editorial
temperatures in the Midwest best products to market to benefit burner every day. These efforts Strong expansion of corn-based
during the study period boosted farmers and consumers. are smart business decisions for ethanol production in the United
the yields of corn and soybeans by our market today and for future States affects virtually every
30%. Alas, if only we could control Additionally, the perception of financial returns. To summarize— aspect of the field crops sector,
the weather, we could ensure slowing of consolidation and there is no “business as usual” ranging from domestic demand and
farmers’ success! In a way, we can. other elements of business situation in our industry. exports to prices and the allocation
reorganization is not entirely of acreage among crops. In future
In many spots, this year’s hot accurate. Only this year, Agriliance, ethanol Production years, this trend will be one of the
summer weather has seen one of the largest distributors most important for our industry to
explosive increases in mite in the US industry, announced Ethanol production has been follow.
populations for some crops, which that their owners, Land O’Lakes covered widely in the news, and for
have been successfully controlled and CHS, will reposition two good cause. Since 2005, Congress continue commitment
with miticides. The cool, wet spring pesticide business segments of the has advocated the use of biofuels. to growth
and increased rainfall in California Agriliance agronomy joint venture. In fact, the Energy Policy Act of
resulted in significant disease CHS is acquiring the crop nutrients 2005 mandated that renewable So far, 2007 has proven to be a
outbreaks in almonds, celery, wholesale distribution business. fuel use in gasoline (with credits very exciting year for the industry
pears, spinach, strawberries and Land O’Lakes is acquiring the crop for biodiesel) reach 7.5 billion with optimistic prospects for 2008.
tomatoes. Significant increases protection products business, gallons by 2012. As the world turns Ethanol production is expected
in fungicide use prevented large and will align that business with its focus to biofuels, it will impact to continue expanding sharply
losses. Milder winters in the the Land O’Lakes Seed division. the pesticide industry more and through 2009-2010, reflecting
Southeast and Midwest resulted in The remaining distribution and more. Crop protection products ongoing plant construction
larger than normal overwintering retail pesticide business will can be used to produce more in response to strong profit
populations of insect pests continue on under the Agriliance corn and other feedstock crops by incentives. Consequently, more
including beet armyworm and banner. Land O’Lakes president maximizing yields and protecting than 30% of the corn crop may
cereal leaf beetle. As a result, and CEO Chris Policinski and CHS the farmers’ investment in these be used to produce ethanol.
growers have needed to spray president and CEO John Johnson increasingly valuable crops. Technology and new products
more often. Of course, drought said repositioning the businesses from the pesticide industry will
conditions in the Southeast have is the most appropriate strategic This year, US farmers planted 92.9 help feed this need. Businesses
moderated some of that optimism. decision: “This repositioning is million acres (37.6 million ha) of will continue to change to better
Pesticide use has been a benefit consistent with our objective of corn, exceeding last year’s planted meet this need, creating endless
to many: farmers and growers maintaining the most effective area by 19% , according to the opportunities for the industry.
themselves by increasing yields farmer-owned presence possible US Department of Agriculture’s And the weather? Well, if any of
and therefore profits; the pesticide in the crop inputs industry. By National Agricultural Statistics us could predict weather with
industry; and ultimately our nation aligning each business segment Service. The actual planted precision, we’d all be in a different
by assuring an ongoing safe, with the core competencies and acreage is the highest since 1944, line of work! So, stay tuned, our
affordable and abundant food strengths of each parent company, when farmers planted 95.5 million future will offer many unexpected
supply. we can intensify our focus in each corn acres (when yields were twists and turns!
of these key businesses, reduce much lower). Driven by favorable
Slowing of market costs and even more effectively prices, growing ethanol demand
conSolidation? supply valuable crop inputs to and strong export sales, farmers
members and customers.” in nearly all states increased their
Some analysts have looked at corn acreage. Jay Vroom
trends in the pesticide market Such repositioning moves are not President
during the past few years and surprising. Companies are always The White House, too, has seen the CropLife America
have seen major consolidations looking for greater opportunities promise in ethanol. The 2007 Farm
of big manufacturers and to expand joint promotions, Bill proposal from the executive
distributors. While some marketing and brand building branch allocates $1.6 billion for
may believe this means less efforts, coordinated service alternative fuel, including millions
competition for companies within offerings and new efficiencies in loan programs so America’s
the industry, consolidation can through shared customer service farmers themselves have the
enhance competition through a and distribution activities. But in opportunity to invest in biofuels
greater focus on innovation and a business as dynamic as the US manufacture. Action so far by the
sustainable best practices. The ag chem industry, such pursuits House of Representatives supports
industry must be able to bring the of enhancements are on the front biofuels.
www.agrow.com • September 2007 
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