PACE 2009 Annual Report

Growers

The great fertilizer price crash of 2008, which left fully stocked retailers holding thousands of tons of over-market-price fertilizer that growers did not want to buy, has created some relational scars between retailers and growers, and retailers and suppliers. While retailers say their relationships with grower-customers have been evolving into being more about business than relationships anyway, this event has accelerated the trend. Handshake deals are increasingly being replaced by written contracts that must be adhered to by both sides.

Also, as growers become more sophisticated, and younger owners take over for the aging farm population, ag retailers will increasingly need to segment their customers by the level and type of service they demand. Size is one way consideration, but not all large growers are sophisticated. Younger growers have shown generally less interest in relationships, and are less tied to proximity as a reason to buy from a particular retailer. They also are steeped in agronomic training vs. their forebears.

Fertilizer

Although fertilizer prices generally have returned to their historic norms, many grower-customers have hesitated to apply more macronutrients to their fields. If crop and fertilizer price instability returns, some growers may be tempted to “mine” soils again, against the recommendations of agronomists. According to multiple sources, soil tests in many areas are making a strong case against mining in 2010.

In addition for crop nutrients, with the change in administration, there has been a renewed interest in regulation related to agriculture from several standpoints: cap-and-trade, fertilizer run-off control, spray drift, hazmat transportation, storage, ew-evaluations, etc. Federal and state associations are working overtime to educate legislators and get agriculture’s point of view heard.

Luckily, natural gas prices have dropped from their high in February 2009. This is because shale recovery methods have added significantly to domestic natural gas stocks (providing a 300-year supply, according to some sources). This should have a long-term impact on nitrogen pricing and availability for U.S. retailers.

Crop Protection

Retailers saw a significant decline in fungicide applications in many areas of the country as grower-customers cut back on preventive applications. It remains to be seen if this market will recover during an uncertain 2010.

Branded crop protection products have made a bit of a comeback compared with their generic counterparts during the past couple of years. Observers report that with the exception of generic brands of glyphosate, grower-customers tend to prefer branded crop protection products to their post-patent counterparts.

Spray drift remains a big area of concern for the marketplace. According to industry insiders, activists have kept up the pressure on EPA to adhere to the 6th Circuit Appeals court rulings on buffer zones and product use. The industry is hopeful it can get the Supreme Court to review/overturn this measure, but this could take some time to accomplish.

Seed/Biotech

Recent investments in “feet on the ground” by mega-biotech companies revealed that they are not relying on dealers to protect and sell the value of traited seed. They are happy to use the retailer for inventory storage, fulfillment, and training, but seed manufacturers are not entrusting their futures to retailers. In some instances, the seed company employee works out of the dealership, and the dealer provides product logistics and customer service. Some retailers have spent millions training their seed businesses but are not being afforded the opportunity to sell at margins necessary to keep it as a sustainable part of the retail model. Biotech company investment could signal a shift toward a “pharmaceuticals” model of selling that is more one-on-one with company representatives and more consultative as the technologies get more complex.

Some industry insiders say that demand for conventional seed in their markets has continued to grow, in part as a response to weed resistance concerns, but also in response to food processors looking for non-biotech sources.

Technology

Automatic steering systems have become popular at all levels of the ag retail community, from large multi-nationals to small independents. This popularity should continue as the technology improves accuracy and unit costs come down even further.

The use of remote diagnostics and unit support will become more widespread as wireless technology improves. This will allow retailers to capture and store application data much faster and more efficiently than is currently possible in many parts of the country.

Biofuels

Retailers report that demand and excitement regarding biofuels has dropped off significantly with the drop in oil prices that has made ethanol production less profitable. Still, because it seems that subsidies are not likely going away, and next generation technology is at least five years off, the belief is that the corn ethanol marketplace has at least a medium-term future. In the interim, corn ethanol will be at the mercy of non-market based factors such as mandated blend levels and minimum mandated use levels, which can’t be predicted or controlled.

Leave a Reply

Featured Stories

EquipmentAGCO Announces Operator Of The Year Finalists
November 20, 2014
Four custom applicators have been selected by AGCO Application Equipment as finalists for 2014 Operator of the Year, an honor that recognizes them as being among the top professionals in their industry throughout North America. Read More
CropLife 100Pinnacle Ag Acquires Colorado Aerial Application Outlet
November 17, 2014
Ft. Lupton, CO-based Reck Aviation — a full-service chemical application company providing aerial crop applications of fertilizers and crop protection products — will operate as part of Pinnacle's AgOne Application Services brand. Read More
Seed CareSeed Care Success Stories: Prible Ag Products And Valent
November 3, 2014
These two companies combined forces to help fight disease pressures in Northern Indiana and Ohio. Read More
InsecticidesValent U.S.A., MGK Form Marketing Agreement
October 24, 2014
Valent has formed an agreement with Minneapolis-based MGK to manage the marketing and sales of MGK’s crop protection line of insect control products within the U.S. beginning April 1, 2015. Read More

Trending Articles

HerbicidesAdjusting To The New Reality Of Weed Control
November 4, 2014
Even with new cropping systems being readied for market introductions, weed control will remain a challenge for many. Read More
StewardshipResponsibleAg Begins Auditor Training
October 31, 2014
ResponsibleAg auditor training is now underway at the Ford B. West Center for Responsible Agriculture in Owensboro, KY. Read More
InsecticidesNew Research Study Shows The Value Of Neonics
October 29, 2014
The study evaluated seed treatment, soil and foliar uses of neonicotinoid insecticides in the U.S. and Canada. Read More
Crop InputsPlatform Specialty Products To Acquire Arysta LifeScience
October 20, 2014
Once the acquisition is complete, Platform Specialty Products will combine Arysta LifeScience with previously acquired companies Agriphar and Chemtura Crop Solutions. Read More
Seed/BiotechMonsanto Offers New Support For Ferguson, Area Communities
October 8, 2014
Monsanto Co. has committed $1 million in new support for several collaborative efforts in Ferguson, MO, and surrounding communities in North St. Louis County. Read More
Seed/BiotechUnapproved Genetically Modified Wheat Found In Montana
October 3, 2014
USDA reports that one year after discovery of Monsanto's unapproved wheat in a single Oregon field disrupted U.S. wheat export sales, the GMO wheat has again been found in Montana. Read More

Latest News

soybean field
Crop InputsABM Patents Microbial R&D Technique
November 25, 2014
Focused Microbial Diversity (FMD) is a newly patented technique employed by Advanced Biological Marketing (ABM) to research and develop microbials that will be used in ABM products Read More
Crop InputsStorage Options Help Grain Growers Go To Market
November 24, 2014
While on-farm storage in a traditional upright storage bin is one possibility for storing grain, it may not be for everyone. Read More
Eric SfiligojGiving Thanks For Another Great Year
November 24, 2014
As Thanksgiving Day 2014 arrives, agriculture has plenty to be thankful for. Read More
Crop InputsSyngenta Cost-Cutting Program To Affect 1,800 Jobs
November 24, 2014
The company's Accelerating Operational Leverage program will result in job reductions and relocations totaling around 1,800 across the company, the majority of which will occur in 2015. Read More
EquipmentAGCO Announces Operator Of The Year Finalists
November 20, 2014
Four custom applicators have been selected by AGCO Application Equipment as finalists for 2014 Operator of the Year, an honor that recognizes them as being among the top professionals in their industry throughout North America. Read More
MicronutrientsH.J. Baker Expands Tiger-Sul Business
November 20, 2014
H.J. Baker has created and filled two strategic positions in business development and sales within its Crop Performance Division. Read More
soybean field
FertilizerGeneral Mills Honors United Suppliers For Nitrogen Opti…
November 19, 2014
United Suppliers winning proposal detailed SUSTAIN, a consulting network that provides customized products and services for farmers using a needs-based system approach. Read More
EmployeesOhio AgriBusiness Association Awards $25,000 In Scholar…
November 19, 2014
Each year, the Ohio AgriBusiness Association Educational Trust scholarship program awards scholarship dollars to students enrolled in an agriculture-related field attending several state colleges. Read More
ManagementServi-Tech Names New CEO
November 17, 2014
Servi-Tech has named Greg Ruehle its new president and CEO. Read More
CropLife 100Pinnacle Ag Acquires Colorado Aerial Application Outlet
November 17, 2014
Ft. Lupton, CO-based Reck Aviation — a full-service chemical application company providing aerial crop applications of fertilizers and crop protection products — will operate as part of Pinnacle's AgOne Application Services brand. Read More
Eric SfiligojMcDonald’s Message: Biotech Crops Scarier Than Cancer
November 17, 2014
Despite their potential health benefits, one of the world’s largest potato users will pass on a new biotech offering. Read More
MicronutrientsWinField Releases 2014 NutriSolutions Results
November 14, 2014
A number of significant regional and national crop deficiency trends emerged from the 2014 WinField NutriSolutions tissue sampling program. Read More
FertilizerH.J. Baker Opens Chinese Production Lines
November 14, 2014
The occasion was the official launch of the Tiger-Sul sulphur Bentonite production line of two much anticipated fertilizer products in China, T90CR sulphur fertilizer and TZinc micronutrient enhanced sulphur fertilizer. Read More
ManagementOhio Certified Crop Adviser Program Accepting Nominatio…
November 14, 2014
The award recognizes an individual who delivers exceptional customer service for farmer clients in nutrient management, soil and water management, integrated pest management and crop production in Ohio. Read More
HerbicidesSyngenta Announces Acuron Trial Plot Results
November 14, 2014
Acuron was tested at 167 trial locations across 35 states. Trials included 95 Syngenta locations, 54 university locations and 18 distributor locations. Read More
Crop InputsVerdesian Expands Sales Force
November 13, 2014
The new sales representatives will work with growers, retail partners and distributors to oversee technical training and product education. Read More
EquipmentAGCO Raises $100K For Wounded Warrior Project
November 13, 2014
AGCO Corp. partnered with local AGCO dealers across the U.S. and Canada to raise nearly $100,000 in support of wounded service veterans. Read More
HerbicidesDow AgroSciences Announces Launch Of Enlist Duo Herbici…
November 12, 2014
It will be launched in conjunction with a stewarded introduction of Enlist corn, and seed production of Enlist soybeans in 2015. Read More