Ag Industry Braces For Uncertainty In 2014
Happy 2014, everyone! A new year has arrived, bringing the promise of good times and fortunes for the business of agriculture.
At least I hope this will be the case.
As I prepare this column for publication, I’ve just returned from the annual Agricultural Retailers Association (ARA) meeting. Not only is this a great venue to see some old industry friends and catch up on the latest trends impacting the ag retail community, it is a great place to gauge the overall feeling ag retailers and their grower-customers have regarding the upcoming year (in this case, 2014). For the past several years, I’ve come away from the ARA event feeling pretty confident that the year ahead would be another in a string of very positive ones for ag.
But I’m not as certain about the prospects for 2014. For the first time since the 2008 meeting, I came away from ARA 2013 feeling a bit worried. In fact, some retailers I talked with are absolutely dreading what 2014 might bring.
“There’s a new reality dawning for the corn market, which has been steadily driving overall growth these past five years,” said one Midwestern ag retailer. “Many growers are starting to recognize the new normal isn’t $7 per bushel corn, but $4 per bushel corn, and they are adjusting their crop inputs accordingly.”
In many cases, said ag retailers, this has meant dialing back fertilizer application work during the second half of 2013. Several ag retailers I talked with at ARA said their fall fertilizer sales were slow to “non-existent” during the early fall months of September and October. Only late in the year — starting in mid-November just before Thanksgiving — did ag retailers report their fertilizer application work matching historic levels.
Fertilizer suppliers in particular seem to be gearing up for a rough 2014. In fact, in early December, PotashCorp announced it was reducing its workforce in Canada, Trinidad and the U.S. by approximately 1,000 employees because of slowing demand. “This sluggish environment has been most visible in our potash and phosphate businesses, and has contributed to challenging market conditions,” said PotashCorp President/CEO Bill Doyle. “As a consequence, we must make some difficult decisions to ensure the company continues to be well positioned for the future.”
And there are, of course, many other concerns on ag’s plate going into 2014. Besides dropping commodity prices and declining fertilizer demand, there are reductions in the ethanol blend requirements, the continuing spread of weed/pest resistance and the lack of a new Farm Bill, to name a few.
An old Chinese curse wishes that the listener “live in interesting times.” Given all the uncertainty that currently exists in agriculture as the industry starts the 2014 season, I’d say we are definitely there already.