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

CropLife 100South Dakota Wheat Growers To Add Grain-Agronomy Facility
September 26, 2014
Planned to be constructed in Kennebec, the facility will be located along the soon-to-be rehabilitated line of heavy-rail service from Chamberlain to Presho. Read More
FertilizerCF Industries Confirms Merger Of Equals Discussions With Yara International
September 23, 2014
CF Industries Holdings, Inc. has confirmed that it is in preliminary discussions with Yara International regarding a potential merger of equals transaction. Read More
Seed/BiotechUSDA Approves Enlist Following Rigorous Review
September 18, 2014
Dow AgroSciences now awaits EPA registration of Enlist Duo herbicide, the companion herbicide to the Enlist traits, which is expected in the near future. Read More
CropLife 100Pinnacle Acquires Kansas-Based Cedar Ridge Supply
September 16, 2014
Cedar Ridge Supply will operate as part of Pinnacle's Performance Agriculture brand. Read More

Trending Articles

Equipment2014 Product Of The Year Voting
September 19, 2014
Many new products were introduced to the ag retail marketplace this year. From this group, CropLife IRON and its consulting partners have selected five finalists for the Product of the Year award. Please cast your vote today to help us determine the winner. Read More
FertilizerFall Fertility 2014: Forecasting Fertilizer Use
September 7, 2014
Great crops this year have tapped the soil, and fall work is definitely called for, but how challenging will that get? Read More
CropLife 100CHS To Build $3 Billion Fertilizer Plant In North Dakota
September 5, 2014
The fertilizer plant in Spiritwood will be the single largest investment in CHS history, as well as the single largest private investment project ever undertaken in North Dakota. Read More
EquipmentNew Holland Acquires Miller-St. Nazianz
September 3, 2014
The assets of Miller acquired as part of the transaction will become part of New Holland Agriculture, a CNH Industrial brand, building on a successful four-year partnership between the two companies. Read More
CropLife 100Pinnacle Acquires East Kansas Chemical
September 2, 2014
Ranked 82nd on the CropLife 100, East Kansas Chemical will operate as part of Pinnacle's Performance Agriculture brand. 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

Latest News

Syngenta
Crop InputsSyngenta Launches Plant Breeding Academy
October 1, 2014
Syngenta announces the release of its Breeding Academy, a global initiative designed to enable the continued development of scientists at Syngenta and beyond. Read More
FertilizerFertilizer Outlook And Technology Conference Set For No…
September 30, 2014
Conference participants can expect to gain perspective on the outlook for agriculture and major fertilizer materials and inputs from industry experts. Read More
MicronutrientsVerdesian Acquires Micronutrient Supplier
September 30, 2014
Verdesian Life Sciences has acquired QC Corp., a producer and supplier of granular and dry micronutrients and ferrous sulfate products. Read More
Eric SfiligojHearing From Young Ag Voices
September 30, 2014
Potential future leaders in ag retail had the chance to shine at the recent Mid America CropLife Association meeting. Read More
WebinarsUpcoming Webinars
September 30, 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
Crop InputsSyngenta Appoints New Chief Operating Officer
September 29, 2014
Jon Parr will succeed retiring COO John Atkin at the end of the year. Read More
CropLife 100South Dakota Wheat Growers To Add Grain-Agronomy Facili…
September 26, 2014
Planned to be constructed in Kennebec, the facility will be located along the soon-to-be rehabilitated line of heavy-rail service from Chamberlain to Presho. Read More
CropLife 100GROWMARK Announces Vice President Appointments
September 25, 2014
Two individuals have been appointed Vice President positions on the GROWMARK executive team. Read More
FertilizerFertilizer Industry Organizations Join Global Alliance …
September 25, 2014
The Fertilizer Institute, the International Plant Nutrition Institute and the International Fertilizer Industry Association are encouraging the industry to promote the proper use of fertilizer products to minimize their environmental impact. Read More
Precision AgARA Organized Precision Forum Hits Capitol Hill
September 24, 2014
The Coalition for the Advancement of Precision Agriculture (CAPA) hosted its inaugural Precision Ag Forum, Sept. 18, in Washington, D.C. Read More
FertilizerFactors To Consider When Placing Fertilizer With Seed
September 24, 2014
The type of crop, fertilizer source, row spacing and soil environment all affect how much fertilizer can be safely applied with seed. Read More
FertilizerSidedressing Manure Into Corn Has Promising Results
September 24, 2014
Applying manure to growing crops can boost yields, reduce nutrient losses and give livestock producers another window of time to apply manure to farm fields. Read More
FertilizerWhen To Sample Manure For Analysis
September 24, 2014
Because the goal is to collect a sample that represents the manure actually being applied, the best time to sample is during loading or field application. Here's why. Read More
Syngenta
Seed/BiotechSyngenta Faces Second Lawsuit Over Agrisure Viptera Cor…
September 23, 2014
A second company has sued Syngenta AG over sales of genetically modified corn seed not approved by China. Read More
StewardshipCover Crops Field Guide For Farmers Expanded
September 23, 2014
Farmers interested in planting cover crops to improve soil health now have an updated and expanded resource in the second edition of the Midwest Cover Crops Field Guide. Read More
HerbicidesArysta LifeScience Launches Contest For Wheat Growers
September 23, 2014
The Flush after Flush Photo Finish contest encourages farmers across the U.S. to participate through Instagram or Twitter using the hashtag #FlushAfterFlush. Read More
FertilizerCF Industries Confirms Merger Of Equals Discussions Wit…
September 23, 2014
CF Industries Holdings, Inc. has confirmed that it is in preliminary discussions with Yara International regarding a potential merger of equals transaction. Read More
StewardshipProgram To Examine Ag-Related Practices, Policies To Pr…
September 22, 2014
A panel discussion on October 14 will include a significant discussion on key issues and solutions related to all aspects of harmful algal blooms. Read More