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

CropLife 100Pinnacle Agriculture Agrees To Credit Agreement Amendment
February 9, 2017
Pinnacle Operating Corp. has entered into an amendment (the “Amendment”) to its First Lien Credit Agreement that will provide for, Read More
Greystone Construction built the tension membrane fertilizer storage building (left) and steel seed treater building (right)
CropLife 100Pinnacle Agriculture Reaches Agreement With Major Shareholders And Creditors
January 31, 2017
Pinnacle Operating Corp. has reached agreement with the majority of the holders of its First-Lien Term Loan and Second-Priority Notes Read More
Andersons Retail Store
CropLife 100The Andersons To Close All Retail Stores; Shutdown Doesn’t Affect Plant Nutrient Group
January 16, 2017
In a stunning announcement to the Toledo area, The Andersons Inc. said on Sunday that it would close its two Read More
Olson Ag Enterprise
CropLife 100Wilbur-Ellis Acquires Nebraska Seed Retailer
January 13, 2017
Wilbur-Ellis’ Agribusiness, a recognized leader in precision agriculture technology and the distribution and marketing of plant protection, seed and nutritional Read More
Trending Articles
Farmer and aptop
Matt Hopkins10 Warning Signs Your Website Is Grossly Outdated
February 8, 2017
Your Website is often a visitor’s first impression of your ag retail business. A positive first impression can set the Read More
AgriSync
Matt Hopkins17 Agriculture Apps That Will Help You Farm Smarter In 2017
December 9, 2016
Ag professionals are working smarter, not harder, than ever before. Smart farming technologies have enabled them to reduce costs, maximize Read More
R4023 Sprayer, John Deere
CropLife 100Ag Retail Equipment Report: The Green Party Continues
December 7, 2016
In the annual race for sales in the ag retail equipment marketplace, the color schemes for participants are a little Read More
Mike Stern
Precision AgClimate Corp. CEO Talks Retailer Support For Digital Ag
December 1, 2016
CropLife Magazine’s sister publication, AgriBusiness Global, recently sat down with Mike Stern, CEO of The Climate Corp., following the Monsanto subsidiary’s Read More
Precision AgTrimble Debuts End-to-End FMIS Platform
November 28, 2016
October’s inaugural PrecisionAg Vision Conference left this author with many thoughts and things to ponder in the coming months. Probably Read More
CHS Primeland
CropLife 100The 2016 CropLife 100 Report: Reviewing The Many Bulls And Bears Impacting This Year’s Marketplace
November 28, 2016
For virtually all of 2016, the nation was wholly focused on the big Presidential election. Some folks aligned themselves with Read More
Latest News
Roy Blunt
LegislationARA Recognizes Blunt, Heitkamp For Legislative Efforts …
February 17, 2017
Agricultural industry continues to face federal regulatory challenges. Thankfully, agriculture’s allies in the U.S. Senate stepped forward. The Agricultural Retailers Read More
LegislationThe Fertilizer Institute Commends Senate On Confirmatio…
February 17, 2017
The Fertilizer Institute (TFI) President Chris Jahn issued the following statement on the Senate confirmation of Oklahoma Attorney General Scott Read More
Trump, Senate, Cabinet
LegislationBREAKING: Trump EPA Nominee Scott Pruitt Confirmed by S…
February 17, 2017
Scott Pruitt, who as Oklahoma’s attorney general spent years suing the Environmental Protection Agency over its efforts to regulate various Read More
ManagementFebruary Road Trip Edition
February 17, 2017
Editors Paul Schrimpf and Eric Sfiligoj discuss their recent visits to Indiana and Kentucky. Read More
Heritage Cooperative Finished Building Aerial
ManagementHeritage Cooperative, Agland Co-op Approve Merger
February 17, 2017
Agland Co-op and Heritage Cooperative stockholders have both approved the merger agreement between Agland Co-op and Heritage Cooperative. Now begins Read More
LegislationARA Fly-In: Ag Retail Descends on Capitol Hill, Lawmake…
February 15, 2017
More than 100 agricultural retailers, distributors and suppliers headed to Capitol Hill Tuesday morning for the Agribusiness Congressional Fly-in, according to a Read More
Untreated soybean seed Heartland Coop
Seed/BiotechMarrone Bio Innovations, Groundwork BioAg Bio-stacked M…
February 13, 2017
Marrone Bio Innovations, Inc. and Groundwork BioAg, Ltd have announced successful seed treatment field trials of the world’s first all-biological Read More
NL5000 With G5 Technology
SpreadersNew Leader Introduces NL5000 Dry Nutrient Applicator Wi…
February 13, 2017
New Leader, a division of Highway Equipment Company (HECO), has announced the next generation of spreading technology with the NL5000 Read More
Fertilizer Storage
Crop InputsThe State Of The Fertilizer Industry
February 9, 2017
He’s all hat, no horse.” It’s a humorous way of describing a person who tells a good story, but is Read More
CropLife 100Pinnacle Agriculture Agrees To Credit Agreement Amendme…
February 9, 2017
Pinnacle Operating Corp. has entered into an amendment (the “Amendment”) to its First Lien Credit Agreement that will provide for, Read More
ManagementUpdates on Upcoming Trips, Dow-DuPont, and the Des Moin…
February 9, 2017
Editors Paul Schrimpf and Eric Sfiligoj review a few future travels, along with the latest on big company mergers and Read More
Championship Tractor Pull
EquipmentNational Farm Machinery Show Highlighted By Championshi…
February 9, 2017
The scream of monster engines, the stench of burning rubber and the ground-pounding vibrations of the country’s largest, loudest and Read More
Farmer and aptop
Matt Hopkins10 Warning Signs Your Website Is Grossly Outdated
February 8, 2017
Your Website is often a visitor’s first impression of your ag retail business. A positive first impression can set the Read More
Corn Field
InsecticidesArysta LifeScience, DuPont Collaborate On Rynaxpyr Prem…
February 8, 2017
Arysta LifeScience recently announced that it has entered into a global collaboration with DuPont Crop Protection for the development of Read More
Industry NewsThe Fertilizer Institute Board Elects New Chairman, Vic…
February 8, 2017
The Fertilizer Institute’s (TFI) Board of Directors has elected Chuck Magro, President and CEO of Agrium, and Tony Will, President Read More
Sonny Perdue
ManagementARA Joins More Than 600 Organizations In Support Of Per…
February 8, 2017
The Agricultural Retailers Association (ARA) recently joined with more than 600 agricultural groups on a letter of support for Governor Read More
World Agri-Tech Innovation Summit Panel 2016
Crop InputsWorld Agri-Tech Innovation Summit To Be Held In San Fra…
February 8, 2017
“Breakthrough Applications and Business Models for Sustainable Farming” is the theme of the World Agri-Tech Innovation Summit to be held Read More
Cedar Country Cooperative
Eric SfiligojConsolidation In Agriculture: More Middle Movement
February 7, 2017
If you’ve regularly followed my column, you know I’m something of a movie junkie. Like many, one of my favorite Read More