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
Milan Kucerak, president/CEO, West Central
CropLife 100West Central Cooperative And Its New President Are A Match Made In Deviation
June 29, 2015
To appreciate just how unique West Central Cooperative is in the world of ag retail, an observer need only consider Read More
Winter Wheat
CropLife 100South Dakota Co-op Member Owners Vote No On Unification
June 26, 2015
The Boards of Directors for North Central Farmers Elevator (NCFE) and Wheat Growers (WG) have announced that member-owners have voted Read More
CropLife 100The Andersons Acquires South Dakota Plant Nutrient Manufacturer Kay-Flo
May 20, 2015
The Andersons, Inc., ranked No. 22 on the CropLife 100, has purchased Kay Flo Industries of North Sioux City, SD. “This Read More
CropLife 100AgGateway’s Barcoding Initiative Progressing Nicely
May 8, 2015
According to legend (or Wikipedia), the first step towards modern bar codes came back in 1948, when Bernard Silver, a Read More
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
Latest News
Measuring Bulk Tanks
ManagementBulk Pesticide Compliance: Top 10 Areas Of Improvement …
July 1, 2015
  In honor of the 33-year run of David Letterman’s Late Show, the American Agronomic Stewardship Alliance (AASA) is happy Read More
Industry NewsArysta North America Hires Midwest Sales Manager
July 1, 2015
Arysta LifeScience North America recently announced the hiring of Brian Battles as the Senior Technical Sales Manager for the Midwest Read More
Farmer on tablet
Eric SfiligojThe Never-Ending Battle Against Modern Agriculture
July 1, 2015
In the world of comic books, the character of Superman often refers to the fight to save the world as Read More
Retail FacilitiesBuilding Up Ag Retail
July 1, 2015
In the oftentimes unpredictable world we live in, it’s nice to know some things can be reliably countered on to Read More
Retail FacilitiesMaple River Grain And Agronomy Phases In Site Developme…
July 1, 2015
Marcus Construction helped Maple River Grain and Agronomy in Casselton, ND, with the design-build of its dry fertilizer, liquid chemical/seed Read More
Retail FacilitiesA&B Welding Builds A New Liquid Terminal Hub For Br…
July 1, 2015
To build its new hub facility, Briggs Crop Nutrients enlisted the help of A&B Welding. The result, an efficient facility Read More
Edon Farmers Co-op
Retail FacilitiesNew Marcus Facility At Edon Farmers Co-op Provides More…
July 1, 2015
Edon Farmers Co-Op in Edon, OH, needed a new facility to consolidate outdated locations. Marcus Construction was able to design Read More
Retail FacilitiesKinder Morgan Expands Its Storage With A New Dome Barre…
July 1, 2015
Kinder Morgan wanted additional covered storage at its Dakota Bulk Terminal on the Mississippi River in St. Paul, MN. With Read More
Retail FacilitiesHeartland Tank Protects Fertilizer From Extreme Cold At…
July 1, 2015
The Arthur Companies in Harvey, ND, enlisted the help of Heartland Tank Companies to develop a new liquid fertilizer facility Read More
The McGregor Co. fertilizer loadout
Retail FacilitiesThe McGregor Co. Partners With Kahler Automation To Cre…
June 30, 2015
Kahler Automation helped The McGregor Co. expand its Clarkston, WA, operation with unstaffed loadout technology that enables customers to pick Read More
Dry and Liquid Plant
Retail FacilitiesKahler Automation Helps CHS Dakota Ag Cooperative Build…
June 30, 2015
CHS Dakota Ag Cooperative in Mooreton, ND, wanted a liquid/dry blender system that could meet the needs of its customers Read More
Crop InputsLand O’Lakes, United Suppliers To Merge Crop Inpu…
June 29, 2015
Land O’Lakes, Inc. and United Suppliers, Inc. of Ames, IA, today announced their intent to merge their crop inputs businesses. Read More
FungicidesHelena To Distribute Unique Summit Agro Fungicide
June 29, 2015
RANMAN 400 SC fungicide, the only fungicide with a FRAC group 21 designation, is now part of the innovative Summit Read More
Eric SfiligojIARC Targets 2,4-D In Latest Report
June 29, 2015
The International Agency for Research on Cancer (IARC) has struck again. Earlier this year in March, this agency of the Read More
Milan Kucerak, president/CEO, West Central
CropLife 100West Central Cooperative And Its New President Are A Ma…
June 29, 2015
To appreciate just how unique West Central Cooperative is in the world of ag retail, an observer need only consider Read More
EquipmentCase IH Launches New Precision Air 5 Series Carts
June 29, 2015
Case IH recently introduced its new Precision Air 5 series air carts, developed to get the most from every plant’s Read More
InsecticidesVestaron Biopesticide Approved In California
June 29, 2015
Vestaron Corporation, a developer of insect control products derived from naturally occurring peptides, today announced that its VST-006330-EP biopesticide has received Read More
InsecticidesValent’s Zeal SC Miticide Receives EPA Approval
June 29, 2015
Valent U.S.A. Corporation announced today that Zeal SC Miticide has been registered by EPA with a new liquid formulation that Read More