A Drought Hangover For Fertilizer Retailers

For several years now, the fertilizer category has been an unstoppable engine of market growth for the nation’s top ag retailers. Following the bump in the road that took place during mid-2008 and early 2009, fertilizer sales for the country’s CropLife 100 dealerships and cooperatives have been gaining ground (literally and figuratively) at a steady clip. In fact, between 2010 and 2012, total sales for the fertilizer category among CropLife 100 retailers grew from $10.1 billion to $15.2 billion, an increase of more than 50%. Naturally, market share for the sector also improved, topping 55% once the final numbers for 2012 had been calculated.

To many market watchers, what made this performance by the fertilizer category all the more surprising was how the sector kept growing despite some very unfavorable field conditions. Throughout much of 2012, most of the Continental U.S. was experiencing its most severe drought since the late 1980s, with temperatures soaring above 90 degrees for much of summer and barely any rainfall occurring. Still, thanks in part of modern agricultural practices and improved biotech seed varieties, most grower-customers managed to keep their crop yields high and profits intact. Others were helped out by crop insurance. But no matter what source the farm income came from, ag retailers did not see a significant drop-off in fertilizer demand during the fall 2012 application season.

There were, however, a few notes of caution from some CropLife 100 retailers last year. According to Dave Coppess, executive vice president, sales & marketing for Heartland Co-op, West Des Moines, IA, there was definitely a danger of some kind of drought hangover for fertilizer once 2013 rolled around. “Since many growers lost their crops and left them in the field in 2012, they might decide that the crop nutrients they applied for the year will be adequate to give them good yields going forward,” said Coppess in the 2012 CropLife 100 report. “So yes, there are some questions about fertility needs for the 2013 crop.”

A Prediction Comes True

But these are questions no longer. According to the 2013 CropLife 100 survey, the nation’s top ag retailers only recorded a modest $100 million sales bump in fertilizer during 2013, coming in at just over $15.3 billion. This 0.7% revenue increase was the slowest for fertilizer in better than five years. Furthermore, since the other three crop inputs/services categories all grew at a much faster rate during 2013, the fertilizer category experienced its first market share decline since 2008, falling from 55% in 2012 to 53%.

For the most part, CropLife 100 respondents blamed the unusually wet spring much of the nation experienced during 2013 for depressing their spring fertilizer demand. “Many customers in our area ended up switching their planting plans from corn to soybeans once the spring rains never stopped,” says Doug Busdeker, senior manager, Northern farm centers for The Andersons, Inc., Maumee, OH.

And this seemed to be the case on a more widespread basis as well. When asked to characterize the level of challenge they faced in managing fertilizer demand during 2013, a majority of respondents (57%) described the year as “very challenging” or “more challenging than normal” for nitrogen-based products such as anhydrous ammonia and urea.

It was a similar situation with the other macronutrients as well. When it came to phosphorus, 39% of CropLife 100 ag retailers said they faced “very challenging” or “more challenging than normal” market conditions during 2013. As far as potassium/potash was concerned, 42% of respondents described their conditions as “very challenging” or “more challenging than normal” for the year.

Many ag retailers — particularly those that had closed their books before the start of the fall application season — were hoping for better luck when it came to fertilizer demand going forward.
“We are still hoping for a good fall season,” wrote Tim McArdle, vice president, general manager for the Ag Division at BRANDT, Springfield, IL, on his CropLife 100 form.

The Prospects For 2014

With a relatively flat year behind it in 2013, can the fertilizer category expect to rebound in 2014 as it has done numerous times in the past? The early indications are not entirely positive.

As everyone in the agriculture industry knows, fertilizer’s fortunes tend to tie directly to the amount of corn the nation’s growers-customers plan to plant come spring. In fact, almost half of the nitrogen fertilizer used for growing crops in America goes to growing corn.

But over the past few years, as commodity prices have stayed high, growers have planted in excess of 90 million acres each and every crop year. This has undoubtedly helped keep fertilizer demand up as well.

In 2014, however, there are signs this crop mix won’t necessarily favor fertilizer usage. According to 48% of CropLife 100 survey respondents, their grower-customers are planning to plant anywhere from 1% to 10% less corn this coming spring than they did during 2013. This would translate into a loss of up to 9 million acres of corn, placing total acreage somewhere in the low to mid 80 million acre range.

In corn’s absence, CropLife 100 retailers expect soybeans to occupy these acres. According to survey respondents, 52% of them are anticipating anywhere from a 1% to 10% increase in the soybean acres in their areas. This would place total soybean acreage in close to the 80 million acre range.

Topics:

Leave a Reply

CropLife 100 Stories

CropLife 100Wilbur-Ellis To Relocate Agribusiness Division To Denver
July 16, 2014
The move Eastward will allow Wilbur-Ellis’ Agribusiness Division to be more accessible to relevant geographies and is expected to enhance communication and collaboration among the division’s nearly 3,000 employees. Read More
CropLife 100Map: Pinnacle Agriculture Holdings Acquisitions In 2014
May 29, 2014
Pinnacle Agriculture Holdings continues to expand its agricultural retail distribution business through these key acquisitions in 2014. Read More
CropLife 100CHS To Acquire Illinois River Energy Ethanol Plant
May 1, 2014
CHS has signed an agreement with Sinav Ltd. to acquire 100% of the company's stock, which includes Illinois River Energy, a 133-million-gallon-per-year ethanol plant at Rochelle, IL. Read More
CropLife 100Wheat Growers Opens New Agronomy Center
April 15, 2014
The new 10,400-square-foot center in Frederick, SD; features a 60,000-gallon liquid fertilizer plant and a state-of-the-industry seed treating system. Read More

Trending Articles

Retail FacilitiesWaconia Manufacturing Builds Facility Designed For Speed, Efficiency
July 7, 2014
To make its new hub facility more efficient, Cooperative Elevator enlisted the aid of Waconia Manufacturing. Read More
EquipmentSummer Show Preview 2014: Superior Sprayers Take The Field
July 3, 2014
In this final installment of our coverage of the major categories of Big IRON that retailers can expect to test-drive at this summer’s events, here is a look at 19 sprayers. Read More
Scouting a soybean patch at Green Valley Ag.
EmployeesCropLife Compensation Survey: Battling Talent Drain
July 2, 2014
Retailers too often lose employees to companies outside of agriculture, while recruiting efforts are most often limited to competitors and other ag-focused organizations. Read More
HerbicidesDow AgroSciences Introduces SureStart II Herbicide
June 16, 2014
The enhanced formulation has improved viscosity and increased stability under heat and controls more than 60 high-anxiety grasses and broadleaf weeds found in corn fields. Read More
HerbicidesBASF Investing $270 Million To Expand U.S. Herbicide Production
June 11, 2014
BASF has invested more than $270 million to expand herbicide production capacities in the U.S., including more than 20 new products to be launched over next two years. Read More
EquipmentGPS: 25 Years And Still Growing
June 2, 2014
The evolution of global positioning systems applications in agriculture remains ongoing as the technology hits a notable milestone. Read More

Latest News

CropLife 100Pinnacle Forms Alliance With Wildlife Managment, Seed O…
July 25, 2014
The strategic alliance will provide Tecomate with key wildlife products, processing facilities, distribution centers and sales through Pinnacle’s ever-growing retail network. Read More
ManagementFranken Presses White House On RFS Support
July 25, 2014
Al Franken and a group of Senate democrats recently met with senior White House official John Podesta to urge the administration to change its position on an EPA proposal. Read More
ManagementASA, FarmLink To Launch ‘Operation Benchmark̵…
July 25, 2014
The American Soybean Association (ASA) and FarmLink are teaming up to help farmers close the $11 billion gap between what they harvested in 2013 and what they could harvest annually. Read More
StewardshipNorthey: Farmers Commit $1.4 Million to Try New Water Q…
July 25, 2014
The practices that are eligible for funding include cover crops, no-till or strip till and using a nitrification inhibitor when applying fall fertilizer. Read More
Precision AgFarmers Learn How Changing World Will Impact Iowa
July 24, 2014
Technology and understanding global consumer demand for Iowa farm products brought hundreds of farmers and agribusiness leaders to Ames recently for the annual Iowa Farm Bureau Federation Economic Summit. Read More
HerbicidesPurdue: Late Season Weeds May Require Manual Removal
July 24, 2014
Hand-rouging and pulling late season weeds by hand may be the best way to remove them, more so than using a herbicide, a Purdue Extension weed scientist says. Read More
Soybean Field
InsecticidesTransform WG, Closer SC Insecticides Receive R&D 10…
July 23, 2014
Dow AgroSciences has received the award from R&D Magazine for Transform WG insecticide and Closer SC insecticide with Isoclast active. Read More
EquipmentKinze, Raven Team Up On 4900 Planter Monitor
July 23, 2014
Kinze Manufacturing announces a partnership with Raven Industries to develop a standalone monitor solution for the Kinze 4900 series planter. With this new Read More
LegislationNew Farm Bill Continues To Confuse As Growers Await USD…
July 23, 2014
The new five-year Farm Bill eliminates many of the direct payments previously payed to growers and could benefit from USDA clarification, reports a Toledo Blade columnist. Read More
EquipmentPrecisionAg.com Relaunches With Responsive Design For M…
July 22, 2014
PrecisionAg, the worldwide leader in precision agriculture information and analysis, announces the launch of its completely redesigned website, PrecisionAg.com. Read More
FungicidesEPA OKs Two Willowood Fungicides
July 21, 2014
The EPA has approved Willowood Azoxy 2SC and Willowood AzoxyProp Xtra. two widely used broad spectrum, preventative fungicides with systemic and curative properties. Read More
Precision AgFarmers Learning Fast As UAVs Take Off
July 17, 2014
Farmers and others interested in how UAVs can be used in agricultural applications were able to learn more about the technology during the recent Precision Aerial Ag Show. Read More
CropLife 100Bobby Knight, Richard Petty To Highlight Ag PhD Field D…
July 17, 2014
Attendees at the July 24 Ag PhD Field Day at Hefty Farms will learn about the latest agricultural technologies, and get a chance to meet legendary sports figures Bobby Knight and Richard Petty. Read More
WebinarsUpcoming Webinars
July 17, 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
A finished Willmar 16-ton side-shooting tender.
TendersNew Production Facility Helps Willmar
July 17, 2014
In 1963, a group of businessmen started Willmar. Today, a half-century later, the company is one of the ag industry’s longest-running brands. Read More
FertilizerCF Industries Sells Carbon Credits To Chevrolet, Donate…
July 17, 2014
CF Industries has completed the sale of a large block of carbon reduction credits to Chevrolet, and will donate the net proceeds of $600,000 to the National FFA Foundation. Read More
CropLife 100Grainland Cooperative, Minier Cooperative Grain To Merg…
July 17, 2014
The shareholders of Grainland Cooperative and Minier Cooperative Grain Co. approved a merger of company operations effective August 1, 2014. Read More
ManagementStudy: Drought Costing California Billions
July 17, 2014
A new study has found the drought has cost the state $2.2 billion, primarily in lost farm revenue and wages. Read More