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
Eric SfiligojThe Need To Defend Production Agriculture
April 27, 2015
Last week, I spent the better part of my time on the road visiting with ag retailers and market suppliers Read More
TMX-2050 In-Cab Display Launch Run Screen
Precision AgIn-Cab Computing 2015: Connectivity, Compatibility Take Center Stage
April 23, 2015
In terms of in-cab computing solutions for the agriculture market, companies like Case IH, Topcon, Trimble, John Deere and Raven Read More
MicronutrientsSouthern States: An Inside Look At Our Tissue Sampling Program
April 15, 2015
Remember learning about the food pyramid in school? The nutritional diagram recommends the proper amount of nutrients you need on Read More
Marestail 18-24 inches infests cotton field
HerbicidesWeeds To Watch 2015: Resistance Remains Riling
April 7, 2015
Although several trade shows/groups are commemorating various anniversaries during 2015, there is another agricultural-themed milestone this year that will not Read More
Top 100 Articles
CropLife 100Pinnacle Agriculture Acquires Minnesota Retailer
April 14, 2015
Pinnacle Agriculture Holdings, LLC, ranked No. 6 on the CropLife 100,  has successfully acquired Liebl Ag, LLC in Ada, MN.  Read More
CropLife 100CHS, Aurora Cooperative Complete Fertilizer Storage, Grain Shuttle Loading Facility
April 13, 2015
CHS Inc., the nation’s leading cooperative and ranked No. 5 on the CropLife 100, and Aurora Cooperative (ranked No. 21) Read More
CropLife 100GROWMARK Acquires Missouri Refined Fuels Terminal
April 2, 2015
Bloomington, IL-based GROWMARK and Magellan Pipeline Co. have entered into an agreement in which GROWMARK will acquire the refined fuels Read More
CropLife 100Wilbur-Ellis Acquires South Dakota Retailer
April 2, 2015
Wilbur-Ellis Co.’s Agribusiness Division, a recognized leader in precision agriculture technology and the distribution and marketing of plant protection, seed Read More
CropLife 100The McGregor Co. Closes Smith-Kem Acquisition
April 2, 2015
The McGregor Co. — ranked No. 16 on the CropLife 100 list of largest U.S. ag retailers — has completed Read More
CropLife 100BRANDT Commemorates National Ag Day
March 20, 2015
The Illinois agriculture community gathered at BRANDT global headquarters on March 18 to celebrate National Ag Day behind this year's theme Sustaining Future Generations. Read More
Latest News
Sunrise Cooperative Norwalk Agronomy
StewardshipSunrise Cooperative Facilities All Certified In 4R Nutr…
May 5, 2015
The 4R Nutrient Stewardship Certification Program has announced that all four of Sunrise Cooperative Inc.’s agronomy branches, located in Attica, Read More
Crop InputsSyngenta Scientist Named 2015 National Inventors Hall O…
May 5, 2015
The National Inventors Hall of Fame (NIHF) announced its 2015 class of inductees. Among the 14 honored is scientist Mary-Dell Read More
Eric SfiligojIARC Glyphosate Report: A Closer Look At ‘Probabl…
May 5, 2015
By now, you’ve probably run across a story or two (probably closer to 100) detailing the ongoing controversy over the Read More
Syngenta
Eric SfiligojWill Monsanto And Syngenta Combine This Time?
May 4, 2015
Under the heading of “never say never,” it sounds as if crop protection/seed giants Monsanto Co. and Syngenta are once Read More
Dr. Bryan Young, Southern Illinois University, shows tour attendees a female Palmer amaranth plant.
Crop InputsPurdue Weed Scientist Publishes Weed Resistance White P…
May 4, 2015
Resistant weeds, the appropriate use of herbicides and integrated weed management strategies are highlighted topics in the new white paper, Read More
Industry NewsMonsanto-Syngenta Mega-Merger Would Drive More Deals
May 4, 2015
A combination of Monsanto Co. and Syngenta AG would set the stage for even more mergers and acquisitions, reports Brooke Read More
InsecticidesAgrian Announces New California Feature
May 4, 2015
Agrian announced today that it has developed a feature within its recommendation writing program that will support the California Department Read More
Storage Tanks at Nachurs
FertilizerNachurs Alpine Solutions: Liquid Fertilizer With Precis…
May 4, 2015
When it comes to fertilizer options in 2015 and beyond, ag retailers are taking a long, hard look at liquid. Read More
West Central Sac City growers
StewardshipIowa Lawsuit Challenges Ag’s Water Quality Efforts
May 3, 2015
Nutrient problems in west-central Iowa’s water supply made national headlines in March when the Des Moines Water Works (DMWW) filed Read More
Tim Hassinger Dow AgroSciences President and CEO
Crop InputsDow AgroSciences: Always About Agriculture
May 2, 2015
When you consider their respective backgrounds, it’s little wonder why Dow AgroSciences and new President/CEO Tim Hassinger ended up together. Read More
Nozzle spray close-up
AdjuvantsSpray Drift Enters More Complex Era
May 1, 2015
Off-target movement of crop protection products has been a problem for decades. The issue got more contentious when glyphosate-tolerant crops Read More
Crop InputsTop 10 Twitter Pics For #Plant15
April 30, 2015
Growers and ag retailers are working feverishly to plant this year’s crop. Fortunately, many of them still have time to Read More
ManagementIowa Retailer Sticks Up For Agriculture and New Spray D…
April 30, 2015
Paul Schrimpf and Eric Sfiligoj talk about how one Iowa ag retailer is working to defend agricultural practices and an Read More
Dow AgroSciences Logo wall
Seed/BiotechNew Soybean Trait Agreement To Use Dow AgroSciencesR…
April 30, 2015
Dow AgroSciences LLC, a wholly owned subsidiary of The Dow Chemical Co., Arcadia Biosciences, Inc. and Bioceres, S.A. have formed an agreement Read More
Confluence of St. Croix and Mississippi Rivers in Minnesota
StewardshipAgricultural Runoff Among Causes Of Water Quality Issue…
April 30, 2015
A new report released April 29 by the Minnesota Pollution Control Agency provides additional evidence that agricultural and urban runoff Read More
EquipmentTop 30 IRON WORKS Cartoons Of All Time
April 29, 2015
When CropLife IRON first started publishing more than a decade ago, long-time Publisher Al Strohmaier decided to start a cartoon Read More
StewardshipCPS-Hillsboro Becomes First ResponsibleAg Certified Fac…
April 29, 2015
Unlike a race where the first finisher takes home a medal or blue ribbon, safety and regulatory compliance doesn’t often Read More
HerbicidesWeed Scientists Offer New Definition For ‘Superwe…
April 28, 2015
The Weed Science Society of America (WSSA) has joined with six sister organizations to recommend a new definition for superweed Read More