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 100BRANDT Acquires Lemon Ag Services
August 4, 2014
The acquisition of Lemon Ag fits BRANDT’s aggressive corporate strategy of providing superior agronomic advice and services for customers in central Illinois. Read More
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

Trending Articles

ManagementExpert To Discuss Farmland Value, Rent At Farm Science Review
August 18, 2014
While cropland values in Ohio increased in the past two years, they have remained flat in 2014, declining in some cases, according to an Ohio State University agricultural economist. Read More
EquipmentAdvance Your Technology IQ At MAGIE
August 13, 2014
The Midwest AG Industries Exposition (August 20-21) is the place you need to be to see, study and evaluate how new advances in the equipment, operations, crop protection and fertility sectors can help your business prosper. Read More
HerbicidesScouting Key To Next Season’s Soybean Herbicide Program
August 12, 2014
When growing soybeans, growers need to think ahead to stay one step ahead of weeds. That means examining weed threats and evaluating which herbicides work best. 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
CropLife 100BRANDT Acquires Lemon Ag Services
August 4, 2014
The acquisition of Lemon Ag fits BRANDT’s aggressive corporate strategy of providing superior agronomic advice and services for customers in central Illinois. Read More
Eric SfiligojThe Resurgence Of Crop Protection
August 4, 2014
Plenty of new offerings over the next few years should see a rebirth for the crop protection products category in terms of market share. Read More

Latest News

Crop InputsBASF Is Betting On A Bright Agricultural Future
September 1, 2014
The crop protection products giant is gearing up for a busy time in agriculture by investing in both product production and development over the next couple of years. Read More
Eric SfiligojAn Erie Feeling For Ag
September 1, 2014
Plenty of water issues have been in the news lately, including the continuing drought in California. Read More
CropLife 100Pinnacle Acquires California-Based Retailer
August 29, 2014
Pinnacle Agriculture Holdings will acquire Kerman Ag Resources, Inc., which will operate under Pinnacle's Performance Agriculture brand. Read More
Allied Cooperative Grain Plant
ManagementArcadia Co-op To Merge With Allied Cooperative
August 28, 2014
Allied Cooperative has announced that members of Arcadia Co-op voted in favor of a merger with Allied Cooperative, paving the way for the consolidation which will be effective on December 1, 2014. Read More
InsecticidesBioinsecticide VENERATE Now Registered In California
August 27, 2014
Marrone Bio Innovations' VENERATE is a new tool to help California growers control crop-damaging insect pests, fight the development of insect resistance and reduce pesticide residues on fruits and vegetables. Read More
CropLife 100Two Iowa-Based Ag Co-ops To Merge
August 27, 2014
The Board of Directors and management of United Western Coop, Missouri Valley, IA has completed a merger with Heartland Co-op, West Des Moines, IA, effective September 1, 2014. Read More
FertilizerKoch Expands AGROTAIN Nitrogen Stabilizer Portfolio
August 26, 2014
Koch Agronomic Services, LLC has added two new innovative nitrogen stabilizers to the AGROTAIN product family – AGROTAIN ADVANCED and AGROTAIN DRI-­MAXX. Read More
Seed/BiotechDuPont To Build Two Seed Treatment Centers
August 26, 2014
DuPont has announced construction on two state-of-the-art centers dedicated to developing and testing seed treatment formulations, applications and seed handling techniques in an important step toward bringing new solutions to growers. Read More
Seed/BiotechLoveland Products Acquires A Controlling Interest In Ag…
August 26, 2014
Loveland Products, a subsidiary of Agrium , has announced the company has acquired a controlling interest in Agricen, a Dallas-area agricultural biotechnology company delivering biochemical-based products for efficient and sustainable plant nutrition. Read More
StewardshipUp Close Look At The 2014 Environmental Respect Award W…
August 25, 2014
The 2014 Environmental Respect Award winners were honored recently at the 24th annual event in Wilmington, DE. Read More
Eric SfiligojAg Science Rejection Carries Consequences
August 25, 2014
As innuendo and fear dog the regulatory process, agriculture can’t get the new tools it needs to combat world hunger. Read More
LegislationFarmers Dismayed As New Farm Bill Dumps Direct Payments
August 25, 2014
The threatened end of cash subsidies to the nation’s row crop farmers dates back through at least the last two iterations of national agriculture policy legislation. Read More
MAGIE 2014 ShowStopper
EquipmentJohn Deere Again Wins MAGIE ShowStopper Award
August 25, 2014
For the second consecutive year, John Deere was honored at the Midwest AG Industries Exposition (MAGIE) for its new R4045 sprayer. Read More
CropLife 100GROWMARK CEO To Retire
August 22, 2014
GROWMARK chief executive officer Jeff Solberg has announced his retirement effective September 15, 2014. Read More
InsecticidesDuPont’s Prevathon Approved For Dry Beans
August 22, 2014
DuPont Prevathon insect control powered by Rynaxypyr has received EPA registration for foliar use on dry bean crops, including dried shelled peas and beans. Read More
ManagementNCGA DuPont New Leaders Program Enters Sophmore Season
August 20, 2014
The National Corn Growers Association and DuPont are pleased to announce the second year of the NCGA DuPont New Leaders Program. Read More
FungicidesVerdesian Links Up With Mitsui, Hokusan
August 20, 2014
Mitsui Chemicals Agro, Inc., and Hokusan Co., announced the signing of an exclusive licensing agreement allowing Verdesian Life Sciences global access to its patented technology for suppressing mycotoxin contamination in wheat and barley. Read More
SprayersUniversity Of Illinois Introduces New Spray App
August 18, 2014
University of Illinois Extension has released a new smartphone app for making sprayer-related calculations. Pesticide Spray Calculator, or Spray Calc, Read More