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

Latest News
UncategorizedPrecision Ag, Iowa Water, and GM Corn Updates
March 24, 2017
Editors Paul Schrimpf and Eric Sfiligoj look at the state of precision agriculture, the dismissal of the Des Moines Water Read More
Pam Marrone
Crop InputsMarrone Bio Innovations Enters Biostimulants Market Wit…
March 23, 2017
Marrone Bio Innovations, Inc. is expanding beyond biopesticides and crop protection and into the biostimulant market by commercially launching Haven Read More
Nutrients for Life Foundation Teacher
FertilizerNutrients For Life Foundation Celebrates 10 Years Teach…
March 23, 2017
Those in agriculture know fertilizer is a vital ingredient to grow strong, productive crops. In fact, fertilizer is responsible for Read More
ManagementThink You Know Water? Take WinField United’s R…
March 22, 2017
Water is among our most precious resources, and arguably the hardest working, with just one percent available for human use, Read More
Corn Field
LegislationTFI Hopes Court Dismissal Is ‘Final Chapter’…
March 20, 2017
The Fertilizer Institute (TFI) released the following statement from President, Chris Jahn on the March 17, 2017, federal court dismissal Read More
Wheat Growers
Industry NewsWheat Growers CEO Dale Locken To Retire
March 20, 2017
CEO Dale Locken has announced that he plans to retire from Wheat Growers. Locken has served almost 15 years as Read More
Bayer Monsanto
Eric SfiligojBayer-Monsanto: Life, LibertyLink, And The Pursuit Of R…
March 20, 2017
As the calendar officially turns to spring, life is in full renewal mode. Flowers are blooming, birds are singing, and Read More
Corn Field
Crop InputsUltra Yield Micronutrients Acquires Kronos Micronutrien…
March 16, 2017
Ultra Yield Micronutrients, Inc. ”Ultra”, an affiliate of Cameron Chemicals, Inc., is pleased to announce that it has acquired the Read More
ManagementSnowstorms, Asset Sales, and Soybeans Prices
March 16, 2017
Editors Paul Schrimpf and Eric Sfiligoj discuss the weather, precision ag, crop protection company mergers, and commodity prices in this Read More
Soybean Field
Seed/BiotechBayer Invests $8.1 million In Soybean Advancement In Th…
March 16, 2017
Growers in Illinois and across the Midwest now have the added benefit of a state-of-the-art soybean research facility, increasing accessibility Read More
CHS
CropLife 100CHS Acquires Western Co-op Transport Association
March 16, 2017
CHS Inc., North America’s leading farmer-owned cooperative and a global energy, grains and foods company, has purchased Western Co-op Transport Read More
Young corn plants in soil
HerbicidesBest Management Practices To Control PPO-Resistant Weed…
March 14, 2017
Weeds resistant to the class of herbicides called protoporphyrinogen oxidase (PPO) inhibitors are spreading at a faster rate than weed Read More
Photo credit: The United Soybean Board/The Soybean Checkoff.
Eric SfiligojFungicide Resistance On The Horizon
March 13, 2017
For many years now, the agricultural market has struggled to keep ahead of an ever-growing number of herbicide-resistant weeds. According Read More
Management2017 Commodity Classic Review
March 10, 2017
Editors Paul Schrimpf and Eric Sfiligoj discuss what happened at the recent Commodity Classic in San Antonio. Read More
Farmer using AgriSync
ManagementMajor AgriSync Update Aims To Extend Ag Experts’ Power …
March 10, 2017
AgriSync announced a major update to its leading collaboration and service management tool for professional ag advisors and their farmer Read More
Agrible Pocket Spray Smart App
EquipmentNew Agrible Pocket Spray Smart App Alleviates Spraying …
March 10, 2017
There’s a new app to help farmers decide when to spray their fields. Pocket Spray Smart is a free iOS Read More
BPIA logo
Crop InputsBiological Products Trade Association Changes Name, Exp…
March 9, 2017
The Biological Products Industry Alliance (BPIA), formerly the BioPesticide Industry Alliance, is the new name of the rapidly growing U.S.-based Read More
BBI MagnaSpread Salford BBI
Equipment14 Fertilizer Spreaders For 2017
March 9, 2017
Application equipment manufacturers stressed flexibility and accuracy with this year’s crop of fertilizer spreaders. From AGCO’s TerraGator TG9300B and Case IH’s 810 Read More