American Ag Moving On Up
10 December 2008 When the US economy suffers, US agriculture thrives. Luckily, agriculture tends to act as an economic stimulus; billions of subsidy dollars each year help set crop prices.
This year, the record cost of petroleum is contributing to a rise in the cost of supplying crops to a growing global population. “Higher raw material and transportation costs are impacting every industry and every level of agriculture by driving up expenses,” says Travis Dickinson, NAFTA region head of marketing, Syngenta Crop Protection.
But CropLife® Editor Eric Sfiligoj just returned from the Commodity Classic with good news: “High commodity prices are translating into record crop input,” said Sfiligoj, “with no one predicting the cycle of prosperity to end anytime soon.”
Surmounting Hurdles
The immediate future looks sunny for retailers and manufacturers, but growers must overcome some hurdles. Says Jack Boyne, director of communications, Bayer CropScience: “The US crop protection market faces many of the same challenges faced by the rest of the world: increasing food and energy demand, decreasing farmland per capita, increasing demand for biofuels, yield losses through adverse weather conditions, and the need to reduce greenhouse gas emissions.”
High raw materials and transportation costs have affected all aspects of the market, says Dickinson. “Specifically, several products — like triazines and glyphosate — have been heavily impacted by these increases, as well as by an unprecedented growth in global demand that is outstripping supply.”
One 2007 problem was a lack of application equipment to apply fungicides within the manufacturer-recommended window. As the corn trend continues, aerial applicators will have to step up.
Breaking Through
New breakthroughs in crop protection will also require overcoming some obstacles. Dickinson said: “The market continues to face major challenges in the area of herbicide resistance. Syngenta has and will continue to respond with development and promotion of herbicide resistance management programs.
“A major challenge currently and for the foreseeable future revolves around meeting growing global demand for corn, wheat and soybeans,” continues Dickinson. “At Syngenta, we are developing a portfolio of Plant Performance technologies which, when combined with our seeds and biotechnology trait platforms, position us to bring considerable yield improvement capacity in most major crops. One example is our alliance with AgroFresh Inc. to bring Invinsa crop stress protection technology to market well in advance of — and ultimately to complement — biotechnology solutions to this serious yield-robber.”
Bayer CropScience also has a strong pipeline, said Boyne, with several new products entering the US market this year. “In addition to the company’s ongoing research in conventional crop protection, seed breeding and plant biotechnology remain key areas of focus, especially with regard to yield increase and stress tolerance,” he said.
Looking Forward
Agrium’s pending buyout of United Agri Products last year showed that 2007 markets were in a consolidation mode; with the largest companies purchasing other crop protection companies and seed companies, consolidation of major players could continue this year. Meanwhile, generics continue to apply pressure.
Still, “Bayer CropScience anticipates a generally positive market environment in 2008,” says Boyne. “If current trends continue, the growing demand for plant sources of energy, rising commodity prices, and a decline in commodity stockpiles for certain crops, among other factors, should keep the industry in a positive position, despite higher input costs in areas like energy.”
Dickinson offers a more tempered forecast: “While buoyant, current market conditions are quite volatile, playing out against increased input costs and putting a margin squeeze on suppliers as well as customers. Increased costs will drive increased prices of crop protection products, but this will vary by product based on market conditions, specific cost drivers, and availability.”
Boyne believes that US ag is up to the challenge in 2008: “A reliable source of food, feed, fiber, and fuel that is secure, safe, adequate, and affordable is critical to meeting the country’s most fundamental needs,” he says. “Sustainability is central to achieving that goal. Crop science research and development is essential to both.”
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