Like always, agriculture will continually have very high-highs, and some very low-lows. It’s unpredictable. It’s irregular. It’s agriculture. That is the way of life in the agriculture industry and there is no denying it. Let’s see what CropLife.com has to say about the 2014 year.
“This past year was filled with ups and downs for the nation’s top ag retailers. From the record-breaking revenue generated by the CropLife 100 companies, to a consolidation frenzy that reached new heights, 2014 had it all.
So what will 2015 have in store for ag retailers? Many signs point to a down year, sparked mostly by fertilizer’s expected slower demand. But there are also subtle hints that things won’t be all doom and gloom. Based on findings from the 2014 CropLife 100 survey, as well as my gut instinct, here are five bold predictions for what could happen between now and the end of the year.
Prediction No. 1: Two top 50 retailers will be acquired. Consolidation occurs within the CropLife 100 every year. But last year’s activity was quite compelling in terms of activity — and perhaps a sign of things to come. Long-time CropLife 100 company Hintzsche Fertilizer sold its business to No. 2 ranked Helena Chemical last fall. Under normal circumstances, this major acquisition would have been the biggest headline of the year. But not with the ultra-aggressive Pinnacle Agriculture Holdings doing what it does. The No. 6 ranked retailer acquired 17 companies in 2014, including top 100 firm East Kansas Chemical. While a lot of emotional- and business-related issues arise in any merger or acquisition, it’s often the right thing to do. As Executive Editor Paul Schrimpf points out in his recent column, “Rightsizing Ag Retail,” too often these deals don’t foster tough, realistic conversations about the need to close down facilities that are no longer efficient. And with the need for improved efficiency that comes from consolidation, I think there’s a good chance at least two large retailers come to this realization and agree to sell their businesses by year’s end.
Prediction No. 2: Fertilizer sales will drop 5%. With corn prices expected to hover around $4 per bushel through 2020, according to a recent report, there’s good reason fertilizer sales will follow suit, at least in the near term. Our annual CropLife 100 surveysupports this trend. In 2010, CropLife 100 respondents recorded a 10% increase in their fertilizer revenues to $10.1 billion. By 2011, this figure had grown significantly, up 26% to $12.7 billion. In 2012, sales jumped another 20% to $15.2 billion. But in 2013, the nation’s top ag retailers saw fertilizer sales growth of only 0.7%. And in 2014, the fertilizer category sales dropped 3% during the year to $14.8 billion. Again, most retailers blamed steadily falling commodity prices, particularly for corn, for depressing their fertilizer revenues the last two years. I hope I’m wrong on this prediction, but all signs point to an even greater drop in fertilizer sales in 2015.
Prediction No. 3: Crop protection sales will increase 10%. This is kind of a contrarian prediction here. One would think if fertilizer revenue drops, then everything else will follow. But our 2014 CropLife 100 survey unveiled something different. The crop protection products category followed up on its 8% gain in 2013 with another 9% boost during 2014. Sales volume for the category now sits at $9.3 billion — and trending up. Herbicide-resistant weeds will continue to be a serious issue — 20 states have reported resistance — for retailers and their grower-customers. Thus, demand for herbicide could push overall sales for crop protection products up to double digits this year.
Prediction No. 4: Revenue from precision ag services will reach $250 million. This might be the boldest of these bold predictions, but one I still feel strongly about. Last year, the nation’s largest ag retailers recorded huge growth from revenue generated by precision ag services. According to our CropLife 100 survey, precision ag sales totaled $214 million in 2014, an incredible 32% jump from 2013 to 2014. Precision ag will continue to trend upward in 2015 — led by successful platforms such as Monsanto’s FieldScripts and Pinnacle’s Sanders/OptiGro — as retailers use this technology to gain a competitive edge while providing an invaluable service to their customers.
Prediction No. 5: 4R Nutrient Stewardship will go mainstream. This prediction is certainly not as quantifiable as the first four, but is one we can see happening before our very eyes. Each year, more and more retailers are implementing the 4R principles of nutrient stewardship. Those principles — the Right fertilizer source, at the Right rate, at the Right time and in the Right place — have become so deeply ingrained in our best management practices, that they’re now second nature. As agriculture continues to meet the challenges of feeding a growing population, while responding to increased scrutiny of land and resource management, the 4Rs will help everyone achieve sustainability in 2015 and beyond.
If you would like to comment about my predictions for 2015 or offer some of your own, please leave a reply in the box below.”