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

Student Young Worker CHS
CropLife 100CHS Supports #FirstJob Compact
October 24, 2016
CHS joins the White House and many of the country’s largest employers in signing a new initiative centered on helping Read More
Kennebec Grain terminal
CropLife 100Wheat Growers Kennebec Facility Loads First Rail Cars
October 21, 2016
In a season of firsts for Wheat Growers’ Kennebec Grain Terminal, the first 115-car unit train was loaded with soybeans Read More
CropLife 100Pinnacle Agriculture Launches Mission Seed Solutions
October 5, 2016
Pinnacle Agriculture Distribution, Inc. has launched its new proprietary seed company, Mission Seed Solutions, LLC. The firm will be based Read More
Pat Bowe The Andersons
CropLife 100An Eventful Year For The Andersons
October 1, 2016
On November 2, 2015, Patrick Bowe was formerly appointed the new President/CEO of The Andersons, Inc. He became the first Read More
Trending Articles
Matt Hopkins15 Twitter Accounts Every Ag Professional Must Follow
October 13, 2016
What do singer Katy Perry and the President of the United States have in common? They are two of the Read More
AGCO RG700 cab
OpinionRoadblocks To Precision Ag Innovation
October 5, 2016
On August 29, I got to preside over the PrecisionAg Innovation Series event, “Game-Changing Advances in Precision Farming Technology,” developed Read More
J.C. Ramsdell containment system
EquipmentClear Opportunity In The Tank Market
October 4, 2016
Crop prices may be down, but steel prices are too — and that’s good news for retailers looking to add some Read More
WinField booth Farm Progress
Special ReportsTalking Weed Management Strategies At Farm Progress 2016
October 2, 2016
The annual Farm Progress Show — this year staged in Boone, IA — is always a great place to catch 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
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
Latest News
Eric SfiligojThe 2016 CropLife 100 Preview
October 28, 2016
Fall is in full swing and we at CropLife magazine are busy putting the finishing touches on our end-of-the-year stories and Read More
ManagementHighlights from the PrecisionAg Vision Conference
October 28, 2016
Editors Eric Sfiligoj and Matthew Grassi discuss what was talked about at the 1st annual PrecisionAg Vision Conference and provide Read More
Crop InputsOhio State Researchers Announce Progress on ‘Phos…
October 27, 2016
Researchers at The Ohio State University are investigating new techniques to detect organic phosphorus compounds in water samples from the Read More
Stewardship4R Nutrient Stewardship Certification Program To Launch…
October 26, 2016
The 4R Nutrient Stewardship Certification Program will expand the voluntary retailer program to the full state of Ohio, allowing nutrient Read More
AGCO RG700 at the 2015 National Farm Machinery Show
EquipmentAGCO Parts Rolls Out No-Interest, No-Payments Offer Via…
October 26, 2016
AGCO Corp. is now offering an innovative financing solution on qualifying Parts and Service transactions. Now through December 31, 2016, Read More
Soybean field
Crop InputsIncotec Invests In North America
October 25, 2016
Leading seed enhancement company Incotec, part of Croda, has announced an investment in their North America business. The total investment of Read More
Patriot 25th anniversary
SprayersCase IH Celebrates 25 Years Of Patriot Sprayers At Bens…
October 24, 2016
Case IH executives, employees and special guests celebrated 25 years of production of Case IH Patriot sprayers in a special Read More
4r Nutrient stewardship
StewardshipNominations For The 4R Advocate Program Due October 31
October 24, 2016
Nominations for the 4R Advocate program are due to The Fertilizer Institute by October 31, 2016. The program recognizes agricultural Read More
Corn close up
Eric SfiligojProtecting Agriculture’s Ability To Feed The World
October 24, 2016
The rate of change coming to agriculture is growing, and will continue to do so for the foreseeable future. This Read More
Student Young Worker CHS
CropLife 100CHS Supports #FirstJob Compact
October 24, 2016
CHS joins the White House and many of the country’s largest employers in signing a new initiative centered on helping Read More
Kennebec Grain terminal
CropLife 100Wheat Growers Kennebec Facility Loads First Rail Cars
October 21, 2016
In a season of firsts for Wheat Growers’ Kennebec Grain Terminal, the first 115-car unit train was loaded with soybeans Read More
ManagementThe Latest Dow-DuPont Rumor, Product of the Year Voting…
October 20, 2016
CropLife Editor Eric Sfiligoj shares a new rumor about the Dow-DuPont merger and updates on two CropLife-driven programs, the CropLife Read More
Soybean Closeup
FungicidesFMC Begins Registration Process For New Fungicide Activ…
October 19, 2016
FMC Agricultural Solutions has begun the joint U.S. EPA and Canadian Pest Management Regulatory Agency registration process for bixafen, a new Read More
Soil Young Corn
Industry NewsAgribusiness Search Firm Appoints New Managing Partner
October 18, 2016
Morris Bixby Group, a leading agribusiness search firm providing the highest quality professional recruiting and career advancement services since 2000, Read More
Wheat Field North Dakota
FertilizerUnited Suppliers Acquires Kansas Fertilizer Business
October 17, 2016
United Suppliers, Inc. has purchased the assets of Evans Enterprises, LLC, an ammonium chloride fertilizer business based in Olathe, KS. Read More
Corn Field
Industry NewsFMC Launches New Operations In Argentina, Exits Joint V…
October 17, 2016
FMC Corp. has exited its joint venture with Ruralco Soluciones S.A. FMC has launched new commercial operations, FMC Quimica S.A., Read More
Dow AgroSciences
InsecticidesRenewed Registration Issued For Products Containing Sul…
October 17, 2016
On October 14, 2016, the U.S. EPA re-established the registration of products containing sulfoxaflor (Isoclast Active), including Transform WG, Closer Read More
Eric SfiligojThe Whys Of Agriculture
October 17, 2016
During 2016, there have been myriad challenges facing the whole agricultural industry. Such wide ranging issues as water protection, sustainable Read More