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 InputsLand O’Lakes Announces Minnesota Water Quality Partnership
May 25, 2016
Governor Mark Dayton and Land O’Lakes, Inc. President and CEO Chris Policinski today announced a new public-private partnership to protect Read More
Corn close up
Crop InputsArysta LifeScience Establishes Global Headquarters In RTP
May 25, 2016
Arysta LifeScience has announced plans to relocate its global headquarters from West Palm Beach, FL, to Cary, NC, over the Read More
Southern States Cooperative
glyphosate
Crop InputsWHO: Glyphosate ‘Unlikely’ To Cause Cancer
May 16, 2016
Via Reuters.com reporter Kate Kelland: The weed-killing pesticide glyphosate, made by Monsanto and widely used in agriculture and by gardeners, Read More
Trending Articles
Eric SfiligojPity The Monsanto Haters
May 23, 2016
An old saying goes thus: “Be careful what you wish for. You just might get it.” Given current events, there Read More
Monsanto Luling Plant
Crop InputsReport: Bayer Eyeing Monsanto For Possible Mega-Merger
May 16, 2016
Bayer AG is exploring a potential bid for U.S. competitor Monsanto Co. in a deal that would create the world’s Read More
Aerial Drone
Precision AgA Deeper Dive Into The Future Of Precision Ag
May 9, 2016
For about two decades now, through the good and the bad times, the ups and the downs inherent in agriculture, Read More
Palmer amaranth in soybean stubble
HerbicidesWSSA: Billions In Potential Economic Losses From Uncontrolled Weeds
May 4, 2016
What losses would corn and soybean growers experience if they were forced to eliminate herbicides and other control techniques from Read More
Eric SfiligojReasons For Hope In Commodity Prices
May 2, 2016
For many months now, the doomsayers have ruled the day in agriculture. Too much supply with too little demand would Read More
Eric SfiligojMissing The Family Ties In Agriculture
April 25, 2016
By its nature, the agriculture market is cyclical. Up and down cycles come and go with a regular pattern. For Read More
Latest News
ManagementWashington Visit and Bayer/Monsanto Deal Update
May 26, 2016
Editors Paul Schrimpf and Eric Sfiligoj discusses a recent trip to DC and the latest news on the proposed pairing Read More
Fertilizer closeup in hand
Industry NewsVerdesian: Striking A Balance Between Yield & ROI
May 26, 2016
Finely tuned nutrient management plans are helping farmers throughout the U.S. improve nutrient use efficiency, increase return on investment (ROI) Read More
Crop InputsLand O’Lakes Announces Minnesota Water Quality Pa…
May 25, 2016
Governor Mark Dayton and Land O’Lakes, Inc. President and CEO Chris Policinski today announced a new public-private partnership to protect Read More
Soybean Plant closeup
Industry NewsMonsanto Rejects Bayer Bid; Open To More Talks
May 25, 2016
Monsanto Co, the world’s largest seed company, turned down Bayer AG’s $62 billion acquisition bid as “incomplete and financially inadequate” Read More
Corn close up
Crop InputsArysta LifeScience Establishes Global Headquarters In R…
May 25, 2016
Arysta LifeScience has announced plans to relocate its global headquarters from West Palm Beach, FL, to Cary, NC, over the Read More
fertilizer blending and storage, Top 100
BlendersCHS Dakota Expansion Features AGCO’s GSI InterSys…
May 25, 2016
The continued growth of precision agriculture has increased farmer use of customized fertilizer blends best-suited for their soil conditions. Several Read More
ManagementAgriculture 3.5: A Bumpy Road Ahead
May 24, 2016
You may have read my article a few years ago on Agriculture 3.0, which is a term I coined to Read More
Topcon’s X30 display with CropSpec sensors
EquipmentGPS Autosteer Systems: Product Updates From Precision A…
May 24, 2016
Throughout 2015 GPS Steering solutions continued to evolve from what was once an after-market add on, to today’s cab where Read More
Trimble TMX-2050 In-Cab Display
Eric SfiligojThe Precision Ag Revolution Continues
May 24, 2016
It’s funny how much “the first time” tends to mean to someone as they get older. I sometimes can’t recall Read More
Eric Wintemute, AMVAC
Precision AgAMVAC Ups The Ante With New Precision Ag Technology
May 24, 2016
A potentially industry-changing at-plant soil treatment system from American Vanguard Corp., or AMVAC, is coming soon to large growers in Read More
Dry and Liquid Plant
CropLife 100CropLife 100 Map
May 24, 2016
The new CropLife 100 map shows the locations of each of the headquarters of the 2015 CropLife 100 retailers. The interactive Read More
Southern States Cooperative
Corn Field
Industry NewsTiger-Sul Names Veteran Account Manager To Lead Central…
May 23, 2016
With the continuing growth of the sulphur bentonite and precision crop nutrient industry, global agriculture firm H.J. Baker has announced that Read More
Bayer sign
Industry NewsReuters: Bayer Defies Critics With $62 Billion Monsanto…
May 23, 2016
German drugs and crop chemicals group Bayer has offered to buy U.S. seeds company Monsanto for $62 billion in cash, Read More
Eric SfiligojPity The Monsanto Haters
May 23, 2016
An old saying goes thus: “Be careful what you wish for. You just might get it.” Given current events, there Read More
Industry NewsCompass Minerals Hires Industry Veteran To Lead Plant N…
May 19, 2016
Compass Minerals has hired plant nutrition industry veteran Vatren Jurin to steer the company’s portfolio expansion into specialty liquid micronutrient Read More
ASMARK Retailers LIVE! Tour 2016 Group shot The Andersons
CropLife 100The Andersons Rejects Unsolicited Proposal From HC2
May 19, 2016
The Andersons, Inc. has announced that its Board of Directors has rejected two non-binding, highly conditional, unsolicited proposals from HC2 Read More
glyphosate
Crop InputsWHO: Glyphosate ‘Unlikely’ To Cause Cancer
May 16, 2016
Via Reuters.com reporter Kate Kelland: The weed-killing pesticide glyphosate, made by Monsanto and widely used in agriculture and by gardeners, Read More