Taxon Biosciences
April 23, 2015
DuPont has agreed to acquire Taxon Biosciences, Inc., a leading microbiome discovery company. This acquisition will build on DuPont’s in-house capabilities Read More
Farmer on tablet
ManagementStudy: Consumers Don’t Care If U.S. Farmers Feed …
April 23, 2015
“We’re feeding the world” is a mantra often used by those involved in farming and food to build support for Read More
Industry NewsCorporate Responsibility Magazine Names Monsanto One Of…
April 22, 2015
Corporate Responsibility Magazine (CR Magazine) named Monsanto Co. to its 100 Best Corporate Citizens List for 2015. This is the Read More
FertilizerSpring Nitrogen Management: Form And Timing
April 22, 2015
Most corn producers have planned their spring nitrogen program for 2015, and many have already started to implement their program. Read More
FMC 3Rive 3D
Industry NewsFMC Corp. Completes Acquisition Of Cheminova
April 22, 2015
FMC Corp. has completed the closing of its acquisition of Cheminova A/S, a multinational crop protection company based in Denmark Read More
SoftwareSyngenta Expands AgriEdge Excelsior Nationwide For 2015
April 22, 2015
Growers across the country can now take the guesswork out of improving their farm’s production, land value, farm stewardship and Read More
Cornfield near Sioux City Iowa
HerbicidesU.S. Regulators May Start Testing Food For Glyphosate R…
April 21, 2015
U.S. regulators may start testing food products for residues of the world’s most widely used herbicide, EPA told Reuters’ Carey Read More
FungicidesBRANDT Adds Zonix Biofungicide To Portfolio
April 21, 2015
BRANDT has added Zonix biofungicide to its rapidly expanding line of organic and sustainable products. Zonix is a contact fungicide that Read More
ManagementMissouri Experts: Spring Planting Slow Start Won’…
April 20, 2015
In the first of the agronomy teleconferences with Extension specialists, University of Missouri Extension climatologist Pat Guinan said the slow Read More