2013 Ag Retail Outlook: 3 Bold Predictions For Agriculture

Never one to shy away from an opportunity to prognosticate, we asked Jim Budzynski of MacroGain Partners to project out to the end of 2013 and provide a prediction for what the industry will look like, what surprise we would have encountered during the year and what big concern the industry will be focused on going into 2014. Here’s what he shared with us:

What do you believe things will look like this time next year?

I think the bull market in ag will be another year older and stronger yet, perhaps entering the 5th or 6th inning. Weakness in other parts of the U.S. economy (partly driven by the mess in Europe and the slowdown in China) will make U.S. agriculture all the more attractive in contrast.

What surprise will have happened in 2013 that we will need to react to?

The industry will be surprised by the number of “cross sector deals” by established companies as ag production technology convergence deepens. Also surprising is the number of financial investors who move from purchasing land to purchasing private agribusinesses (chemicals, specialty fertilizer, niche seeds, and ag retail). For example, the explosion of seed treatments will make deals between seed, nutrition, crop protection and equipment companies ever more common as companies seek to “control their destiny” by assembling all the technologies they need to succeed under one roof.  

What will we be most concerned about going into 2014?

In an election year the focus will shift to government support to agriculture, with farm support payments being endangered by the fiscal conservatives’ efforts to separate the food stamp program (“exorbitant”) from the rest of the farm bill, ironically resulting in significant damage to the traditional farm support lobby. Debate on government support to corn ethanol will also endanger support for 40% of U.S. corn demand.

Also, the impending retirement of Ben Bernanke at the Fed will draw into stark relief how much additional Federal debt has accrued via the QE1 to QE5 monetary stimulus programs without very much to show for it. Will the massive Keynesian money printing experiment continue?  If not, commodity prices could face severe pressure.

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