The 2016 CropLife 100 Report: Reviewing The Many Bulls And Bears Impacting This Year’s Marketplace

For virtually all of 2016, the nation was wholly focused on the big Presidential election. Some folks aligned themselves with the Democratic Party and its symbol the donkey. Many others (at least based upon the election results themselves) found more kinship with the Republican Party, which uses an elephant as its animal symbol.

Within the agricultural marketplace itself, the nation’s ag retailers were more likely interested in other animal symbols when reflecting on their revenue fortunes for 2016. In this spirit, let’s take some time to look at how the overall ag retail marketplace performed using those two animal symbols commonly used in the financial sector, bulls and bears.

When looking at the entirety of the ag retail marketplace in 2016, things were definitely bearish. During the 2015 CropLife 100 survey, the nation’s top ag retailers enjoyed their best year ever with revenues topping $30.4 billion. This represented a healthy 1.7% increase over the $29.9 billion in sales the nation’s top ag retailers recorded on their books for the 2014 season. Given that this gain was accomplished despite falling commodity prices and reduced grower-customer incomes, many respondents in the 2015 survey wondered if the good financial news would continue once the numbers were totaled for the 2016 season.

Plus: 2016 CropLife 100 Rankings | CropLife 100 Map

And it didn’t. The combination of low commodity prices and grower-customer incomes apparently made their presences felt. According to the 2016 CropLife 100 ag retailer survey, overall crop inputs/services income for the nation’s top ag retailers came in at $29.6 billion for the year. This marked a steep 2.6% drop from the 2015 total and basically resets the total market value for ag retailers back to the level it was during the 2013 season.

The Fertilizer Fall Guy

When an overall marketplace crashes as the CropLife 100 did during 2016, the downward trend usually begins at the top and works its way down. This was certainly the case for this year’s financial report.

CropLife 100 chartSince the beginning of the 2010s, the fertilizer category has annually led the way in revenues among ag retailers. In fact, for at least one year in 2012, sales for this sector alone topped the $15 billion mark, representing more than 55% market share compared with all other crop inputs/services.

But this hasn’t been the case the past few years. Starting in 2013, the fertilizer category began seeing its revenue figure and market share erode bit by bit. By the end of 2015, sales for this sector had fallen back to $14.6 billion with an overall market share of 48%. At this point, everyone was wondering if the category could possibly recover in 2016?

In a word, no. Bears continued to pound the fertilizer category for the year. According to 2016 CropLife 100 survey, revenues in this sector dropped just over $1 billion to end at slightly less than $13.5 billion. This represented a 7.4% decline from the 2015 total. Furthermore, market share for the fertilizer category now stands at 45% — virtually the same percentage it held almost one decade ago in 2006.

According to respondents, the fertilizer category continues to be plagued by an almost perfect storm of low commodity prices coupled with high macronutrient prices. Throw in some incredibly uneven weather events in various parts of the country the past two seasons and demand for fertilizer has remained “soft,” say most CropLife 100 ag retailers.

In sharp contrast to the fertilizer category, the seed sector was running with the bulls during 2016. This was something of a change in fortunes for the category. For much of the early 2000s, the seed category tended to be the fastest growing sector among all crop inputs/services for CropLife 100 ag retailers. Although it was working from a smaller base, the seed category typically grew between 4% and 10% annually through the early 2000s.

Then, starting in the 2010s, the seed category began a new pattern — up a few percentage points one year, down the next. This seemingly came to a head during the 2015 growing season, when plenty of seeds ended up being drowned in wet fields or unplanted because of the adverse weather. For that year, CropLife 100 ag retailers saw their seed category sales dip 4% to $4.3 billion.

But things were much better for the sector this year. The seed category enjoyed one of its strongest years ever in 2016, surging forward 6.9% to top $4.6 billion. With this uptick in overall revenues, the sector was able to improve upon its market share by 2%, now sitting at 16%.

Besides benefitting from improved weather conditions across much of the country in 2016, the seed category seems to be being driven by the host of new varieties and seed types now entering the marketplace. Other CropLife 100 survey respondents also noted that renewed interest by a handful of their grower-customers in traditional, higher value, non-biotech seeds was also a factor in the seed category’s improving financial performance.

Crop Protection a Push

For the third major component of the crop inputs part of ag retailers’ business, crop protection products, 2016 was a little bit bearish and bullish. On the bearish side, crop protection product category sales did decline during the 2016, but only ever so slightly — 0.4%, to be exact. When rounded for the purposes of this report, the sector came in for both 2015 and 2016 at just a hair over $10 billion. On the bullish side, however, since the basically flat performance outpaced other categories within the CropLife 100 rankings, the crop protection products sector did actually improve its market share position vs. other crop inputs/services for the year, advancing 1% to 34%.

Croplife 100 chart adjuvantsAccording to most respondents, the continuing (and expanding) battle against herbicide-resistant weeds is largely driving crop protection products sales these days. With more than 70% of CropLife 100 ag retailers describing these biotypes as “a major problem in many of the fields we service,” the entire industry can probably expect overall crop protection products sales to remain in the $10 billion range for several years to come.

In tandem with the seed category, the other sector of the CropLife 100 that really enjoyed a bullish time during 2016 was the custom application category (which includes precision agricultural service/product sales as well). According to the survey, respondents saw their custom application revenues grow 2.4%, from just a hair under $1.5 billion in 2015 to just a hair over $1.5 billion in 2016. Market share for this category remained constant at 5%. As was the case with crop protection products, respondents credited the increased number of applications needed by many grower-customers to combat a new generation of herbicide-resistant weeds with keeping demand high for this sector.

When separated out from one another, custom application and precision ag showed similar growth curves. According to the 2016 CropLife 100 survey, respondents saw their custom application sales increase 2.5%, from just below $1.2 billion in 2015 to just over this amount in 2016. As for precision ag, sales in this sector improved 1.8%, from $305 million in 2015 to $311 million in 2016. Here, sales may improve even quicker in 2017 now that the Federal Aviation Administration will start to allow ag retailers to commercialize unmanned aerial vehicle (UAV) use in their operations. According to the survey, more than half of all respondents (51%) said their companies are planning to begin working in this area of the precision ag business once the 2017 begins.

Consolidation Continues

Besides looking at just the crop inputs/services sides of the business, the annual CropLife 100 report also tracks how many consolidations and mergers took place among its members from one year to the next. For many years during the early part of the decade — as commodity prices for corn and soybeans were at near record highs — the incentive to sell a long-established ag retail business wasn’t as evident.

During the past two years, however, commodity prices have fallen back down to Earth. As a result, several ag retailers that might have been considering exiting the marketplace before the boom times of 2010-13 started doing so again once the 2014 season came to a close. This is why entities such as Golden Furrow Fertilizer, Eldon, IA, and MRM Ag Service, East Prairie, MO, disappeared from the landscape during 2015. The trend continued in 2016, when Cargill AgHorizons was acquired by Crop Production Services.

But by far the more common trend in 2016 was for ag retail consolidation to take place at the cooperative level. Earlier in the year, CropLife 100 member Farmers Elevator Association formally merged with two other retailers to form Cooperative Farmers Elevator. Also, Watonwan Farm Service combined with Central Valley Cooperative to form Central Farm Service. Farm­ers Cooperative and West Central Cooperative, both based in Iowa, combined their resources to create Landus Cooperative. And other current members of the CropLife 100 are considering their own company get-togethers, including Heritage Cooperative, which would take place during 2017.

Speaking of the 2017 season, which animal symbol might rule the day doesn’t seem to be much a debate with CropLife 100 ag retailers at this point. When asked in the survey what their outlook was for 2017, absolutely no one described their mood towards the year as “very optimistic.” Twenty-two percent did view their financial prospects for 2017 as “cautiously optimistic.” There are not too many bulls on the horizon, says this group.

Instead, the bears are expected to show up. According to the 2016 CropLife 100 survey, 55% of respondents are “somewhat pessimistic” for their profits staying in positive territory during 2017. Another 23% described their outlook for 2017 as “very pessimistic.”

Leave a Reply

CropLife 100 Stories

CHS-FFA-Minnesota
CropLife 100CHS and FFA: A Homerun Partnership
August 17, 2017
CHS hosted the Minnesota FFA for its annual FFA night at CHS Field. FFA students, educators and CHS leadership enjoyed Read More
Greg Musson, Gar Tootelian
CropLife 100Gar Tootelian Foundation Donates Half Million Dollars to Local School
August 16, 2017
Students at Immanuel Elementary are looking forward to the first day of school for two reasons this year. One, they Read More
Greg Musson, Gar Tootelian
CropLife 100Cause of Gar Tootelian Fire Under Investigation
August 7, 2017
Over one hundred firefighters and equipment responded to a four-alarm shop fire at the Gar Tootelian, Inc. (GAR) facility in Read More
CHS Primeland
CropLife 100CropLife 100: The Half-Way Report
July 10, 2017
For more than 30 years now, CropLife® magazine has regularly tracked the state of the ag retail marketplace through its Read More
Trending Articles
Iowa waterways
Stewardship2,600 Iowa Farmers Commit $8.7 Million to Water Quality Practices
August 9, 2017
Iowa Secretary of Agriculture Bill Northey announced Tuesday that a record number of Iowa farmers signed up to install nutrient Read More
Greg Musson, Gar Tootelian
CropLife 100Cause of Gar Tootelian Fire Under Investigation
August 7, 2017
Over one hundred firefighters and equipment responded to a four-alarm shop fire at the Gar Tootelian, Inc. (GAR) facility in Read More
Rob Versprille
ManagementCeres Solutions, North Central Co-op Merger to Bring New Opportunities for Indiana, Michigan Farmers
August 1, 2017
More than 40,000 customers and almost 9,000 Indiana and Michigan farmers will begin doing business with the new Ceres Solutions Read More
CPS-Norwood-and-Dupont-reps
Eric SfiligojA Message to Ag Retailers: Do Tell Your Good Stories
July 26, 2017
As the daughter of a peanut farmer, Krysta Harden, Chief Sustainability Officer for DuPont Crop Protection, understands the importance ag Read More
Tim Hassinger Dow AgroSciences President and CEO
Crop InputsDow’s Tim Hassinger Named President, CEO of Lindsay Corp.
July 24, 2017
Lindsay Corp. has  announced the appointment of Timothy Hassinger as president and CEO and a member of its board of Read More
Stewardship‘Gonna Fly Now’ with Environmental Respect
July 20, 2017
One of the most memorable moments in movie history occurred in the Academy Award-winning 1976 film “Rocky.” Haven gotten his Read More
Latest News
RoGator RG1300B AGCO
EquipmentAGCO Opens Nominations for 12th Annual Operator of the …
August 18, 2017
AGCO Corp. has announced the opening of nominations for AGCO Application Equipment’s 12th Annual Operator of the Year. The award Read More
ManagementTravels, Mergers, and CropLife 100 Updates
August 18, 2017
Editors Paul Schrimpf and Eric Sfiligoj discuss recent trips they’ve taken, the latest news on market consolidation, and the 2017 Read More
Corn Seed
Seed/BiotechSeed Innovations Benefit All of the Seed Industry
August 17, 2017
Innovations from throughout the seed industry help address many of the economic, environmental and health issues we face as a Read More
SpreadersGVM to Introduce New Prowler at MAGIE
August 17, 2017
The newest Prowler in GVM’s line-up will be introduced next week at the Midwest Ag Industries Expo (MAGIE), August 23 Read More
AcreEdge bag
Seed/BiotechLandus Cooperative’s AcreEdge Seed Brand Gears Up for 2…
August 17, 2017
Growers in more than 26 Iowa and Minnesota counties are seeing field signs with a new brand name at end Read More
Engenia soybeans
ManagementCorn and Soybean Yield Forecasts Larger than Expected
August 17, 2017
The USDA’s August Crop Production report contained larger-than-expected forecasts for the 2017 U.S. corn and soybean crops. At 169.5 bushels Read More
ManagementU.S. Ag Secretary Introduces SCORE
August 17, 2017
U.S. Agriculture Secretary Sonny Perdue signed a new agreement to support new and beginning farmers. On August 5, Perdue joined Read More
CHS-FFA-Minnesota
CropLife 100CHS and FFA: A Homerun Partnership
August 17, 2017
CHS hosted the Minnesota FFA for its annual FFA night at CHS Field. FFA students, educators and CHS leadership enjoyed Read More
Greg Musson, Gar Tootelian
CropLife 100Gar Tootelian Foundation Donates Half Million Dollars t…
August 16, 2017
Students at Immanuel Elementary are looking forward to the first day of school for two reasons this year. One, they Read More
Water Drainage
StewardshipNew System Could Remove Two Water Pollutants from Ag Fi…
August 14, 2017
Algae blooms in the Gulf of Mexico use up the majority of the oxygen in the water, leading to massive Read More
Eric SfiligojThe Top 10 Crop Protection Companies, Post-Mega Mergers
August 14, 2017
Everyone loves a good Top 10 list. In fact, some prominent celebrities such as David Letterman spent much of their Read More
ManagementThe DuPont-Granular Deal, Dicamba Update, and Upcoming …
August 11, 2017
Matthew Grassi joins Paul Schrimpf for the second week in a row to talk about DuPont’s acquisition of Granular, as Read More
Soybeans weeds
HerbicidesOngoing Evaluation Key to Controlling Weeds, Improving …
August 10, 2017
As the sun bears down on record U.S. soybean acres this August, farmers keep their eyes on their fields to Read More
Young Corn Plants
Seed/BiotechMycogen Seeds Offers Novel Product to Battle Pythium, O…
August 10, 2017
After a season plagued by seedling diseases caused by cool, wet soils at planting, farmers have a new option to Read More
Corn Field
FertilizerProtect Applied Manure Straight From the Manure Pit to …
August 10, 2017
Farmers who use liquid manure to fertilize corn crops can now mix Instinct nitrogen stabilizer in their pit for easy Read More
Iowa waterways
Stewardship2,600 Iowa Farmers Commit $8.7 Million to Water Quality…
August 9, 2017
Iowa Secretary of Agriculture Bill Northey announced Tuesday that a record number of Iowa farmers signed up to install nutrient Read More
Natives-First-Purple_Prairie_Clover
Seed/BiotechLa Crosse Seed Continues Focus on Soil and Water Conser…
August 9, 2017
La Crosse Seed is doing its part to lead communication to ag retailers across the country on the importance of Read More
HerbicidesAg Secretary Perdue Comments on Dicamba Issue
August 9, 2017
Agriculture Secretary Sonny Perdue indicated to reporters this week that he would like to see the industry work out a Read More