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From the Classic: Buyer's market for inputs

Agriculture.com Staff 03/04/2010 @ 2:45pm

If you're waiting to buy certain inputs like chemicals for 2010, you’ll likely find a buyer's market.

A 2009 combination of deteriorating global economic conditions and difficult weather conditions has resulted in more products like chemicals in the pipeline.

"Globally, things started slowing down," says Bill Buckner, regional head of North America, president and CEO, Bayer CropScience. "In looking at the late harvest of 2009, there wasn't as much winter wheat planted (as farmers planned). The channel is chocked full of product."

Buckner spoke at the Bayer Ag Issues Forum held prior to this year's Commodity Classic in Anaheim, California. Other topics covered at this meeting included:

  • Traits. You'll have a slug of traits from which to select in future years. But they won't have the shelf life of Monsanto’s initial Roundup Ready herbicide-tolerant trait that was first unveiled in 1996.

    "With the number of traits coming on the market, they won't have the luxury that Monsanto had to extract a return on investment," says Buckner. "As new traits come on the market, they may just have a shelf life of just a few years."

    The reason? Competition. Several types of Bt-insect resistant traits are now on the market. Several different types of drought-tolerant traits are also slated for market later this decade. With more competiton, turnover will be faster, he says.

  • Ag banking. So far, agricultural banks have been more immune from financial stress compared to the bigger banks who have been bailed out by the federal government. But it's still a good idea to quiz your banker just as he or she quizzes you.

    "Farmers need to be asking more question of bankers, in light of bank failures," says John Ryan, president and CEO of Rabo AgriFinance.

    He advises farmers to ask if there are any new restrictions in loan documents. It's also wise to ask if the bank has funds available for new acquistions like operating land.

  • Bin construction. It's booming. That's particualry true in states shifting from small grains to row crops like North Dakota.

    "I thought three to five years ago, the building boom was done," says Michael Krueger, president of The Money Farm, a grain marketing advisory service in Fargo, North Dakota. If anything, it's getting stronger.

    "Eastern North Dakota is now like the Corn Belt," he says. "Producers historically had 2 to 3 years worth of storage for wheat and barley, with 30 to 40 bushel per acre yields. Now that they have 140 to 150 bushel per acre corn yields, they've been putting up steel like you can’t imagine."

If you're waiting to buy certain inputs like chemicals for 2010, you’ll likely find a buyer's market.

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