A Moment To Success

Going into 2007, it certainly appeared that ag retailers were in for one incredible sales year. As the weeks went on, early projections of 3 million more acres of corn going into the ground doubled and then doubled again, setting the stage for one of the best input sales years in memory. It looked like everyone would make a lot of money, even if they had to scramble a little to keep up with an increased workload and demand for products.

And that’s exactly what happened.

According to the sales figures compiled in the 2007 CropLife 100 survey of ag retailers, the nation’s largest dealerships brought in more than $14.7 billion this year, up 8.9% from the 2006 total of $13.5 billion. This helped reverse the 2% revenue loss ag retailers recorded in 2006 and set another all-time high in overall sales among the nation’s top retailers.

In almost every case, ag retailers credited a single source for their good sales fortune in 2007 — corn. The equation worked something like this: more corn acreage =

more inputs = more sales. “Increased corn acreage was a huge boost for 2007,” said Denny Myers, president of Myers, Inc. This sentiment was echoed on virtually every CropLife 100 form received by our staff.

To appreciate just how deeply this corn acreage trend impacted the entire marketplace, consider how well each of the four major input/service areas tracked by the CropLife 100 — fertilizer, crop protection products, seed, and custom application — performed in 2007. In a normal sales year, perhaps half of these segments will experience sales gains and half will record sales losses. In an exceptional year, three out of the four will prosper with the final one accounting for the brunt of overall sales declines. This is the pattern that played out in 2006 as crop protection sales dropped 13% from the 2005 total, dragging down the entire market in the process.

If gaining sales ground in three out of four areas counts as an exceptional year for the CropLife 100, then 2007 must be labeled as an incredible year for the industry. Or unbelievable. But no matter how it is labeled, the bottom line on 2007 is simply this — every one of the four segments increased sales at the retail level.

Let that sink in for a moment — in 2007, no one segment suffered at the expense of another. Every one of them prospered.

Much Fertile Ground

Given that increased corn acreage was credited as the major industry driver in 2007, it should come as no surprise that the fertilizer segment benefited the most. According to the numbers recorded in CropLife 100 surveys, fertilizer sales grew a robust 13.6% in 2007 to more than $6.7 billion. With this gain, fertilizer further cemented its status as the top crop input, market share-wise, by accounting for 46% of total input revenue in 2007, up 2% from 2006. With another year or two of similar growth, the fertilizer segment could easily control 50% of the total crop inputs market among CropLife 100 retailers by the end of decade.

Even more telling, fertilizer was far and away the most profitable crop input for many retailers. In each year’s CropLife 100 survey, we ask respondents to rate if their sales increased, decreased, or stayed the same from the previous year. Normally, the numbers for the various inputs average out to 60% increases, 30% decreases, and 10% no change. This historic trend played out with fertilizer in 2006 with 65% of respondents up, 29% down, and 6% flat.

This year was an entirely different story, however. For 2007, an incredible 96% of CropLife 100 retailers had fertilizer sales up from their 2006 totals. Only 3% reported fertilizer sales declines, with the remaining 1% seeing no change from the prior year. This sales growth outpaced even biotech seed, which historically leads all crop inputs in increased sales volume year after year with a percentage in the mid-80s.

Despite these impressive sales gains, CropLife 100 retailers are worried that the fertilizer segment could present problems moving into the 2008 growing season. When asked to list the factors that could be expected to limit their sales growth in 2008, the overwhelming choice was “rising fertilizer cost/tighter fertilizer supply” at 36%.

“The uncertainty of fertilizer supply and pricing is a problem in a competitive market,” says Wayne Ganser, vice president, research and development for Jay-Mar, Inc.

For the other big crop input segment, crop protection, 2007 was something of a godsend. In 2006, virtually all of the lost revenue among CropLife 100 retailers came from this segment, with sales dropping $800 million for the year. Going into 2007, retailers were uncertain crop protection could recover this lost sales ground.

But recover it did — and then some. According to CropLife 100 retailers, their crop protection product sales increased 3.8%, from $5.3 billion in 2006 to more than $5.5 billion in 2007. Better still, 76% of respondents indicated their crop protection product sales increased 1% to more than 5% for the year. In 2006, only 42% of CropLife 100 retailers could make this claim. About the only negative for the segment was the fact that its sales growth did not keep up with that of the overall marketplace. As a result, crop protection products now account for 37% market share among crop inputs, down 2% from 2006.

Seeds Of Discontent

For the seeds segment, 2007 continued an uninterrupted string of sales gains. This portion of the crop inputs universe saw revenue grow 13.3% to $1.7 billion. This kept the segment’s market share at 11%, but significantly, six CropLife 100 retailers reported that their seed sales now outpace their crop protection sales. Only three retailers could make this claim in 2006.

Not surprisingly, biotech seed continued to expand at a much faster sales pace than its traditionally bred cousin. In 2007, 89% of respondents said their biotech seed sales grew 1% to more than 5%, up from 84% in 2006. Meanwhile, only 29% of CropLife 100 retailers recorded revenue gains for traditional seed, with 46% seeing declines ranging from 1% to more than 5% and 25% seeing no change in sales.

There are a few dark clouds looming for the seed segment, however. For several years, a portion of CropLife 100 retailers have listed eroding seed margins as one of their Top 5 limiting factors to continued future growth. In 2006, 17% indicated this was the case.

This year, the percentage dropped slightly to 11%, but CropLife 100 respondents were much more vocal regarding their difficulty making any seed money. “Seed sales continue to show eroding margins,” wrote Peter Vail, chairman of Carolina Eastern Vail, Inc. on his CropLife 100 form. “We will continue to de-emphasize seed sales.”

Jim Rakestraw, president of Sur-Gro Plant Food, echoed this view. “We can’t make any money in seed,” he wrote. “It won’t cover the expenses.”

Last but not least, custom application sales grew 3.4% in 2007 to $827 million. This was good enough for the segment to maintain its 6% market share among crop input segments. For the most part, CropLife 100 retailers credited the strong performance of fungicide applications on corn with boosting their overall revenues.

Leave a Reply

CropLife 100 Stories

CHS
CropLife 100CHS Acquires Western Co-op Transport Association
March 16, 2017
CHS Inc., North America’s leading farmer-owned cooperative and a global energy, grains and foods company, has purchased Western Co-op Transport Read More
Storage Tank The Andersons
CropLife 100The Andersons To Sell Farm Center Locations In Florida
March 8, 2017
The Andersons, Inc. has signed an agreement to sell its farm center locations in Florida to Wedgworth’s Inc., of Belle Read More
Wilbur-Ellis Miller, SD
CropLife 100Wilbur-Ellis Acquires Minnesota Ag Retailer
March 7, 2017
Wilbur-Ellis Agribusiness, a recognized leader in precision agriculture technology and the distribution and marketing of plant protection, seed and nutritional Read More
CropLife 100The Grower Acreage Consolidation Question
March 3, 2017
For the past few years, one of the consistent concerns among ag retailers taking part in the annual CropLife 100 Read More
Trending Articles
Nutrients for Life Foundation Teacher
FertilizerNutrients For Life Foundation Celebrates 10 Years Teaching Fertilizer Education
March 23, 2017
Those in agriculture know fertilizer is a vital ingredient to grow strong, productive crops. In fact, fertilizer is responsible for Read More
AdjuvantsA New Weed-Control Era Begins: But First, One Last Obstacle
March 4, 2017
There is trepidation, there is reluctance, and there is excitement. Ag retailers feel it all about the new dicamba and Read More
LIFT Academy video screenshot
Crop InputsLIFT Agriculture Academy: A Q&A With West Central Distribution’s Dean Hendrickson
March 1, 2017
West Central Distribution recently launched its LIFT Agriculture Academy, a new, premiere training and professional development resource for West Central’s ag 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
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
Latest News
ManagementStudy: Farming Becoming Riskier Under Climate Change
March 28, 2017
Scientists the world over are working to predict how climate change will affect our planet. It is an extremely complex Read More
Young Corn Plants
Crop NutritionProtecting Nitrogen Provides Economic, Environmental RO…
March 28, 2017
Every business looks to improve its return on investment and reduce its risk of loss. Farmers are no different, yet Read More
Water Drainage
Eric SfiligojDMWW Lawsuit Dismissal Good News for Ag
March 27, 2017
On March 17 while most of the nation was toasting St. Patrick’s Day, agriculture was likely lifting a glass (or Read More
Eric Jenks, Wilbur-Ellis
Crop InputsWilbur-Ellis Launches ADVANTIGRO Plant Growth Regulator…
March 27, 2017
Wilbur-Ellis Agribusiness, a recognized leader in the marketing and distribution of crop protection, seed and nutritional products, as well as Read More
Yara West Sacramento Ribbon Cutting
Crop InputsYara West Sacramento Is Newest Addition
March 27, 2017
Yara’s West Sacramento Terminal was officially welcomed March 21 as the newest Yara North America facility in the U.S. While continually Read More
UncategorizedPrecision Ag, Iowa Water, and GM Corn Updates
March 24, 2017
Editors Paul Schrimpf and Eric Sfiligoj look at the state of precision agriculture, the dismissal of the Des Moines Water Read More
Pam Marrone
Crop InputsMarrone Bio Innovations Enters Biostimulants Market Wit…
March 23, 2017
Marrone Bio Innovations, Inc. is expanding beyond biopesticides and crop protection and into the biostimulant market by commercially launching Haven Read More
Nutrients for Life Foundation Teacher
FertilizerNutrients For Life Foundation Celebrates 10 Years Teach…
March 23, 2017
Those in agriculture know fertilizer is a vital ingredient to grow strong, productive crops. In fact, fertilizer is responsible for Read More
ManagementThink You Know Water? Take WinField United’s R…
March 22, 2017
Water is among our most precious resources, and arguably the hardest working, with just one percent available for human use, Read More
Corn Field
LegislationTFI Hopes Court Dismissal Is ‘Final Chapter’…
March 20, 2017
The Fertilizer Institute (TFI) released the following statement from President, Chris Jahn on the March 17, 2017, federal court dismissal Read More
Wheat Growers
Industry NewsWheat Growers CEO Dale Locken To Retire
March 20, 2017
CEO Dale Locken has announced that he plans to retire from Wheat Growers. Locken has served almost 15 years as Read More
Bayer Monsanto
Eric SfiligojBayer-Monsanto: Life, LibertyLink, And The Pursuit Of R…
March 20, 2017
As the calendar officially turns to spring, life is in full renewal mode. Flowers are blooming, birds are singing, and Read More
Corn Field
Crop InputsUltra Yield Micronutrients Acquires Kronos Micronutrien…
March 16, 2017
Ultra Yield Micronutrients, Inc. ”Ultra”, an affiliate of Cameron Chemicals, Inc., is pleased to announce that it has acquired the Read More
ManagementSnowstorms, Asset Sales, and Soybeans Prices
March 16, 2017
Editors Paul Schrimpf and Eric Sfiligoj discuss the weather, precision ag, crop protection company mergers, and commodity prices in this Read More
Soybean Field
Seed/BiotechBayer Invests $8.1 million In Soybean Advancement In Th…
March 16, 2017
Growers in Illinois and across the Midwest now have the added benefit of a state-of-the-art soybean research facility, increasing accessibility Read More
CHS
CropLife 100CHS Acquires Western Co-op Transport Association
March 16, 2017
CHS Inc., North America’s leading farmer-owned cooperative and a global energy, grains and foods company, has purchased Western Co-op Transport Read More
Young corn plants in soil
HerbicidesBest Management Practices To Control PPO-Resistant Weed…
March 14, 2017
Weeds resistant to the class of herbicides called protoporphyrinogen oxidase (PPO) inhibitors are spreading at a faster rate than weed Read More
Photo credit: The United Soybean Board/The Soybean Checkoff.
Eric SfiligojFungicide Resistance On The Horizon
March 13, 2017
For many years now, the agricultural market has struggled to keep ahead of an ever-growing number of herbicide-resistant weeds. According Read More