The Color Purple

As the marketplace gears up for the 2010 spring season, it seems as if the industry is dividing up into two distinct camps when it comes to predicting how the year will play out. Saying this is “black or white” sounds too cliché. So, in honor of how political pundits describe the national divide these days, I will label these camps the Red and the Blue.

In the Red Camp, everyone is angry. These individuals have watched their healthy profit margins from 2007 evaporate and, in some cases, turn into a sea of red ink on their 2008 and 2009 balance sheets. Red campers are angry that the good times of the mid-2000s didn’t last (and that they were unprepared for the crash in fertilizer inventories vs. prices).

But by the same token, individuals in the Red Camp are convinced 2010 will be a harbinger of better days ahead. Grower-customers who favor corn have spent the better part of the past two seasons “mining” their soils for crop nutrients without putting down needed items such as phosphate (P) and potassium (K). “If they want to maintain the record yields from 2009, they will have to start buying P and K again,” say Red campers. Along with improved fertilizer sales, Red campers believe other crop inputs will follow a similar growth curve and the industry will return to its profitable ways, a la 2007.

Meanwhile, in the Blue Camp, individuals are deeply depressed, or blue, in their outlook. These retailers are looking at the market in a completely different light, with most convinced the down times of 2008 and 2009 will usher in an age of depressed profit margins, lower input usage, and more custom application work being done by grower-customers themselves. “Now that growers have maintained high yields without doing as much work, they will be satisfied to sit back and wait until things get desperate before making a purchase,” say Blue campers.

What do I think? Truthfully, I can see both sides being right in some ways. In that sense, color me purple.

I believe Red campers are right when they think things have to improve in 2010. But the bar is so low compared with the performances of 2008 and 2009, this shouldn’t be hard to accomplish. On the flip side, Blue campers are probably right that growers will be much more reluctant to spend money than ever before.

Viewing things from a purple perspective, 2010 will probably be a “one step forward, one step back” kind of year. Retailers will see increased fertilizer profits, with formal contracts locking in deals far in advance of delivery. However, with record harvest numbers for the 2009 crop, commodity prices have already dipped, meaning grower-customers will be watching every penny they need to spend throughout the year. Credit will be available for some companies, but others will struggle to find banks willing to back them.

All this means is that the industry will have plenty of Red and Blue stories to tell in 2010. But the overall market performance will probably be colored a middle-of-road purple in the end.

Leave a Reply

Latest News
FertilizerGypsum Added To List Of Conservation Practices
July 28, 2016
Crop farmers in a growing number of states may be eligible for financial assistance from the USDA’s Natural Resources Conservation Read More
Management2016 CTIC Cover Crop Survey: 33% Report ROI From Cover …
July 28, 2016
Insight from 2,020 farmers from across the country reflected enthusiasm for cover crops and—for the fourth year in a row—found Read More
Palmer pigweed seedhead in cotton
HerbicidesStudy: Fall Weed Controls Can Make Significant Impact O…
July 28, 2016
An article published in the latest issue of the journal Weed Science shows that adopting harvest-time and post-harvest weed controls Read More
InsecticidesSyngenta: Beware Of Early Stinkbug Threat To Soybeans
July 28, 2016
With the record warm temperatures this past winter and confirmations from early entomologist reports, Syngenta encourages growers to monitor stinkbug Read More
Peanut field
Crop InputsVerdesian Introduces New Inoculant For Peanuts
July 28, 2016
As planning begins for the next growing season, Verdesian Life Sciences adds Primo Power CL, a new liquid inoculant, to Read More
Soil Young Corn
Crop InputsSmithsonian: 5 Things to Know About New GMO Labeling Bi…
July 27, 2016
On July 14, the House of Representatives passed a bill requiring large food companies to label products containing genetically modified Read More
Palmer pigweed in soybean stubble
HerbicidesSpecial Issue Of Weed Science Explores Human Aspects Of…
July 27, 2016
Weeds that evolve resistance to herbicides are a serious threat to global agricultural production. In this Special Issue of Weed Science, Read More
CHS Primeland
CropLife 100CHS Businesses In Washington, Idaho Combining For Great…
July 27, 2016
As full-service ag retailers, CHS Primeland and CHS Farmers Co-op collectively serve farmers and other customers in 15 counties in Read More
Storage Tanks at Nachurs
Crop InputsNACHURS Joins Field to Market
July 27, 2016
NACHURS announced today that it has joined Field to Market: The Alliance for Sustainable Agriculture, a leading multi-stakeholder initiative working Read More
Illinois Researchers
FertilizerMeasure Of Age In Soil Nitrogen Could Help Precision Ag…
July 26, 2016
What’s good for crops is not always good for the environment. Nitrogen, a key nutrient for plants, can cause problems Read More
Kochia
Crop InputsNufarm Launches New Herbicide for Resistant Kochia
July 25, 2016
Nufarm introduces Scorch herbicide for U.S. farmers and ranchers combating a broad range of troublesome broadleaf weeds. A unique premix Read More
ManagementNew Rabobank Report Calls for Farmer ROI Focus
July 25, 2016
As U.S. row crop farmers brace themselves for a third year of negative margins, Rabobank believes farmers must lower the Read More
Syngenta Sign
Crop InputsBloomberg: Syngenta-Chem China Deal on Track for Regula…
July 25, 2016
Syngenta AG, which has agreed to be taken over by China National Chemical Corp. for $43 billion, said talks with Read More
ManagementGROWMARK Meeting Visit, Company Takeover Updates, and R…
July 22, 2016
Editors Paul Schrimpf and Eric Sfiligoj discuss their recent speaking engagement at GROWMARK’s eastern event, crop protection company merger rumors, Read More
Crop InputsMonsanto: EU Approves Roundup Ready 2 Xtend Imports
July 22, 2016
Monsanto Co. announced today that the European Commission has granted import approval for Roundup Ready 2 Xtend soybeans. This milestone Read More
Syngenta headquarters in Basel, Switzerland
Crop InputsSyngenta Announces Alfalfa Seed Split Off
July 22, 2016
On September 1, 2016, Syngenta will transfer sales and distribution of alfalfa seed to the NEXGROW branded business that is Read More
Dow DuPont
Crop InputsDuPont, Dow Shareholders Approve Merger
July 21, 2016
DuPont and The Dow Chemical Company announced that, at their respective special meetings of stockholders held today, stockholders of both Read More
ManagementLand O’Lakes Announces SUSTAIN Business Unit, Oth…
July 20, 2016
Land O’Lakes, Inc. today announced the formal organization of a new business unit, SUSTAIN, and its leadership. SUSTAIN will focus Read More