Happy New Fear
Usually, I love this time of the year. The holidays always have a festive feel that brings back memories of childhood. Also, our magazine presents its annual CropLife 100 report, detailing the fortunes of the nation’s largest retailers. This year is particularly special because the CropLife 100 is turning 25, and we are celebrating with all the silver trimmings — not to mention a host of market insights gleaned from our survey. As you will see in stories and charts sprinkled throughout this issue, ag retailers have plenty to be thankful for this holiday season.
Yes, by all accounts, it should be a joyous time of the year for everyone that works in and makes a living from our industry.
And I’ve never been more scared for us.
By now, everyone has read, heard, or chanced upon news of the nation’s rapidly falling economic fortunes. Considering nightly newscasts regularly start out by reviewing the day on Wall Street and the country’s quickly expanding bailout deficit, it’s hard not to catch this negative information. Besides the country-at-large, state governments are running up huge budget shortfalls as their tax revenues dry up.
Then, there’s the effect on workers. As I write this column, more than 1.5 million workers have been laid off. And with the news that General Motors and Ford continue to rack up losses, more layoffs are sure to follow. In fact, by the time the calendar turns, analysts expect that the unemployment rate will be nearing a 20-year high of 8%.
Fortunately, the agriculture marketplace has been relatively immune to these negative goings-on. According to figures from the 2008 CropLife 100 survey, the nation’s top retailers had revenue of more than $19 billion this year, up an incredible 30% from 2007. Ag retailers also remain positive about the outlook for 2009, with 49% ranking their level of optimism for the year at a seven out of 10 or better. Only 15% think their business fortunes will be less positive during the upcoming year.
In a similar fashion, the industry’s grower-customers had a great year in 2008. According to USDA, net farm income for the year rose 10% to a record $95.7 billion.
Furthermore, the value of crop production increased 25% to $188.8 billion as major crop prices remained strong.
So you must be asking, with all this positive news from agriculture, why am I afraid for the future? Because right now, our industry seems to be an island in the midst of a terrible, widespread storm. How long will it be before cash-starved entities such as state and local governments start looking to us — and our $100 billion revenue stream in 2008 — to help them out of their financial woes in 2009?
Naturally, ag retailers need to be wary of any attempts by the legislature to alter their tax status to get this money for themselves. This could be potentially devastating for retailers, especially ones that have competitors “just over the border” in states that may not be in such dire financial straits.
Hopefully, it won’t come to this. But being an island of plenty in a sea of poverty is always dangerous . . .