If you as a child watched the television program Sesame Street, you might remember that each episode was brought to you by a different letter of the alphabet. In a sense, the 2017 ag retail marketplace followed a similar script. But since this was a year-long event, there were actually three letters that led the way.
The Letter C — Consolidation
Although the trend started in earnest during 2016, 2017 will definitely be remembered by many agricultural industry watchers as the year of consolidation. By the end of the year, two of the crop protection industry’s two mega-mergers — Syngenta/ChemChina and DowDuPont — had been completed and the new companies began taking shape. Still to come (hopefully by the end of the 1st quarter of 2018) is the marriage of Bayer and Monsanto. When the dust on all of these transactions takes place, there will be three large mega-corporations where there were once five, with sales ranging from $27 billion (Bayer/Monsanto) to just over $17 billion (DowDuPont).
Along with these mega-moves, the consolidating companies in many instances were forced to divest assets by regulators to complete their deals. Therefore, many of the companies in the “next tier” of crop protection manufacturers gained new products/lines as a result. This included FMC Corp., which purchased a substantial portion of DuPont’s crop protection business and BASF, which entered into a $6 billion agreement to buy crop protection and seed assets from Bayer including LibertyLink traits.
According to V.M. (Jim) DeLisi, Owner of Fanwood Chemical, the reason for all these moves ties back to money, or a lack thereof. “The largest driver of agrochemical mergers is the market price for crops such as corn and soybeans,” said DeLisi. “New product development costs, for both seeds and chemicals, are in the range of $300 million to $500 million. Only the largest companies have the resources and leverage to both finance and then recapture this level of investment.”
In addition to crop protection suppliers, the consolidation trend in agriculture during 2017 also trickled down to the ag retail level itself, particularly among cooperatives. At this start of the 21st century, there were an estimated 2,000 cooperatives spread out across the U.S. By the end of 2017, this number will be down to around 800. Several of the more high profile cooperative mergers during the years included Agland Co-op/Heritage Cooperative in Ohio, Ceres Solutions/North Central Cooperative in Indiana, and North Central Farmers Elevator and Wheat Growers in South Dakota.
“This is a merger of two financially strong, legacy-rich cooperatives,” said Wheat Growers Board President Hal Clemensen. “Our mission now is to seize the opportunity to build a new, even stronger cooperative better able to serve our member-owners.”
The Letter D — Dicamba
According to statistics, U.S. growers planted more than 25 million acres of seeds resistant to this long-time herbicide in an effort to combat an ever-growing list of resistant weeds. However, many researchers warned throughout the winter months of 2017 that dicamba application would be different than applying other herbicides and that off-target movement of the product could become a problem if proper precautions weren’t taken.
Then during the summer months, state agencies began receiving numerous complaints from growers that their non-dicamba crops were being damaged by dicamba spraying in nearby fields. In all, say experts, more than 1,000 such complaints were filed, including more than 800 in the state of Arkansas. By mid-July, Arkansas and Missouri both banned the further use of dicamba applications (although Missouri did rescind this ban a few weeks later).
Ultimately, there was a lot of finger-pointing going on between growers, applicators, suppliers, and regulators. In the end, the EPA considered the issue and proposed banning the use of dicamba for application work for the 2018 season after April 15. Suppliers such as Monsanto called this move “not in the best interest of farmers.” In the end, however, both Monsanto and EPA worked together to find some kind of middle ground.
In late October, the agency announced enhancements to Monsanto’s XtendiMax with VaporGrip Technology (XtendiMax) product label. The updates, which were voluntarily proposed by Monsanto and are supported by the EPA, include mandatory training, new recordkeeping requirements, and a Restricted Use Pesticide (RUP) designation, which will limit sale and use to certified applicators or those acting under their supervision.
“The vast majority of farmers using our low-volatility dicamba product have had tremendous success in 2017, both with on-target applications and good weed control,” said Ty Vaughn, Monsanto’s Global Regulatory Lead. “The product was extensively tested for volatility and other forms of off-target movement before it was made available to farmers this season.”
The Letter J — Jay Vroom
Away for the arenas of companies and products, perhaps the biggest other news from 2017 for agriculture involved a long-time spokesperson for the industry. In late September, CropLife America President/CEO Jay Vroom announced that he would be retiring from the association effective the end of 2018 following nearly 30 years at the post.
“When I stepped into this role in 1988, I don’t think I could have foreseen the challenges and triumphs the industry would encounter over the past three decades,” said Vroom at the CropLife America annual meeting in California. “I’m proud to have represented the industry as we addressed important issues ranging from Farm Bills to the Food Quality Protection Act and ESA to PREA.”
While he finishes up his term as head of CropLife America throughout the coming year, the association’s board will conduct a search to identify a replacement candidate. “After I retire, I plan to stay involved in agriculture and work on the critical issues of growing agriculture technology and improving profitability for American farmers.”