Report: Another Good Year For The Top 100 Ag Retailers

Call it a bit of delayed reaction. Overall, the numbers weren’t terrible for ag retailers in 2013. But things were certainly slower than they’ve been for the past few years.

Going back to the 2012 CropLife 100 survey, many respondents said that back-to-back uneven weather seasons for agriculture hadn’t really impacted their overall bottom lines very much. Crop input and service sales remained brisk, with the entire marketplace seeing double-digit revenue gains despite lingering droughts and rain deluges.

However, another very wet spring during 2013 apparently did put a damper on the marketplace. According to 2013 CropLife 100 retailers, their overall revenue topped $29 billion for the year — another in a string of all-time sales highs going back to 2010. Despite this fact, the modest 4% increase in overall sales vs. 2012 was a far cry from the 15% and 17% jumps the nation’s top ag retailers recorded the prior two years.

And if you want to find the reason for this marketplace slowdown, look no further than the performance of the industry’s top crop input category, fertilizer. Since its overall downturn in 2008, the fertilizer category has been on a steady growth curve within the CropLife 100. A few years ago, this category surpassed crop protection to become the largest revenue generator for most ag retailers and its overall market share has climbed above 50%. In 2012, the fertilizer category hit an all-time revenue high of $15.2 billion — equal to 55% of all crop inputs/service sales — and seemed headed towards a 60% mark in 2013.

But this didn’t happen. Because of the dry fall in 2012 and wet spring in 2013, several ag retailers indicated on their CropLife 100 surveys that application work for fertilizer was severely limited compared with those in the previous years. As a result, fertilizer category sales in 2013 edged up only 0.7% to $15.3 billion. Since this rate of growth was far below the overall marketplace, the fertilizer category saw its market share dip 2% to 53%.

With the market’s lead crop input dog slowing down some in 2013, the next two categories — crop protection and seed — both regained some lost ground. For second place crop protection, 2013 turned out to be a very good year indeed, perhaps helped in part by the need for more crop protection product usage in the wet field conditions that existed throughout much of the nation during the spring and early summer. Overall, according to CropLife 100 ag retailers, sales in the crop protection products category surged ahead 8% during 2013, climbing from $7.9 billion in 2012 to $8.5 billion. More significantly, this revenue bump improved the category’s overall market share from 28% in 2012 to 29% in 2013. This marked the first market share increase the crop protection products category has experienced since the beginning of the 2000s.

Definitely Seed Money

If there was a category that performed in a completely opposite way from fertilizer, it was seed. At the start of the 2000s, the seed category was on the fast track when it came to market growth. Annually, the category gained sales and market share compared with the rest of the crop input/service categories.

Until 2011, that is. Beginning in that year, the seed category revenue among CropLife 100 retailers slowed down significantly, with annual double-digit gains falling into the low single-digit range. By the end of 2012, the seed category’s market share had dropped to 13%, down 2% from its 2010 high of 15%.

But in 2013, the seed category regained some of its lost form. For the year, said CropLife 100 survey respondents, seed sales increased 11%, topping $4 billion. As a result, market share for the category grew 1% to 14%.

As for the final of the major categories — custom application — 2013 was also a very good year. According to CropLife 100 retailers, their custom application revenues moved ahead 9% in 2013, topping $1.2 billion. This marked the second year in a row that the category has crossed the $1 billion threshold. Despite this gain, however, the market share for the custom application category stayed at 4%.

Leading Sectors

Besides tracking the major categories, the CropLife 100 survey also asks respondents to describe how their sales went in nine sub-sectors as well. For purposes of the survey, we ask retailers if their revenues in these sectors were up, down or flat compared with those from the prior year. In an average year, seven or eight of the nine tracked sectors have sales increases year-over-year for better than half of the respondents. In this sense, 2013 was average indeed. For the year, more than half of CropLife 100 retailers had sales upticks in eight out of the nine categories. Only traditional seed performed worse than this, with only 35% of respondents seeing an increase in sales in this sector.

Leading the way among these sectors was micronutrients. According to 82% of 2013 CropLife 100 survey respondents, their micronutrient sales grew 1% to more than 5% from 2012. Tied for second among the sectors were adjuvants and crop protection products, which were both up 1% to more than 5% in year-over-year sales for 80% of ag retailers in 2013. Most of the other sector sales for retailers were up in the low 60% to high 70% range (see graph for a more complete breakdown).

Looking ahead to 2014, CropLife 100 ag retailers continue to believe that agricultural fortunes will remain strong. When asked to rank their outlooks for 2014 on a scale of one to 10 (1 being low confidence, 10 being high confidence), 72% of respondents thought the coming year would rate between a seven and a nine. Another 25% believed 2014 would rate between a four and six on the revenue scale.

Grower-customers see things a bit differently, however. According to 2013 CropLife 100 ag retailers, only 68% of their grower-customers rate their outlook for 2014 as “cautiously optimistic.” The remaining 32% say their outlooks for agriculture in 2014 are “somewhat or very pessimistic.”

However, spending at the ag retail level should remain high, particularly when it comes to new construction. When asked how they would characterize their overall expenditure plans for 2014 vs. 2013, 81% of CropLife 100 respondents said their companies plan to spend more or the same amounts on construction and renovation as they did during 2013. Only 19% planned to spend less in this area.

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