Will 2013 Be An Unlucky Year For Ag Retail?

Another new year is upon us. Now that we know the world didn’t end in December (as the Mayans predicted), we can all give thanks and look forward to another wonderful year for agriculture in 2013. In truth, many of the factors that have driven the marketplace to new heights during the 2000s remain in place — high commodity prices, an increasing global population looking for food, fuel, feed and fiber and a grower-customer set seeking to improve their operations by investing money in equipment, services or both.

On the surface, it appears that the ag industry is poised for another banner year in 2013, joining an unbroken string of ones that have occurred since the 2010s began. (And you can read more about these predictions from various industry experts in this issue.) Still, I would be lying to you if I said I was completely comfortable with such a rosy outlook for 2013. And there are two very important reasons why I think 2013 could be a bit unlucky for the marketplace.

The first is the weather. Everyone knows that better than half the Continental U.S. was gripped by a very severe drought during 2012, which ultimately shaved 10 million acres from the anticipated corn harvest when all was said and done. For the most part, grower-customers and ag retailers came through this dry spell without feeling much financial heat (largely due to crop insurance).

But the fear now among industry watchers is that 2013 will bring more of the same dry weather across much of the U.S. Early forecast models by the federal government seem to predict that 2013 has a better than 50% chance of being another year of “insufficient rainfall,” particularly in the Mid-South and Upper Midwest.

If this happens, there are many ag retailers who believe their grower-customers will not be able to survive, even with the cushion of crop insurance. “My guys can take an one-year hit losing their crops, but not two,” said one retailer at a recent industry event.

My second concern is consolidation among ag retailers. In late 2012, newly-formed Pinnacle Ag, with significant financial backing, purchased both CropLife 100 retailers Jimmy Sanders and G&H Seed in its bid to become “a top five retailer by 2017.” Meanwhile, other big players in the market such as Crop Production Services, J.R. Simplot and Wilbur-Ellis are making their own acquisitions as well. And more are certain to follow as these big players look to strengthen their market positions/penetration.

Now I’ve seen this kind of “consolidation wave” sweep over other industries I’ve covered before. As bigger companies swallow up littler ones, there is plenty of industry wealth changing hands, but overall market growth tends to stall as everything shakes out.

Minus these two factors, I would agree that everything looks just fine for ag in 2013, with plenty of positive growth and money to go around. At this point, only time will tell how lucky, or unlucky, 2013 ends up being.

Leave a Reply

2 comments on “Will 2013 Be An Unlucky Year For Ag Retail?

  1. I believe the biggest fear in 13 is the weather. Will the drought expand or shrink is the million dollar question that everyone has a opinion and no one has a answer.

  2. If you look at farm income in 2012 it spiked upward because yields droppped by 15% and prices spiked 50%. Many farmers made more money on their crop before insurance than they did in 2011. With revenue protection insurance the windfall was even greater. Cheaper crop insurance will only give farmers more reasons to purchase protection. Who's going to go out of business with record income? Retailers are the ones who will feel the pain here.

Eric Sfiligoj Stories

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
Eric SfiligojAgriculture: A Need For The Long View
May 1, 2013
Members of the agricultural community might be tempted to take short-term fixes to problems, but only a long-term approach will ultimately prevail. Read More

Trending Articles

Green Valley Ag facility
Retail FacilitiesGreen Valley Ag Adopts A.J. Sackett’s Precision Fertilizer Blending® Technology At New Facility
July 8, 2014
Sackett's Precision Fertilizer Blending® Technology is making huge strides around the world. Green Valley Ag adopts the technology at its new facility to support its advancing agronomic needs. Read More
Retail FacilitiesWaconia Manufacturing Builds Facility Designed For Speed, Efficiency
July 7, 2014
To make its new hub facility more efficient, Cooperative Elevator enlisted the aid of Waconia Manufacturing. Read More
EquipmentSummer Show Preview 2014: Superior Sprayers Take The Field
July 3, 2014
In this final installment of our coverage of the major categories of Big IRON that retailers can expect to test-drive at this summer’s events, here is a look at 19 sprayers. Read More
Scouting a soybean patch at Green Valley Ag.
EmployeesCropLife Compensation Survey: Battling Talent Drain
July 2, 2014
Retailers too often lose employees to companies outside of agriculture, while recruiting efforts are most often limited to competitors and other ag-focused organizations. Read More
HerbicidesDow AgroSciences Introduces SureStart II Herbicide
June 16, 2014
The enhanced formulation has improved viscosity and increased stability under heat and controls more than 60 high-anxiety grasses and broadleaf weeds found in corn fields. Read More
HerbicidesBASF Investing $270 Million To Expand U.S. Herbicide Production
June 11, 2014
BASF has invested more than $270 million to expand herbicide production capacities in the U.S., including more than 20 new products to be launched over next two years. Read More

Latest News

StewardshipMonsanto Joins Panel Of Innovators To Advance Research …
July 30, 2014
Monsanto Co. and The Climate Corp., its division, recently joined a roundtable of experts at the White House to share ideas and research approaches to help the world’s farmers manage and adapt to the impact of climate change on the global food supply. Read More
Crop InputsSoybean Checkoff Produces Big ROI
July 30, 2014
Under the soy checkoff program, all U.S. soybean farmers contribute a small percentage of their gross soybean sales for research and marketing projects that maximize their profit potential. Read More
CropLife 100Learfield Sports, CHS Agree To Football-Centric, Colleg…
July 30, 2014
CHS Inc. will embark on a highly integrated collegiate sports sponsorship platform with 24 Division I universities in 19 states designed to reach the farmer-owned cooperative's rural owners and customers. Read More
LegislationUSDA Implements Key Farm Bill Crop Insurance Provision
July 30, 2014
The new Supplemental Coverage Option, available through the federal crop insurance program and set to begin with the 2015 crop year, is designed to help protect producers from yield and market volatility. Read More
CropLife 100Wilbur-Ellis Forms New Organizational Structure For Its…
July 30, 2014
The new structure will provide more responsive internal support and will allow regional vice presidents and area managers to spend more time with customers, on talent development and on operational excellence across branches. Read More
Palmer pigweed in cotton
HerbicidesNew Training Modules On Herbicide Resistance Now Availa…
July 30, 2014
The Weed Science Society of America has announced the availability of three new education modules on herbicide resistance in weeds. Read More
HerbicidesWillowood To Market Glufosinate
July 28, 2014
Willowood USA recently announced that Federal EPA has approved its technical registration for glufosinate. Read More
InsecticidesHow To Scout For Corn Earworms In Corn
July 28, 2014
In her weekly report, University of Missouri Agronomy Specialist Jill Scheidt discusses what to look for when scouting for corn earworm. Read More
Crop InputsDuPont Pioneer, Weyerhaeuser Enter Technology License A…
July 28, 2014
The agreement brings together agricultural and forestry know-how to sustainably improve crop productivity for corn growers around the world. Read More
EquipmentAGCO Launches Global iPad App
July 28, 2014
The free AGCO Global iPad App can be downloaded from the Apple iTunes Store and features the full family of RoGator self-propelled sprayers and TerraGator high-floatation spreaders. Read More
Eric SfiligojYuma Centennial Ag Supply Earns 2014 National Environme…
July 28, 2014
Colorado-based ag retailer receives top trophy in 24th annual DuPont Crop Protection/CropLife ceremony. Read More
CropLife 100Pinnacle Forms Alliance With Wildlife Managment, Seed O…
July 25, 2014
The strategic alliance will provide Tecomate with key wildlife products, processing facilities, distribution centers and sales through Pinnacle’s ever-growing retail network. Read More
ManagementFranken Presses White House On RFS Support
July 25, 2014
Al Franken and a group of Senate democrats recently met with senior White House official John Podesta to urge the administration to change its position on an EPA proposal. Read More
ManagementASA, FarmLink To Launch ‘Operation Benchmark̵…
July 25, 2014
The American Soybean Association (ASA) and FarmLink are teaming up to help farmers close the $11 billion gap between what they harvested in 2013 and what they could harvest annually. Read More
StewardshipNorthey: Farmers Commit $1.4 Million to Try New Water Q…
July 25, 2014
The practices that are eligible for funding include cover crops, no-till or strip till and using a nitrification inhibitor when applying fall fertilizer. Read More
Precision AgFarmers Learn How Changing World Will Impact Iowa
July 24, 2014
Technology and understanding global consumer demand for Iowa farm products brought hundreds of farmers and agribusiness leaders to Ames recently for the annual Iowa Farm Bureau Federation Economic Summit. Read More
HerbicidesPurdue: Late Season Weeds May Require Manual Removal
July 24, 2014
Hand-rouging and pulling late season weeds by hand may be the best way to remove them, more so than using a herbicide, a Purdue Extension weed scientist says. Read More
Soybean Field
InsecticidesTransform WG, Closer SC Insecticides Receive R&D 10…
July 23, 2014
Dow AgroSciences has received the award from R&D Magazine for Transform WG insecticide and Closer SC insecticide with Isoclast active. Read More