he calendar has changed and we are now officially in the second decade of the 21st century. Gone are the days of people saying they are living in “two-thousand whatever.” Now, people will begin using the easier to say “twenty-ten” to describe the year. Of course, given how difficult the past 18 months have been for the world of ag retail, most individuals in our industry are probably already tired of looking backward.
And I agree. It’s a new year. Let’s move forward. In many regards, 2010 holds as much uncertainty for the future as 2008 or 2009 did. But that feeling of underlying dread is gone. Most of the ag retailers I’ve spoke with during December 2009 trade events believe 2010 will be a “normal year,” more of less. This means ag retailers should see some segments of their business up and some down. In the end, total sales will probably grow somewhere in the 2% to 4% range, which would again place the industry’s total market value in the neighborhood of $20 billion.
With lower prices in place, fertilizer is expected to rebound from almost two years of inactivity and grower-customers “mining the soil.” Crop protection, too, should enjoy a healthy sales year, but margins could remain tight, particularly with glyphosate prices declining as much as they have in the past few months. Custom application and seed could be the most interesting segments to watch, simply because historic trends would indicate growth for both. However, with an increasing number of large growers doing their own application work and seed margins on the wane, historic trends may not be a reliable benchmark for either category.
The other interesting trend to watch in 2010 is how capital moves within the marketplace. During late 2008 and the whole of 2009, manufacturers and retailers virtually halted investment in their businesses, horded cash, and waited. This freeze was still in place with many companies towards the end of 2009, despite signs that the worst was over for the industry’s economic health. Fortunately, there are indications that marketing budgets are once again being increased for 2010 and the number of new construction projects at the retail level seems to be on the upswing – at least based upon press releases and event invites I’ve already received for the year.
As winter gives way to spring, I’m betting this positive feeling will only grow stronger. It’s a new year and a new decade. Our industry has endured a hard winter, these past few years, so to speak. It’s time for a little springtime mood to appear.
