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

FertilizerGypsum Added To List Of Conservation Practices
July 28, 2016
Crop farmers in a growing number of states may be eligible for financial assistance from the USDA’s Natural Resources Conservation Read More
Palmer pigweed seedhead in cotton
HerbicidesStudy: Fall Weed Controls Can Make Significant Impact On Glyphosate-Resistant Palmer Amaranth
July 28, 2016
An article published in the latest issue of the journal Weed Science shows that adopting harvest-time and post-harvest weed controls Read More
InsecticidesSyngenta: Beware Of Early Stinkbug Threat To Soybeans
July 28, 2016
With the record warm temperatures this past winter and confirmations from early entomologist reports, Syngenta encourages growers to monitor stinkbug Read More
Peanut field
Crop InputsVerdesian Introduces New Inoculant For Peanuts
July 28, 2016
As planning begins for the next growing season, Verdesian Life Sciences adds Primo Power CL, a new liquid inoculant, to Read More
Trending Articles
Southeast Farmers Coop - Finished Building
Retail FacilitiesNew Stueve Facilities Offer Ag Retailers Speed, Accuracy
July 9, 2016
Leading the industry in planning and constructing dry fertilizer storage and chemical warehouse solutions, Stueve Construction helped three ag retailers Read More
Heritage Cooperative
Retail FacilitiesKahler Automation Designs State-Of-The-Art Facility For Heritage Cooperative
July 4, 2016
Heritage Cooperative in Marysville, OH, needed an efficient liquid, dry and grain facility to serve the many needs of their Read More
The Andersons Waterloo
ManagementFirst Indiana Facility Certified Under 4R Nutrient Stewardship Certification Program
June 27, 2016
The 4R Nutrient Stewardship Certification Program has announced that The Andersons, Inc.’s Waterloo, IN, facility has been added to its Read More
Food IT
Industry NewsCalifornia Event Will Mix Ag And Tech Professionals To Explore IT Solutions
June 20, 2016
Silicon Valley is hot on agriculture, and an upcoming event in California will bring together the food and tech industries Read More
Monsanto Luling Plant
Eric SfiligojWhat’s Next For Monsanto?
May 31, 2016
For the folks at Monsanto’s headquarters in St. Louis, MO, it has been an eventful few weeks. Back on May 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
Latest News
FertilizerGypsum Added To List Of Conservation Practices
July 28, 2016
Crop farmers in a growing number of states may be eligible for financial assistance from the USDA’s Natural Resources Conservation Read More
Management2016 CTIC Cover Crop Survey: 33% Report ROI From Cover …
July 28, 2016
Insight from 2,020 farmers from across the country reflected enthusiasm for cover crops and—for the fourth year in a row—found Read More
Palmer pigweed seedhead in cotton
HerbicidesStudy: Fall Weed Controls Can Make Significant Impact O…
July 28, 2016
An article published in the latest issue of the journal Weed Science shows that adopting harvest-time and post-harvest weed controls Read More
InsecticidesSyngenta: Beware Of Early Stinkbug Threat To Soybeans
July 28, 2016
With the record warm temperatures this past winter and confirmations from early entomologist reports, Syngenta encourages growers to monitor stinkbug Read More
Peanut field
Crop InputsVerdesian Introduces New Inoculant For Peanuts
July 28, 2016
As planning begins for the next growing season, Verdesian Life Sciences adds Primo Power CL, a new liquid inoculant, to Read More
Soil Young Corn
Crop InputsSmithsonian: 5 Things to Know About New GMO Labeling Bi…
July 27, 2016
On July 14, the House of Representatives passed a bill requiring large food companies to label products containing genetically modified Read More
Palmer pigweed in soybean stubble
HerbicidesSpecial Issue Of Weed Science Explores Human Aspects Of…
July 27, 2016
Weeds that evolve resistance to herbicides are a serious threat to global agricultural production. In this Special Issue of Weed Science, Read More
CHS Primeland
CropLife 100CHS Businesses In Washington, Idaho Combining For Great…
July 27, 2016
As full-service ag retailers, CHS Primeland and CHS Farmers Co-op collectively serve farmers and other customers in 15 counties in Read More
Storage Tanks at Nachurs
Crop InputsNACHURS Joins Field to Market
July 27, 2016
NACHURS announced today that it has joined Field to Market: The Alliance for Sustainable Agriculture, a leading multi-stakeholder initiative working Read More
Illinois Researchers
FertilizerMeasure Of Age In Soil Nitrogen Could Help Precision Ag…
July 26, 2016
What’s good for crops is not always good for the environment. Nitrogen, a key nutrient for plants, can cause problems Read More
Kochia
Crop InputsNufarm Launches New Herbicide for Resistant Kochia
July 25, 2016
Nufarm introduces Scorch herbicide for U.S. farmers and ranchers combating a broad range of troublesome broadleaf weeds. A unique premix Read More
ManagementNew Rabobank Report Calls for Farmer ROI Focus
July 25, 2016
As U.S. row crop farmers brace themselves for a third year of negative margins, Rabobank believes farmers must lower the Read More
Syngenta Sign
Crop InputsBloomberg: Syngenta-Chem China Deal on Track for Regula…
July 25, 2016
Syngenta AG, which has agreed to be taken over by China National Chemical Corp. for $43 billion, said talks with Read More
ManagementGROWMARK Meeting Visit, Company Takeover Updates, and R…
July 22, 2016
Editors Paul Schrimpf and Eric Sfiligoj discuss their recent speaking engagement at GROWMARK’s eastern event, crop protection company merger rumors, Read More
Crop InputsMonsanto: EU Approves Roundup Ready 2 Xtend Imports
July 22, 2016
Monsanto Co. announced today that the European Commission has granted import approval for Roundup Ready 2 Xtend soybeans. This milestone Read More
Syngenta headquarters in Basel, Switzerland
Crop InputsSyngenta Announces Alfalfa Seed Split Off
July 22, 2016
On September 1, 2016, Syngenta will transfer sales and distribution of alfalfa seed to the NEXGROW branded business that is Read More
Dow DuPont
Crop InputsDuPont, Dow Shareholders Approve Merger
July 21, 2016
DuPont and The Dow Chemical Company announced that, at their respective special meetings of stockholders held today, stockholders of both Read More
ManagementLand O’Lakes Announces SUSTAIN Business Unit, Oth…
July 20, 2016
Land O’Lakes, Inc. today announced the formal organization of a new business unit, SUSTAIN, and its leadership. SUSTAIN will focus Read More