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

ManagementMACA 2014: The State Of The Agricultural Industry, And Then Some
October 9, 2014
The trade association’s annual gathering featured speakers from across agriculture and beyond. Read More
StewardshipA Multi-Layered Approach To Water Quality
October 6, 2014
Illinois event highlights research and technology designed to better monitor and improve water quality — and the benefits of cooperative, coordinated effort. Read More
StewardshipMichigan Agriculture Leaders On Toledo Water Ban: We Want To Be Part Of The Conversation
August 8, 2014
Leaders of Michigan agricultural organizations said Thursday that the government should not have a “knee-jerk reaction” based on last weekend’s water ban in Toledo due to fertilizer run-off in Lake Erie. Read More
ManagementRussia Bans U.S. And EU Ag Product Imports In Ukraine Sanctions Battle
August 7, 2014
Russian President Vladimir Putin has banned the import of agricultural goods from countries that have imposed sanctions on Russia. Read More

Trending Articles

Matt Hopkins15 Best New Agriculture Apps Worth Downloading In 2014
December 16, 2013
These latest agriculture apps are sure to help ag professionals do their jobs more efficiently in 2014 and beyond. Read More
Seed/BiotechMonsanto Offers New Support For Ferguson, Area Communities
October 8, 2014
Monsanto Co. has committed $1 million in new support for several collaborative efforts in Ferguson, MO, and surrounding communities in North St. Louis County. Read More
Seed/BiotechUnapproved Genetically Modified Wheat Found In Montana
October 3, 2014
USDA reports that one year after discovery of Monsanto's unapproved wheat in a single Oregon field disrupted U.S. wheat export sales, the GMO wheat has again been found in Montana. Read More
Equipment2014 Product Of The Year Voting
September 19, 2014
Many new products were introduced to the ag retail marketplace this year. From this group, CropLife IRON and its consulting partners have selected five finalists for the Product of the Year award. Please cast your vote today to help us determine the winner. Read More
FertilizerFall Fertility 2014: Forecasting Fertilizer Use
September 7, 2014
Great crops this year have tapped the soil, and fall work is definitely called for, but how challenging will that get? Read More
CropLife 100CHS To Build $3 Billion Fertilizer Plant In North Dakota
September 5, 2014
The fertilizer plant in Spiritwood will be the single largest investment in CHS history, as well as the single largest private investment project ever undertaken in North Dakota. Read More

Latest News

Seed/BiotechSyngenta Ranked A Top 10 Biotech Employer For Third tim…
October 20, 2014
Syngenta ranked in the top 10 among the world’s top biotech employers, according to an annual survey conducted by Science magazine. Read More
CropLife 100Wheat Growers Break Ground For New Facility At Kennebec
October 20, 2014
Wheat Growers has broke ground for a state-of-the-art shuttle loader grain handling, fertilizer and agronomy facility in Kennebec, SD. Read More
FertilizerVerdesian Life Sciences Signs Agreement With Los Alamos…
October 20, 2014
Verdesian Life Sciences has signed a licensing agreement with Los Alamos National Laboratory to develop and market LANL’s latest nitrogen enhancement technology for plants. Read More
MicronutrientsStoller Group Announces Groundbreaking At New Office Bu…
October 20, 2014
Jerry Stoller, founder and president of Stoller Group, announced the groundbreaking at the site of the company’s future headquarters in Read More
Crop InputsBioSafe Systems Opens New Production Facility In Nevada
October 20, 2014
BioSafe Systems has completed construction of a state-of-art production facility in Sparks, NV, for its line of activated peroxygen products. Read More
Crop InputsPlatform Specialty Products To Acquire Arysta LifeScien…
October 20, 2014
Once the acquisition is complete, Platform Specialty Products will combine Arysta LifeScience with previously acquired companies Agriphar and Chemtura Crop Solutions. Read More
Seed/BiotechEPA Approves Dow’s Enlist Duo Herbicide
October 15, 2014
The Enlist Weed Control System, breakthrough technology to fight resistant and tough weeds, has received the long-awaited green light from federal regulatory authorities. Read More
MicronutrientsGypsum On Farms Could Help Keep Water Clean, Not Green
October 14, 2014
Gypsum, which has roots in the past as a farm soil treatment, also may have a bright future, and not just as a booster of crops but also as a protector of water. Read More
Photo credit: The United Soybean Board/The Soybean Checkoff.
Crop InputsVerdesian Grows Sales Staff
October 14, 2014
The new account managers will drive sales growth and support relationships with key customers in the plant nutrition and seed treatment and inoculants product categories. Read More
WebinarsUpcoming Webinars
October 14, 2014
Register for one of our upcoming Webinars or access our archive of past Webinars to view recordings of presentations that may be of interest to you. Read More
CropLife 100The Andersons Purchases Six Grain Elevators, Four Agron…
October 14, 2014
The Andersons has acquired Auburn Bean and Grain of Auburn, MI, which will increase the storage capacity of its Grain Group by about 13%. Read More
StewardshipThree Ohio Ag Retailers Honored With 4R Certification
October 13, 2014
The 4R Nutrient Stewardship Certification Program has announced its first three agriculture nutrient service providers to achieve certified status. Read More
Eric SfiligojEntering Agriculture’s New Phase
October 13, 2014
The market’s giddy ride the past few years might be coming to an end in 2015, warns one industry insider. Read More
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
StewardshipCover Crops Add To Farm Sustainability
October 10, 2014
Farmers nationwide find cover crops to be a tool that helps groundwater, prevents erosion, builds soil quality and complements existing best management practices. Read More
EquipmentMeeting Changing Liquid Storage Needs
October 10, 2014
Tank and containment choices are expanding with shifts in farming practices and the economy. Read More
StewardshipEDF Launches Initiative To Reduce Fertilizer Pollution …
October 9, 2014
The effort will engage farmers and businesses throughout the supply chain to transform the way fertilizer-dependent grain crops are grown and sourced. Read More
ManagementMACA 2014: The State Of The Agricultural Industry, And …
October 9, 2014
The trade association’s annual gathering featured speakers from across agriculture and beyond. Read More