A Tougher Road Expected For Ag Retailers In 2014, But Still A Nice Ride
For the most part, ag retailers are in agreement — the past few years have been a banner time for those companies and individuals that make their living from agriculture. At all levels, revenues have soared, commodity prices have stayed at record highs and even challenging weather conditions (a severe drought in 2012 followed by extreme wetness in 2013) haven’t depressed incomes, both on the farm and at the retail outlet.
Based upon these types of performances, the majority of ag retailers remain confident that 2014 will hold more of the same for the marketplace. In its annual CropLife 100 survey of the nation’s top retail organizations, CropLife® magazine asked respondents to rate their outlook for the 2014 season on a scale of one to 10 (one being extremely negative and 10 being extremely positive). When totalled, the numbers showed that 73% of the nation’s top ag retailers believe 2014 will rate between a seven and a 10 in overall sales.
According to these same retailers, their grower-customers are a bit more conservative in their views on the fortunes for 2014. When asked to describe how their customers think the year will play out, 69% of CropLife 100 respondents said they felt “cautiously optimistic” it would be a good year. Another 30% of grower-customers were “somewhat to very pessimistic” 2014 would continue agriculture’s current winning streak.
No 2008 Revisited
Perhaps following through on these feelings toward 2014, many growers apparently spent the fall of 2013 sitting on the sidelines when it came to conducting fall fertility applications. At several recent industry events, many ag retail ers said their fall fertilizer sales were “very slow” compared with those in 2013 and 2012. “Producers seem reluctant to buy fertilizer and are expecting the prices to come down,” says Frank Schumacher, agronomy division manager at Mountain View Cooperative Inc., Black Eagle, MT.
At first blush, this kind of “wait-and-see” attitude harkens back to what the ag retail industry experienced in 2008, when rapidly rising fertilizer prices eventually lead to a marketplace crash. However, according to Dave DuFault, senior vice president, retail operations for J.R. Simplot Co., Boise, ID, this same kind of “disaster” scenario is unlikely to play out again. “Given what’s happening with falling commodity prices, fertilizer prices will have to come down some,” says DuFault. “In the end, 2014 might be a tougher year for fertilizer sales, but it’s not going to be like what happened in 2008.”