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 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 100The Andersons Acquires South Dakota Plant Nutrient Manufacturer Kay-Flo
May 20, 2015
The Andersons, Inc., ranked No. 22 on the CropLife 100, has purchased Kay Flo Industries of North Sioux City, SD. “This Read More
CropLife 100North Central Farmers Elevator, Wheat Growers Unification Approved By Board, Still Awaits Member Approval
May 13, 2015
The Boards of Directors for North Central Farmers Elevator (NCFE) and Wheat Growers (WG) have voted to approve the Unification Read More
CropLife 100AgGateway’s Barcoding Initiative Progressing Nicely
May 8, 2015
According to legend (or Wikipedia), the first step towards modern bar codes came back in 1948, when Bernard Silver, a Read More
CropLife 100Pinnacle Agriculture Acquires Minnesota Retailer
April 14, 2015
Pinnacle Agriculture Holdings, LLC, ranked No. 6 on the CropLife 100,  has successfully acquired Liebl Ag, LLC in Ada, MN.  Read More
CropLife 100CHS, Aurora Cooperative Complete Fertilizer Storage, Grain Shuttle Loading Facility
April 13, 2015
CHS Inc., the nation’s leading cooperative and ranked No. 5 on the CropLife 100, and Aurora Cooperative (ranked No. 21) Read More
CropLife 100GROWMARK Acquires Missouri Refined Fuels Terminal
April 2, 2015
Bloomington, IL-based GROWMARK and Magellan Pipeline Co. have entered into an agreement in which GROWMARK will acquire the refined fuels Read More
Latest News
Bayer CropScience, ILeVO
Crop InputsISU: ‘Halo Effect’ From ILeVO Soybean Seed …
May 28, 2015
Farmers who were lucky enough to plant soybeans and spray pre-emergence herbicides in between rain events may now be seeing Read More
ManagementCorn Planting/Monsanto-Syngenta Update; New PrecisionAg…
May 28, 2015
Eric Sfiligoj and Paul Schrimpf give updates on corn planting progress, the latest on Monsanto-Syngenta rumors and preview a brand Read More
Waterhemp in soybean stubble
HerbicidesEPA Signs Off On Monsanto’s Warrant Ultra Premix
May 27, 2015
Soybean and cotton growers looking for new tools to manage weeds will have a new, first-of-its-kind option in 2016 with Read More
Palmer pigweed seedhead in cotton
HerbicidesSTUDY: Weed Diversity Primarily Influenced By Geography
May 27, 2015
The potential long-term impacts of glyphosate-resistant crops on biodiversity of the agricultural landscape have been the subject of controversy. A Read More
Seed/BiotechAgrilead Forms Distribution Alliance With Kansas-Based …
May 27, 2015
Agrilead, Inc. announces the formation of a strategic alliance with KALO, Inc. of Overland Park, KS. Through the alliance, KALO Read More
EquipmentPrecision Tank Announces A&B Welding Acquisition
May 27, 2015
Precision Tank, a specialized tank and equipment manufacturer, announced today the acquisition of A&B Welding of Thompson, IA, a manufacturer Read More
Allied Cooperative Grain Plant
ManagementTraining Program Gives First Responders Skills For Grai…
May 27, 2015
When stored grain forms hard bridges, columns and other irregularities, those working to correct it find themselves at risk of Read More
Industry NewsBASF Sponsors Space Farming Research Project
May 26, 2015
Is it possible to produce large quantities of high quality vegetables on a space station, about 320 kilometers away from Read More
FertilizerTexas Ammonium Nitrate Bill Passes Senate, Heads To Gov…
May 26, 2015
The Texas State Senate gave final approval last Thursday to new regulations for ammonium nitrate, reports The Dallas Morning News Read More
Young corn plants
Industry NewsArysta Europe Details New Organizational Structure
May 26, 2015
Arysta LifeScience Europe recently announced a new organizational structure to leverage its scale and accelerate the company’s growth in this Read More
Syngenta Sign
Eric SfiligojMonsanto-Syngenta Could Hinge On A Judgment Of Solomon …
May 26, 2015
In the bible, the reputation of King Solomon’s wisdom in matters of despite comes from a tale of one child Read More
ManagementA New Sprayer Company & UAV Research In The Spotlig…
May 21, 2015
CropLife’s Paul Schrimpf and Eric Sfiligoj talk about a Dutch sprayer manufacturer entering the U.S. with a super-sized entry and Read More
HerbicidesFirst U.S. Sale Of Enlist Duo Herbicide Made By Dow Agr…
May 21, 2015
Dow AgroSciences has recorded the first U.S. sale of Enlist Duo herbicide with Colex-D Technology. This marks the first commercial Read More
CropLife 100The Andersons Acquires South Dakota Plant Nutrient Manu…
May 20, 2015
The Andersons, Inc., ranked No. 22 on the CropLife 100, has purchased Kay Flo Industries of North Sioux City, SD. “This Read More
EquipmentNORAC Options Coming To TerraGator
May 19, 2015
Utilizing NORAC’s Standard Control technology, boom height control is now available for TerraGators with Airmax Precision 2 and Benson Booms. This Read More
Crop InputsHelena Introduces New Soil Health Product
May 19, 2015
Helena Chemical Co. is helping agricultural producers maximize yields and efficiency with the introduction of Liquid Chisel, a new product Read More
Stewardship4R Nutrient Management Planning Certification Now Avail…
May 19, 2015
The American Society of Agronomy (ASA) and the International Certified Crop Adviser (ICCA) program announce a new specialty certification in Read More
Environmental Defense Fund logo
Paul SchrimpfEnvironmental Defense Fund: Appreciating Partners
May 19, 2015
I WAS deep in the throes of preparation for the Commodity Classic meeting that took place this past February, trying Read More