Ag Poised for ‘Transitional Year’ in 2014

After years of strong growth, agriculture is poised for a “transitional year” in 2014 as the sector digests lower commodity prices and a drop in planting acreage, predicted Paul Schickler, DuPont Pioneer president, as quoted in The Des Moines Register.

During the last half-decade, the agriculture industry benefited from high commodity prices that helped spur a boost in acres planted, leaving farmers flush with cash they could use to buy more land or seeds or make improvements on their farms.

As a result, agribusiness companies’ revenue soared and they hired more employees to meet the demand. But the momentum has slowed, due in large part to a sharp drop in commodity prices.

Schickler said he expects a return in 2015 to more “normalized” plantings and crop prices above their recent historical averages. He sees 2014 as a “transitional year” and anticipates that, in the longer term, the ag-business environment will be “more demand driven.”

The USDA estimated farm income will decline almost 30% in 2014, to $96 billion. Schickler said demand for seed will come from a growing population, as well as a burgeoning middle class around the world that is demanding more and better quality food. Further growth will be stoked by the livestock, dairy and ethanol industries.