CropLife 100: Silver Anniversary

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This year marks the 25th anniversary for the CropLife 100 ag retailer report. When CropLife® started planning for this milestone event, we were hopeful that the market wouldn’t rain on our silver-themed parade by being in a “down” cycle. In some ways, the stage was set for such a letdown in 2008. Coming off an incredibly positive sales year in 2007, CropLife 100 retailers (and we) were naturally apprehensive that 2008 could never live up to its potential given some significant changes within the marketplace and world in general.

For one thing, the nation’s economic climate began showing signs of strain during mid-2008, coming to a complete meltdown once autumn arrived. For another, added corn acreage in 2007 (and its chief benefactor, ethanol) seemed to be falling out of fashion with the general public. Indeed, in some circles, the chorus of “fuel vs. food” reached a fever pitch — one that ag retailers and their grower-customers were only too happy to shy away from whenever possible.

Presented with all these facts, industry insiders could hardly be faulted for speculating that the good times of 2007 would come to a screeching halt in 2008.

Wrong.

If anything, 2008 was a much stronger sales year for the ag retail marketplace compared with 2007. According to the sales figures compiled in the 2008 CropLife 100 survey of ag retailers, the nation’s largest dealerships sold more than $19 billion of crop inputs and services this year. That’s an increase of almost 30% from 2007′s record-setting $14.7 billion in sales.

For the most part, ag retailers credited the combination of higher commodity prices during 2007, coupled with the desire by grower-customers to keep their yields high in 2008, for providing this impressive revenue boost to their bottom lines. “Historically high demand for foodstuffs, combined with historically high costs, makes for a time of much more opportunity — and much more risk — for the farm families we serve,” said Alex McGregor, president of The McGregor Co.

Another Segment Sweep

Besides being an exceptionally strong sales year in general, 2008 had another thing in common with its performance in 2007. In last year’s CropLife 100, we pointed out how unusual it was for all four input/service areas tracked by the survey — fertilizer, crop protection, seed, and custom application — to have positive sales simultaneously. This happened in 2007, but we would have bet lightning couldn’t strike the same survey results two years in a row.

But it did.

As in 2007, all four categories recorded various degrees of sales growth in 2008. Not surprisingly, the biggest story among the four was fertilizer and its performance.

In 2007, buoyed by increased corn acreage, fertilizer sales grew 13.6%. In 2008, fertilizer sales jumped 42% to top $9.5 billion. In terms of market share, fertilizer now accounts for half of all crop input/services sold by CropLife 100 retailers.

Let that soak in for a minute — one out of every two inputs/services sold in 2008 belonged in the fertilizer category. At the beginning of this decade, fertilizer accounted for just over 40% of all crop input/service sales.

Even more impressively, all kinds of fertilizer seemed to enjoy this sales success in 2008. According to CropLife 100 survey respondents, 90% saw their macronutrient sales increase during the year. Likewise, micronutrients sales increased for 80% of those surveyed.

For crop protection products, 2008 was something of a mixed bag. Overall, sales were extremely good, growing by $1 billion to $6.5 billion. This represented an 18% increase from the 2007 totals. Furthermore, among all inputs, crop protection products enjoyed the highest percentage of positive sales for retailers, with 91% of respondents reporting their revenue in this category grew anywhere from 1% to more than 5%. For the most part, retailers credited renewed interest in different types of herbicides and insecticides to combat growing resistance problems, coupled with strong interest in fungicide applications, for these increases.

Despite these gains, however, the market share for crop protection products continued downward as the category was unable to outpace overall crop input sales growth and the percentage increases for fertilizer and seed. As a result, crop protection products’ market share has dropped to 34% in 2008, down 3% from 2007 and more than 13% since the start of the 21st century.

Speaking of seed, 2008 was another solid year for the category. Overall, seed sales among the CropLife 100 retailers grew 29%, topping $2.2 billion. Seed now represents a 12% market share of all crop input sales, up 1% from 2007.

As has been the case for the past several years, biotech seeds were the primary market driver for the seed category. In 2008, 90% of CropLife 100 respondents recorded higher biotech seed sales than the year before. Consistently since 2000, this segment of the seed business has been in the 90% range each and every year.

Not surprisingly, traditionally bred seed has lagged behind. In 2008, only 36% of respondents had sales increases of 1% to more than 5% in this segment. Thirty-two percent saw sales declines ranging from 1% to more than 5% and 32% had flat sales.

Finally, for custom application, 2008 were mixed. On the plus side, this category saw its annual revenue increase 1%, from $827 million in 2007 to $837 million in 2008. Retailers thought that more corn acres and more persistent field pests helped grow this segment of their businesses.

On the negative side, custom application failed to keep pace with the overall marketplace growth. Therefore, its market share slid 2%, down from 6% in 2007 to 4% in 2008.

A Quarter Of Plenty

Back during the first CropLife 100 ranking in 1984, the editors at the time bragged about how prosperous many members of the listing were. “There are 25 companies with sales of over $80 million, maybe not high enough to make the Fortune 500, but still a spectacular accomplishment,” said the magazine.

Fast forward 25 years, and this year’s CropLife 100 still has one-quarter of its members with impressive sales figures — now northward of $100 million. More impressively, however, there are five members of the listing with sales of more than $1 billion. Furthermore, the top company on the list — Agrium Retail — would rank on the current Fortune 500, somewhere around number 440 or so with sales in the “multiple billion-dollar” range.

Indeed, Agrium Retail was involved in the single biggest event to hit the industry in some time in 2008. In December 2007, the company announced plans to acquire United Agri Products (UAP), then the no. 2 ranked company on the CropLife 100.

Once the deal was completed, the combined company boasted more than 800 retail outlets. Combining these two huge retailers, coupled with Agrium’s purchase of Royster-Clark in 2006, means that almost 30% of the total sales within the CropLife 100 in 2008 moved through outlets sporting the Agrium Retail name.

CropLife magazine would like to thank all the CropLife 100 retailers for helping make this report possible. We appreciate your time spent filling out our annual survey form. On the following pages, you will find the 2008 CropLife 100  rankings, charts on some of our key findings, and detailed analysis on a few of the key crop input areas.

Sfiligoj is the Editor for both CropLife and CropLife IRON magazines. He travels regularly to cover industry events and has been dedicated to the ag retail industry since he joined the staff in 2000.

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