The calendar has turned and that sudden rush of wind you are hearing is probably not Mother Nature. It’s more likely the collective sigh of relief being exhaled by members of the ag community (and just about everyone else in the world) now that 2009 has finally come to an end.
Let’s face it — 2008-09 were two of the most difficult, challenging years agriculture has ever had. Among the low points were crop input suppliers seeing their sales cut in half or more from their 2008 highs, ag retailers taking millions of dollars in write-downs on unsold fertilizer inventories, ag equipment orders grinding to a halt, and persistent wet weather keeping the majority of grower-customers from finishing their 2009 harvests before winter set in. These were on top of increased legislative activity impacting the ag market and a general inability to obtain credit.
Neatly summing up the year, Mike Wilson, president/CEO for Agrium, provided this footnote. “Our guys want 2009 behind them,” he said, speaking at December’s Agricultural Retailers Association (ARA) meeting. “Our company recently took a $200 million write-down on inventory. Collectively, we are forgetting about 2008 and 2009 and looking at 2010 as being like 2007.”
Since mid-October, I’ve been hearing this comparison, equating the future of 2010 to the past performance of 2007. In terms of money and crops, this would be great. Back in 2007, CropLife 100 retailers pulled in $14.7 billion in revenue, up more than $1 billion. Crop-wise, input-intensive corn was king, with almost 94 million acres planted.
Despite these positives, I’m hoping the industry doesn’t completely return to a 2007 mind-set. After all, you could argue that the attitudes and practices spawned during the boom times of 2007 and early 2008 led directly to the busts of late 2008 and 2009.
Thankfully, I don’t think this will be the case. In this issue of CropLife®, we are providing readers our annual forward-looking take on what’s to come for ag retailers in the new year. Early indications are that lessons learned the past two years — particularly in the fertilizer and crop protection markets — will not be forgotten. Retailers are purchasing these inputs in a more cautious, customer-driven fashion and are unlikely to return to the “buy early and sell later” mantra of 2007.
In addition, the seed segment looks like it will have much more scrutiny than ever before. According to many retailers, predictions at the start of the 2000s that seed would ultimately displace crop protection in their operations have largely not panned out. Some dealers are actually dropping seed from their offerings for 2010 or separating this part of their operations to make the segment “pay for itself.”
Overall, retailers seem ready to return to some normalcy. “The past two years were interesting, but it will be nice if 2010 is more like an average year,” said one retailer at ARA.
Following the wild rides of the past 24 months, average results will probably be fine with just about everybody.
