A Drought Hangover For Fertilizer Retailers

For several years now, the fertilizer category has been an unstoppable engine of market growth for the nation’s top ag retailers. Following the bump in the road that took place during mid-2008 and early 2009, fertilizer sales for the country’s CropLife 100 dealerships and cooperatives have been gaining ground (literally and figuratively) at a steady clip. In fact, between 2010 and 2012, total sales for the fertilizer category among CropLife 100 retailers grew from $10.1 billion to $15.2 billion, an increase of more than 50%. Naturally, market share for the sector also improved, topping 55% once the final numbers for 2012 had been calculated.

To many market watchers, what made this performance by the fertilizer category all the more surprising was how the sector kept growing despite some very unfavorable field conditions. Throughout much of 2012, most of the Continental U.S. was experiencing its most severe drought since the late 1980s, with temperatures soaring above 90 degrees for much of summer and barely any rainfall occurring. Still, thanks in part of modern agricultural practices and improved biotech seed varieties, most grower-customers managed to keep their crop yields high and profits intact. Others were helped out by crop insurance. But no matter what source the farm income came from, ag retailers did not see a significant drop-off in fertilizer demand during the fall 2012 application season.

There were, however, a few notes of caution from some CropLife 100 retailers last year. According to Dave Coppess, executive vice president, sales & marketing for Heartland Co-op, West Des Moines, IA, there was definitely a danger of some kind of drought hangover for fertilizer once 2013 rolled around. “Since many growers lost their crops and left them in the field in 2012, they might decide that the crop nutrients they applied for the year will be adequate to give them good yields going forward,” said Coppess in the 2012 CropLife 100 report. “So yes, there are some questions about fertility needs for the 2013 crop.”

A Prediction Comes True

But these are questions no longer. According to the 2013 CropLife 100 survey, the nation’s top ag retailers only recorded a modest $100 million sales bump in fertilizer during 2013, coming in at just over $15.3 billion. This 0.7% revenue increase was the slowest for fertilizer in better than five years. Furthermore, since the other three crop inputs/services categories all grew at a much faster rate during 2013, the fertilizer category experienced its first market share decline since 2008, falling from 55% in 2012 to 53%.

For the most part, CropLife 100 respondents blamed the unusually wet spring much of the nation experienced during 2013 for depressing their spring fertilizer demand. “Many customers in our area ended up switching their planting plans from corn to soybeans once the spring rains never stopped,” says Doug Busdeker, senior manager, Northern farm centers for The Andersons, Inc., Maumee, OH.

And this seemed to be the case on a more widespread basis as well. When asked to characterize the level of challenge they faced in managing fertilizer demand during 2013, a majority of respondents (57%) described the year as “very challenging” or “more challenging than normal” for nitrogen-based products such as anhydrous ammonia and urea.

It was a similar situation with the other macronutrients as well. When it came to phosphorus, 39% of CropLife 100 ag retailers said they faced “very challenging” or “more challenging than normal” market conditions during 2013. As far as potassium/potash was concerned, 42% of respondents described their conditions as “very challenging” or “more challenging than normal” for the year.

Many ag retailers — particularly those that had closed their books before the start of the fall application season — were hoping for better luck when it came to fertilizer demand going forward.
“We are still hoping for a good fall season,” wrote Tim McArdle, vice president, general manager for the Ag Division at BRANDT, Springfield, IL, on his CropLife 100 form.

The Prospects For 2014

With a relatively flat year behind it in 2013, can the fertilizer category expect to rebound in 2014 as it has done numerous times in the past? The early indications are not entirely positive.

As everyone in the agriculture industry knows, fertilizer’s fortunes tend to tie directly to the amount of corn the nation’s growers-customers plan to plant come spring. In fact, almost half of the nitrogen fertilizer used for growing crops in America goes to growing corn.

But over the past few years, as commodity prices have stayed high, growers have planted in excess of 90 million acres each and every crop year. This has undoubtedly helped keep fertilizer demand up as well.

In 2014, however, there are signs this crop mix won’t necessarily favor fertilizer usage. According to 48% of CropLife 100 survey respondents, their grower-customers are planning to plant anywhere from 1% to 10% less corn this coming spring than they did during 2013. This would translate into a loss of up to 9 million acres of corn, placing total acreage somewhere in the low to mid 80 million acre range.

In corn’s absence, CropLife 100 retailers expect soybeans to occupy these acres. According to survey respondents, 52% of them are anticipating anywhere from a 1% to 10% increase in the soybean acres in their areas. This would place total soybean acreage in close to the 80 million acre range.

Topics:

Leave a Reply

CropLife 100 Stories

Greg Musson, Gar Tootelian
CropLife 100California Ag Retailer Steps Up To Feed Families Affected By Drought
September 16, 2016
GAR Tootelian, Inc. (GAR) in Reedley, CA, is challenging the Central Valley to help raise enough money and provide 525,000 meals Read More
Wilbur-Ellis Sedgwick Grand opening 2015
CropLife 100Wilbur-Ellis Receives ResponsibleAg Certification At Sedgwick Location
September 9, 2016
Wilbur-Ellis Co., a recognized leader in precision agriculture technology and the distribution of crop protection products, announces the ResponsibleAg certification Read More
Growmark FS Outlet
CropLife 100GROWMARK To Build New Fertilizer Facility In Ayr, Ontario
August 31, 2016
GROWMARK announced plans Wednesday to build a new state-of-the-art fertilizer facility in Ayr, Ontario. It will be managed by FS Read More
CHS St. Paul, MN fertilizer terminal
CropLife 100CHS Completes $10 Million Renovation Of St. Paul Agronomy Fertilizer Terminal
August 29, 2016
CHS Inc., North America’s leading farmer-owned cooperative and a global energy, grains and foods company, has completed a $10 million Read More
Trending Articles
Corn Field
Eric SfiligojFacing Ag Industry Challenges
September 26, 2016
At the 2016 annual Mid America CropLife Association (MACA) meeting in September, a pair of crop protection company representatives discussed Read More
Bayer Monsanto
Crop InputsBayer-Monsanto Mega-Merger: 6 Things You Need To Know
September 14, 2016
Mega mergers have become almost routine in the agricultural industry. Right on the heels of Monday’s news that fertilizer giants Potash Read More
Potash Corp Agrium
Crop InputsAgrium, Potash Corp To Merge To Create $36 Billion Company
September 12, 2016
Canada’s Agrium Inc. and Potash Corp of Saskatchewan Inc. have agreed to combine in a deal that would create a Read More
Osage Co-op Elevator Osage, IA Finished Building
OpinionAre We Crazy?
September 8, 2016
At some point in the first few months of my employment here at CropLife® magazine, I started getting curious about Read More
ManagementMAGIE 2016 Highlights and Deere Anti-Trust
September 1, 2016
CropLife Editor Eric Sfiligoj discusses the recent Midwest AG Industries Exposition and the Department of Justice’s objection to John Deere Read More
ASMARK 2016 Retailers Live! Tour - CPS
CropLife 100CPS Acquires Texas Retail Operation
August 23, 2016
Crop Production Services (CPS) has acquired the assets of Larry’s Chemical and Spray, Inc., for an undisclosed amount in an Read More
Latest News
Young Corn Field
StewardshipStudy: Ohio Farmers Doing ‘A Good Job Of Managing…
September 27, 2016
Leaders from Ohio’s largest grain farming organizations announced today that Ohio farmers are doing their part in effectively managing phosphorus Read More
Crop InputsLake Erie HAB Update: Phosphorus Soil Level Reduction G…
September 27, 2016
Leaders from Ohio’s largest grain farming organizations announced today that Ohio farmers are doing their part in effectively managing phosphorus Read More
Growmark FS Outlet
Industry NewsGROWMARK To Purchase Suncor’s Share Of UPI
September 26, 2016
GROWMARK and Suncor have reached an agreement in which GROWMARK will purchase Suncor’s 50% interest in UPI, Inc. in Ontario, Read More
Corn Field
Eric SfiligojFacing Ag Industry Challenges
September 26, 2016
At the 2016 annual Mid America CropLife Association (MACA) meeting in September, a pair of crop protection company representatives discussed Read More
Syngenta Seedcare Institute
Seed/BiotechSyngenta Opens New North America Seedcare Institute In …
September 23, 2016
Syngenta unveiled its new Seedcare Institute in Stanton, MN, during a recent grand opening celebration. More than 150 industry leaders, Read More
StewardshipMonsanto Invests $1.6 Million In System To Quantify Gre…
September 23, 2016
The USDA – Natural Resources Conservation Service (USDA-NRCS) recently awarded the National Corn Growers Association (NCGA) and its Soil Health Read More
Pipe rack
LegislationCourt Sides With Ag Retailers On PSM
September 23, 2016
The D.C. Court of Appeals has ruled the Occupational Safety and Health Administration violated the Occupational Safety and Health Act when Read More
ManagementPacific Coast Fertilizer Announces Interest In Longview…
September 22, 2016
Pacific Coast Fertilizer LP (PCF) announced at the Cowlitz Economic Development Council board of directors meeting its interest in developing Read More
Young corn plants in soil
UncategorizedCool Planet Raises Additional $9 Million To Commerciali…
September 22, 2016
Cool Planet has announced the first close of a new financing round to commercialize the company’s Cool Terra Engineered Biocarbon Read More
Crop InputsJim Loar Promoted To President And CEO Of Cool Planet
September 22, 2016
In a move that reflects and reinforces the company’s commitment to the agricultural market, the Cool Planet board of directors Read More
BlendersNorth Dakota Coop Debuts Dry Fertilizer Plant
September 22, 2016
North Central Grain Cooperative has begun operations at a new dry fertilizer plant at its Rolla, ND, site. It is Read More
Crop InputsMonsanto, Bayer Officials Defend Proposed $66 Billion M…
September 21, 2016
Top officials for Monsanto and Bayer defended their proposed $66 billion merger before skeptical senators on Tuesday, insisting that the Read More
ManagementUpcoming Shows & Recent Events
September 19, 2016
Editors Paul Schrimpf and Eric Sfiligoj talk about upcoming trade shows and events and review the Mid America CropLife Association Read More
Industry NewsVerdesian Life Sciences Appoints New CEO
September 19, 2016
Verdesian Life Sciences, a plant health and nutrition company, today announced that its board of directors has named Kenneth M. Avery Read More
Corn
Crop InputsEPA Settles With Syngenta For Alleged Multi-Regional Pe…
September 19, 2016
The U.S. EPA has announced a multi-region settlement with Syngenta Crop Protection, LLC (Syngenta) in Greensboro, NC, for alleged violations of Read More
ManagementMerger Mania
September 16, 2016
Editors Paul Schrimpf and Eric Sfiligoj discuss this week’s mega-ag mergers of Bayer and Monsanto and Potash and Agrium. Read More
Monsanto sign
Crop InputsMonsanto Ends Up Being A Bargain For Bayer
September 16, 2016
History will say Bayer got a bargain in its $66 billion purchase of Monsanto, writes David Nicklaus, St. Louis Post-Dispatch. The Read More
Greg Musson, Gar Tootelian
CropLife 100California Ag Retailer Steps Up To Feed Families Affect…
September 16, 2016
GAR Tootelian, Inc. (GAR) in Reedley, CA, is challenging the Central Valley to help raise enough money and provide 525,000 meals Read More