Agriculture In 2017: Attack Of The Clone?

Agriculture In 2017: Attack Of The Clone?

Happy New Year, everyone! At least, I hope so.

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When 2017 was fast approaching, many people asked me how I thought the year would play out for ag retailers and their grower-customers. During the tail-end of 2016, one of the big movies making the rounds was Rogue One, the latest in a string of Star Wars films. Using this as an analogy, many ag folks are probably hoping 2017 will end up being like the title of Star Wars IV for the marketplace: A New Hope. I, however, fear it could be closer to the title of the second Star Wars film: Attack of the Clones.

To review, a clone is basically an exact copy of something that had previously existed. Given these facts, it seems as if 2017 could end up a near identical year to 2016 in many ways. For one thing, almost all the mega-mergers being proposed in 2016 will still be ongoing in 2017, thanks to slower-than-expected regulatory approvals, company dynamics, and final structure discussions. We’ve already seen ChemChina extend its deal with Syngenta until March. Dow and DuPont expect their merger to take the better part of 2017 to complete. Bayer and Monsanto could easily take all year as well.

Which Star Wars movie will 2017 be like for agriculture?

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More troubling for the marketplace, the projected crop mix doesn’t seem like it will radically shift sector fortunes in 2017, either. According to USDA estimates, growers in 2017 will plant 90 million acres of corn (down 5 million acres from 2016) vs. 85 million acres of soybeans (up 1 million acres). This probably means the four major areas where ag retailers make their money – fertilizer, crop protection products, seed, and custom application – will follow similar paths as they did in 2016. This means more losses for fertilizer, more slight gains for seed, and virtually flat revenues for everything else.

Or 2017 could go in a completely different direction if some unknown event such as weather or higher-than-expected export demand comes to the forefront. In Star Wars movie speak, this would make it a Rogue One, I guess. As always, time will tell . . .

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