MF Global Collapse Could Hurt Ag Retail

I’ve just gotten back from the annual Agricultural Retailers Association (ARA) meeting and it was a wonderful show. The overall mood among attendees and exhibitors was very positive, with the general feeling being that 2012 should continue to be another strong year for ag retail from the The Great Recession years of 2008 and 2009.

There was, however, one note of caution. For the past three years, our magazine has hosted a roundtable discussion at ARA as part of our State of the Industry coverage and special report. This year, nine ag retailers sat in on the meeting and most seemed very satisfied with how 2011 has played out financially, with the anticipation that 2012 would mirror this kind of performance.

However, one panel member was a little more fearful of the future, pointing to the failure of commodity trading company MF Global as the culprit. While not a household name among ag retailers, MF Global nonetheless was at one time the third largest commodities trading company on the grain side of the ag business. When the company filed for bankruptcy last month, federal investigators found that up to $1.2 billion was missing from customer accounts. Unfortunately, several of these customers are ag retailers with large grain businesses.

“In most years, grain is the part of our company that drives growth,” said this panelist. “Fertilizer outpaced this growth for 2011, but grain was still a big part of our profits for the year.”

And this is true for many companies ranked among CropLife 100 retailers. According to the 2011 survey, the nation’s largest retailers had over $13 billion in grain sales for the year – approximately half the total for all other inputs and services combined.

Will MF Global’s collapse lead to a marketplace panic like Lehman Brothers’ failure did to financial markets back in 2008? Right now, it’s too early to tell. However, hearing about any kind of unexpected threat to the financial security of the ag retail market is always a cause for concern, and one that should be watched going forward.

Leave a Reply

Eric Sfiligoj Stories
Eric SfiligojWar And Green Peace
October 11, 2014
A one-time member of Green Peace recently explained why he left the organization after 15 years. Read More
Eric SfiligojThe Resurgence Of Crop Protection
August 4, 2014
Plenty of new offerings over the next few years should see a rebirth for the crop protection products category in terms of market share. Read More
Eric SfiligojA Whole New Precision Ag World
June 2, 2014
Excitement and technology developments could make 2014 a year to remember for precision ag. Read More
Eric SfiligojOngoing State Biotech Crop Labeling Laws Could Receive Federal Stop Sign
May 19, 2014
Proposed legislation in Congress might prevent states from passing biotech crop labeling laws. Read More
Top 100 Articles
CropLife 100Pinnacle Expands Sanders Brand In The South
February 27, 2015
Pinnacle has acquired Hopkins Seed and Chemical in Qulin, MO, which expands the company's Sanders brand to nine Southern states. Read More
CropLife 100Pinnacle Launches New Providence Agriculture Location In Indiana
February 27, 2015
Pinnacle Agriculture Holdings — ranked No. 6 on the CropLife 100 — has established a new retail location in New Castle, IN, which will operate as part of Pinnacle's Providence Agriculture brand. Read More
CropLife 100Cooperative CHS Returns $518 Million To Owners
February 23, 2015
The 2015 cash return to owners is based on CHS net income of $1.1 billion, the company's second highest on record. Read More
corn field
CropLife 100The Andersons’ Humic DG Now Available In Canada
February 13, 2015
The Andersons, Inc. Turf & Specialty Group has announced its Humic DG product is now available to customers in the Canadian turf, agriculture and horticulture markets. Read More
Farmer on tablet
CropLife 100Southern States Co-op: An Inside Look At Our Aerial Imagery Program
February 8, 2015
Now is as good a time as any to explore the basics of what a retail aerial imagery program looks like today. Read More
CropLife 100Wilbur-Ellis Inks Satellite Imagery Agreement
February 3, 2015
Wilbur-Ellis Company has reached an agreement with Planet Labs to bring satellite imagery to the AgVerdict software platform. Read More
Latest News
CropLife 100Pinnacle Expands Sanders Brand In The South
February 27, 2015
Pinnacle has acquired Hopkins Seed and Chemical in Qulin, MO, which expands the company's Sanders brand to nine Southern states. Read More
CropLife 100Pinnacle Launches New Providence Agriculture Location I…
February 27, 2015
Pinnacle Agriculture Holdings — ranked No. 6 on the CropLife 100 — has established a new retail location in New Castle, IN, which will operate as part of Pinnacle's Providence Agriculture brand. Read More
Management2,4-D Celebrates 70 Years; GROWMARK Uses Super Bowl Ad …
February 27, 2015
Jim Gray, executive director of the 2,4-D Research Task Force, lays out planned activities to mark the chemistry’s 70th anniversary. Read More
HerbicidesUniversity Of Arkansas Flag The Technology Program Adds…
February 27, 2015
Started in 2010, the Flag the Technology program provides a visual reference for applicators to distinguish between fields planted with different herbicide-tolerant trait technologies. Read More
Luckey Farmers, Inc.’s Berkey Farm Center
Industry NewsLuckey Farmers’ Berkey Branch Certified In 4R Nut…
February 26, 2015
The 4R Nutrient Stewardship Certification Program has announced Luckey Farmers Inc.’s Berkey Farm Center in northwest Ohio has been added to its growing list of nutrient service providers to achieve certified status. Read More
Crop InputsWinField Unveiling NutriVision Technology, Ascend Dry F…
February 24, 2015
New for 2015 are NutriVision Technology, a unique tool for monitoring in-season plant nutrient availability, and Ascend WSG plant growth regulator, a new dry formulation of Ascend plant growth regulator. Read More
FertilizerNew Formulation Of NutriSphere-N Protects High Volume U…
February 24, 2015
Verdesian Life Sciences is launching NutriSphere-N HVTM, a new polymer formulation of the proven NutriSphere-N Nitrogen Fertilizer Manager that protects high-volume applications of UAN. Read More
EquipmentIowa Ag Secretary Northey Names Hagie Water Quality Lea…
February 24, 2015
Iowa Secretary of Agriculture Bill Northey has named Hagie Mfg. as a recipient of the Secretary’s Water Quality Initiative (WQI) Leader Award. Read More
FungicidesEvito Fungicide Gives Canadian Wheat Growers New Diseas…
February 24, 2015
EVITO fungicide from Arysta LifeScience North America gives Canadian wheat and barley growers a new option for disease control. Read More
Eric SfiligojThe Commodity Classic Turns 20
February 23, 2015
Two decades in, this annual gathering of all things agriculture has become a must-see event. Read More
CropLife 100Cooperative CHS Returns $518 Million To Owners
February 23, 2015
The 2015 cash return to owners is based on CHS net income of $1.1 billion, the company's second highest on record. Read More
ManagementCropLife Retail Week: On The Road Edition
February 20, 2015
Editors Paul Schrimpf and Eric Sfiligoj discuss their recent trips to the National Farm Machinery Show in Louisville and the Read More
Crop InputsLand O’Lakes Acquires FLM+ Assets
February 19, 2015
FLM+ will become a wholly owned subsidiary of Land O'Lakes, Inc., and the company will retain its employee base after closing of the deal, which is scheduled for the second quarter of the year. Read More
Seed/BiotechUnited Suppliers, Stine Seed Form Marketing Alliance
February 19, 2015
The new alliance will greatly expand sales opportunities for Stine Seed with the United Supplier Seed Link Owners. Read More
Crop InputsVilsack To Deliver Commodity Classic Keynote Address
February 19, 2015
The secretary will deliver a keynote address to several thousand farmers and ag allies during the event's General Session, to be held Friday, February 27, in Phoenix, AZ. Read More
Crop InputsSoybean Storage Tips
February 19, 2015
On-farm storage of soybeans requires some special considerations compared to corn. Read More
Monsanto Sign
Crop InputsBioAg Alliance Delivers Promising Field Trial Results
February 19, 2015
In its first full year of field trials, the BioAg Alliance reported that the top 10 microbial strains tested in corn and soybeans showed very promising results. Read More
National Farm Machinery Show overview
EquipmentNational Farm Machinery Show Attendance Up By 16K
February 18, 2015
The 2015 event saw the second highest attendance total of all time as 310,589 attendees that included exhibitors and agribusiness professionals traveled to the Kentucky Exposition Center to participate in the nation’s largest indoor ag trade show. Read More