PACE Annual Report 2007

Fertilizer Loading

1. Biofuels

This was the topic of conversation during 2007. Although the marketplace was anticipating more corn acreage during the year, practically no one predicted that the industry’s final tally would top more than 93 million acres. Not surprisingly, this translated into substantial increases in all crop input areas for the majority of ag retailers.

Now, however, many PACE members say the boom times are over for biofuels. Due to increased costs for raw materials and feedstock, many of the nation’s ethanol plants are seeing their profits erode significantly. This has already caused a few manufacturers to put their new ethanol plant construction plans on hold until the situation stabilizes somewhat.

As a result of these moves, many council members believe corn acres will inevitably decline in 2008, with more acreage moving over to other high cash crops such as soybeans and wheat instead. Indeed, with carryover stocks for these crops at lower-than-historic levels, crop prices have increased significantly (with soybeans topping $10 per bushel in some cases).

Still, retailers can expect government support for alternative fuel efforts in agriculture to continue for years to come. While corn might be the short-term solution, some council members believe retailers need to keep an eye on the development of other “high energy” crops such as elephant grass and switchgrass (or cellulsic forms).  Although these crops take years of capital investment before they can be harvested, they produce significantly more ethanol when processed than corn.

As one PACE representative put it: “Corn is sexy today because of ethanol, but growers will ultimately grow what makes the most money.”

2. Fertilizer

Even though it was the largest crop input in terms of overall sales in 2007, fertilizer prices have skyrocketed in the past year. For example, PACE Council members report that domestic natural gas prices have increased approximately 200% between 2002 and today. This has prompted domestic producers to permanently close 25 ammonia plants located in the U.S., causing production to drop 42%. This means more fertilizer — particularly the nitrogen-based forms that corn growers crave — is coming from overseas sources, but delivery times have doubled because of this. Also, as the U.S. dollar has lost ground vs. the Canadian dollar, many retailers are facing renewed fertilizer price pressures, as 20% of this nation’s fertilizer supply comes from Canada.

Also, representatives say that “green” efforts regarding fertilizer are increasing in frequency. Already, environmental concerns are taking more of the center stage in the nation’s capital. As a result, Council members predict all fertilizer types (and as a consequence, the ag retailers that carry them) could be in the line of political fire.
Greenhouse gas legislation already in the works is expected to impact natural gas prices, driving them even higher than today’s record levels. There is also the possibility that the industry could find itself being taxed on ammonia use and urea application.

3. Crop Protection

As grower-customers planted more corn in 2007, many of them turned to fungicide applications to help boost their yields. Many Council members expect this trend to continue into 2008, but warn that a lack of application equipment could hinder it somewhat. Aerial applicators were generally able to get product down, but not within the window recommended by the manufacturers.

Weed resistance — a major problem in some regions in the past few years — continues to create challenges. Retailers working with the major crop protection product manufacturers have done a good job on this issue, but more continuing education and training is needed.

4. Seed/Biotech

Even though seed is becoming more ingrained into the ag retail community, it still offers problems for many retailers when it comes to profitability. As more grower-customers look to biotech seed to replace their crop protection product needs, seed producers have added new options to their offerings, including using triple-stacked traits, which have become very popular with growers.

Retailers, to be true trusted advisor to the grower, must be highly knowledgable about how these traits as they complement locally successful varieties/hybrids, as well as how they fit into a total cropping plan. As one council member said: “Seed is still an emotional decision for growers, so seed variety is a key. Each seed type has its own distinct personality as far as the customer is concerned.”

5. Equipment

Although equipment manufacturers have steadily increased boom length in recent years (with 120-foot booms now the norm), conventional wisdom says this trend has just about run its course. Moving into 2008, many believe that manufacturers will focus on increasing machine productivity through the use of newer technology such as automatic steering, boom height, and spray nozzle control instead.

With crop prices as well as input prices at all-time highs, many growers are expected to turn to precision agriculture practices to squeeze more yield and dollars out of their production investments. This should open the door for broader and deeper precision adoption in 2008.

Leave a Reply

Management Stories

Young Corn Plants
ManagementTimac Agro USA Acquires Michigan Ag Retailer
January 20, 2017
Timac Agro USA, an agriculture supply company specializing in high-efficiency plant and animal nutrition products, has acquired St. Louis,MI-based A&E Ag, Read More
Sonny Perdue
LegislationTrump Formally Picks Perdue As Agriculture Secretary
January 19, 2017
U.S. President-elect Donald Trump officially announced Sonny Perdue as his choice for secretary of agriculture on Thursday, selecting a former Read More
ManagementPresident Trump, Wisconsin Review, and a Dow-DuPont Update
January 18, 2017
Editors Paul Schrimpf and Eric Sfiligoj reflect on a new administration, a recent winter show, and crop protection company mergers. Read More
Werner Baumann, Bayer AG, and Hugh Grant, Monsanto
Industry NewsReport: Monsanto, Bayer CEOs Among Latest to Make Trump Tower Pilgrimage
January 18, 2017
The chief executive officers of German chemical giant Bayer AG and U.S. seed behemoth Monsanto, Werner Baumann and Hugh Grant, Read More
Trending Articles
AgriSync
Matt Hopkins17 Agriculture Apps That Will Help You Farm Smarter In 2017
December 9, 2016
Ag professionals are working smarter, not harder, than ever before. Smart farming technologies have enabled them to reduce costs, maximize Read More
R4023 Sprayer, John Deere
CropLife 100Ag Retail Equipment Report: The Green Party Continues
December 7, 2016
In the annual race for sales in the ag retail equipment marketplace, the color schemes for participants are a little Read More
Mike Stern
Precision AgClimate Corp. CEO Talks Retailer Support For Digital Ag
December 1, 2016
CropLife Magazine’s sister publication, AgriBusiness Global, recently sat down with Mike Stern, CEO of The Climate Corp., following the Monsanto subsidiary’s Read More
Precision AgTrimble Debuts End-to-End FMIS Platform
November 28, 2016
October’s inaugural PrecisionAg Vision Conference left this author with many thoughts and things to ponder in the coming months. Probably Read More
CHS Primeland
CropLife 100The 2016 CropLife 100 Report: Reviewing The Many Bulls And Bears Impacting This Year’s Marketplace
November 28, 2016
For virtually all of 2016, the nation was wholly focused on the big Presidential election. Some folks aligned themselves with Read More
Monsanto sign
Crop InputsMissouri Governor Meets With Bayer CEO To Discuss Monsanto Merger
November 21, 2016
Missouri Gov. Jay Nixon visited Bayer AG global headquarters in Leverkusen, Germany, on November 18 to discuss the proposed Bayer-Monsanto Read More
Latest News
Eric SfiligojNo Alternative Facts: Dicamba Cropping System Applicato…
January 23, 2017
During President Donald Trump’s inauguration, much fuss was made over the use of the term “alternative facts” vs. some of Read More
Young Corn Plants
ManagementTimac Agro USA Acquires Michigan Ag Retailer
January 20, 2017
Timac Agro USA, an agriculture supply company specializing in high-efficiency plant and animal nutrition products, has acquired St. Louis,MI-based A&E Ag, Read More
Soybean field
Crop InputsNufarm Teams Up With John Deere Financial
January 19, 2017
Nufarm and John Deere Financial have teamed up to help farmers grow a better tomorrow. This program helps make purchases Read More
Sonny Perdue
LegislationTrump Formally Picks Perdue As Agriculture Secretary
January 19, 2017
U.S. President-elect Donald Trump officially announced Sonny Perdue as his choice for secretary of agriculture on Thursday, selecting a former Read More
ManagementPresident Trump, Wisconsin Review, and a Dow-DuPont Upd…
January 18, 2017
Editors Paul Schrimpf and Eric Sfiligoj reflect on a new administration, a recent winter show, and crop protection company mergers. Read More
Industry NewsBayer, MS Technologies Get China Approval For Balance G…
January 18, 2017
MS Technologies and Bayer have received import approval from China for Balance GT soybeans. The new Balance GT Soybean Performance Read More
Werner Baumann, Bayer AG, and Hugh Grant, Monsanto
Industry NewsReport: Monsanto, Bayer CEOs Among Latest to Make Trump…
January 18, 2017
The chief executive officers of German chemical giant Bayer AG and U.S. seed behemoth Monsanto, Werner Baumann and Hugh Grant, Read More
Giant Ragweed
HerbicidesStudy: Focusing On Weed Seedbank Can Help Manage Herbic…
January 18, 2017
Researchers writing in the latest issue of the journal Weed Science provide important insights on the control of herbicide-resistant giant Read More
Management3 Financial Trends To Watch In Agriculture
January 17, 2017
I recently had the opportunity to attend a meeting of credit managers for Midwest ag supply and input companies, in part Read More
Andersons Retail Store
CropLife 100The Andersons To Close All Retail Stores; Shutdown Does…
January 16, 2017
In a stunning announcement to the Toledo area, The Andersons Inc. said on Sunday that it would close its two Read More
Trimble TMX-2050 In-Cab Display
Eric SfiligojPrecision To Lead Agriculture In 2017?
January 16, 2017
Another new year is upon us! And I’m certain I speak for many in the agricultural world when I say Read More
Corn
Eric SfiligojThe Mood From Madison? In A Holding Pattern
January 16, 2017
Last week, I had the chance to attend the annual Wisconsin AgriBusiness Classic show in Madison, WI. It’s been a Read More
Syngenta Sign
Crop InputsAccenture Helps Syngenta Transform Its Global Logistics
January 13, 2017
Syngenta, a leading agriculture company, has collaborated with Accenture to design and implement a new digital logistics operating model across Read More
Fall Creek Seth Harden The Nature Conservancy
StewardshipLocal Farmers’ Watershed Initiative: Continuous Improve…
January 13, 2017
The goal in the Big Pine Watershed Project is to more intentionally do what local farmers and responsible ag retailers Read More
HerbicidesEPA Expands Enlist Duo Herbicide Registration To 34 Sta…
January 13, 2017
The U.S. EPA has expanded the geography for application of Enlist Duo herbicide from 15 to 34 states. This means Read More
Olson Ag Enterprise
CropLife 100Wilbur-Ellis Acquires Nebraska Seed Retailer
January 13, 2017
Wilbur-Ellis’ Agribusiness, a recognized leader in precision agriculture technology and the distribution and marketing of plant protection, seed and nutritional Read More
ManagementDeere-Precision Planting Update and the Ag Secretary Wa…
January 12, 2017
Editors Paul Schrimpf and Eric Sfiligoj provide the latest on the court date for John Deere/Precision Planting and the quest Read More
Monsanto sign
Seed/BiotechMonsanto, NRGene Form Agreement For Big Data Genomic An…
January 12, 2017
Monsanto Co. and NRGene have announced that the companies have reached a non-exclusive, multi-year global licensing agreement on NRGene’s genome-analysis Read More