Nearly 600 registrants were on hand in Palm Springs, Calif., for the 2010 Agricultural Retailers Association (ARA) Conference and Expo Nov. 30 through Dec. 2. The second-day attendance figure of 596 was well ahead of last year and second only to 2008’s record of 630, but conference organizers noted that a record 73 exhibitors made the trip to the Westin Mission Hills Resort in Palm Springs last week.
Attendees heard a variety of speakers, ranging from agribusiness CEOs to government policy experts and business strategists. The event also gave ARA an opportunity to present awards to key members and update conference-goers on the major policy issues facing the ag retail industry.
CF Industries Holdings Inc. President and CEO Steve Wilson outlined the factors influencing global and domestic fertilizer markets, as well as the most challenging regulatory issues facing the industry. Wilson noted that high natural gas costs earlier in the decade saw U.S. nitrogen production fall by more than 40 percent from 1999 to the 2005/06 fertilizer year. “The U.S. is now by necessity the world’s largest importer of nitrogen,” he said, but the remaining U.S. nitrogen producers are “strong and healthy.”
Wilson said demand for each of the three major nutrients will be up this year, approaching 2007 levels. The largest factor outside of the industry’s control, however, is government regulation. Wilson spotlighted efforts at greenhouse gas regulations, saying the cap and trade policies advocated by the current administration “had the potential to weaken the domestic nitrogen producers significantly.”
Wilson cautioned that “regulation by litigation” is now a bigger threat than regulation through legislation, citing EPA’s recent numeric nutrient limits for waters in Florida and the successful efforts by environmental groups to block phosphate mine permits. “The precedent of revoking or impairing previously issued permits is distressing,” he said, noting that these and other issues such as hypoxia and inherently safer technologies are areas where U.S. fertilizer producers and retailers can work together to influence policy.
Wilson noted that antidumping duties on urea imports from Russia and Ukraine have been “a point of disagreement” between CF and ARA. “We welcome fair competition from any source,” he said, but stressed that CF would not allow its business, customers, and shareholders “to be hurt by unfair trade practices.”
Wilson also talked about CF’s acquisition of Terra Industries, which was completed in April. “Retailers are now a very important group for us,” he said in reference to a customer segmentation graph of the company. “Our sales to retailers now represent as big a piece of the pie as our sales to wholesale customers.”
Asked if CF will continue its offer forward pricing to retailers, Wilson said CF’s forward pricing program “will continue to be an important tool in our tool kit.” Wilson was also queried about the factors causing fertilizer pricing volatility, answering that the wild price fluctuations of recent years are the result of “the commodity nature of the business we’re in.”
Wilson was also asked if North America would see new nitrogen capacity given the favorable market fundamentals and natural gas prices. “Economically it is reasonable to think that new production is justified,” he said. The big hurdle, however, is the regulatory climate with respect to climate legislation. Without clarity on this issue, Wilson said it is unlikely that new nitrogen production will be launched in the U.S. He also said it is unlikely that any previously idled capacity could be returned to production. “If it isn’t running now, I think it is not available to come back,” he said.
The conference also featured a post-midterm election analysis by Randy Russell, president of the agricultural policy consulting firm Russell & Barron Inc. Russell said the midterms resulted in 94 new House members and 16 new Senators, with Republicans gaining at least 64 House seats, six Senate seats, and six governorships. At the state level, Russell said Republicans now hold 57 of the 99 state legislative chambers, their largest majority since 1952. As a result, he expects a much tighter Electoral College vote in 2012.
Russell said 15 of the 28 Democrats on the House Agriculture Committee were defeated. Looking ahead to 2012, he said seven Democrats and one Republican on the Senate Agriculture Committee are up for reelection. New committee chairs and members will “complicate” the 2012 Farm Bill process, he noted, as will spending cuts related to the deficit reduction package. He added, however, that agriculture “will not likely be cut disproportionally.”
Russell said Social Security, defense, Medicare, and Medicaid make up 71 percent of the Federal budget, and these have to be addressed if federal spending is to be cut. He said USDA’s budget has doubled since 2002 due to huge increases in nutrition assistance programs, with 70 percent of the agency’s budget now funneled to these programs and only 17 percent to commodity programs.
Like Wilson, Russell said President Obama’s legislative agenda is largely dead as a result of the midterm election results, but cautioned that the administration will now rely on the regulatory, rulemaking process to advance public policy objectives. He said the major challenges to commercial agriculture include animal welfare, antibiotic use in livestock, EPA regulation, biotech approvals, competition, and the organic/local production movement.
The biggest challenge for commercial agriculture, Russell said, is one of food production. By 2050, food production must be doubled with no increase in arable land and 70 percent less water to feed a world population that will increase by 2.3 billion, with 80 percent of that growth in developing countries. “All of us in commercial agriculture … need to work together collectively to meet this challenge,” he said.
Vern Hawkins, president of the Syngenta North American Crop Production business, noted the company’s strategic focus on innovation in crop protection products and seed traits, environmental stewardship, and partnership with retailers. Hawkins highlighted what he called the “atrazine challenge,” saying it was really about more than atrazine and its continued availability as a herbicide to growers. “It is about defending a science-based regulatory approach,” he said.
The conference also featured presentations by Chamila Tissera of Deutz Corporation, Dan Burrus of Burrus Research, John Covington of Bank of the West Agribusiness, and sales management consultant Jim Pancero. In addition, Darren Coppock, ARA president and CEO, highlighted the priority policy issues for ARA.
ARA presented numerous awards at the conference, including the Distinguished Service Award to Kim Bohlander of Dow AgroSciences; the Legislator of the Year award to Reps. Blaine Luetkemeyer (R-Mo.) and Sam Graves (R-Mo.); and the Jack Eberspacher Lifetime Achievement Award to Bill Griffith, formerly of American Cyanamid and a key figure in ARA’s inception. Outgoing ARA Board Chairman Scott Ramsdell also introduced the new board chairman, Doyle Pearl.
In addition, the conference highlighted the 2010 Ag Retailer of the Year award, sponsored by Monsanto, to Central Valley Ag of O’Neill. Neb.; and the 2010 Environmental Respect Awards, presented by DuPont Crop Protection and the CropLife Media Group, with the national winner being Willard Agri-Service of Greenwood, Del. The AGCO Operator of the year award and a new Harley Davidson motorcycle went to Mike Pluimer of Ceres Solutions in Templeton, Ind.
