Article by Eric Sfiligoj CropLife March 3, 2014
When I first started covering the agricultural marketplace almost 15 years ago, I was told by many industry contacts and co-workers that grower-customers were a bit different. Many folks I talked with said growers were quick to pull back on spending once market conditions declined and slow to start spending as things improved again. This tied back to their cautious nature, several people told me. And for the first six years or so of my time with CropLife magazine, this pattern played out each and every year.
But then, the ethanol boom came along in the mid-2000s, which started to seriously boost corn commodity prices (and virtually every other crop along with them). Making more money than they ever had, grower-customers started an unprecedented spending spree, adding acres where they could and applying products such as fungicides as a preventive in their fields. Naturally, ag retailers also enjoyed record incomes during this timeframe.
How do you think your grower-customers will adapt to lower commodity prices?
- By cutting back on inputs (62%, 8 Votes)
- Nothing will change (23%, 3 Votes)
- By cutting back on services (15%, 2 Votes)
- By increasing yields (0%, 0 Votes)
Total Voters: 13
Now, sitting in 2014, everyone in agriculture is wondering just how long this “golden age” of grower-customer incomes will last. In fact, many of my cohorts that regularly cover grower-customers themselves have hinted to me that falling commodity prices will likely mean cuts are coming sooner as opposed to later, as history has generally dictated.
But let’s not jump to conclusions just yet. At last week’s 2014 Commodity Classic event in San Antonio, TX, I was invited to participate in a series of grower-customer discussions by BASF. These growers were on hand to talk about not only their experiences with the crop protection supplier, but their overall feelings on the 2014 growing season as well.
During one of the sessions, the speaker was T.J. Shambaugh, a 7th generation corn and soybean grower from Oakley, IL. A reporter from a grower magazine asked if Shambaugh was considering cutting back on his crop input purchases during 2014 because of recent low commodity prices. His answer surprised me a little.
“I have no plans to cut back on input use,” he said. “When you have tighter margins, you just try to produce more to make up the difference.”
Hopefully, other grower-customers will feel this way as well. This is a big change from my early years covering the ag market, but a welcome one. After all, who in the ag retail world can’t get behind helping grower-customers produce more crops to feed demand in a growing world?