Dec. 29, 2016
From an anti-regulation, anti-establishment President-elect to mega mergers to murder prompted by chemical drift, 2016 has been an unprecedented one for the ag community. Here are the top stories from this past year, compiled by the Successful Farming team.
1. President-Elect Trump
With promises of lower taxes and less regulation, President-elect Trump swept the farm states during the 45th presidential election. While his attacks on overregulation, including the Waters of the United States rule, are viewed favorably by most of the ag community, it's less clear how his stance on trade, immigration, and ethanol will affect farmers.
The agriculture community is also waiting on another indicator of this administration's farming policies: the pick for secretary of ag. Trump has named almost all of his cabinet picks besides the top position for the USDA, which will most likely be announced in the next few days.
2. Ag Mergers
2016 has been the year of the mergers for the ag industry.
On the chemical and seed side, the action started in February when ChemChina offered to buy Syngenta for a value of over $43 billion. This was on the heels of Dow and DuPont's plan to merge in December 2015. The new firm with a combined market capitalization of approximately $130 billion will be known as DowDuPont. Meanwhile, Monsanto shareholders just approved a $66 billion merger with Bayer this month.
It's important to note that negotiations for all of these deals are still occurring, and none has been finalized. For example, the European Commission announced in November that it will delay making a decision on ChemChina's acquisition of Syngenta. U.S. regulators and regulators in other nations where these companies do business may also require divestures of businesses they deem to be anti-competitive. This will be a continuing story in 2017.
Equipment and technology companies have also seen their fair share of merger activity this past year.
The John Deere-Precision Planting merger hit a roadblock this year when the Department of Justice (DOJ) sued to stop the acquisition. Following this announcement, Deere entered into an agreement with Ag Leader, allowing the competitor to sell Precision Planting products. This prompted Dawn Equipment to put Precision Planting and Ag Leader on notice, defending Dawn's hydraulic down-pressure technology. Continuing the drama, Kinze has sued to block access to internal documents requested by the DOJ to examine the proposed Deere-Precision Planting mashup.
Other merger activity this year included Deere's acquisition of Hagie Manufacturing and Kubota's purchase of Great Plains.
3. Net Farm Income Drops 17%
A continued drop in commodity prices resulted in sharply lower net farm income for 2016. The USDA's 2016 Farm Income Forecast Report showed that net farm income is down 17% to the lowest level since 2009.
4. Record Yields Lead to Large Inventories
U.S. producers harvested massive corn and soybean crops this year with average yields of 175.3 and 52.5 bushels per acre, respectively. With these large crops, world inventories for corn will rise to 222.3 million tons, up from 209, and the carryout for soybeans will soar past last year's 77.3 million tons to 82.9. This increased output and the inventories globally will keep a lid on prices next year, says market adviser Chad Henderson.
5. Off-Target Dicamba Movement
Off-target movement of dicamba has damaged thousands of soybean acres in Missouri, Arkansas, and Tennessee during the 2016 growing season. (It also prompted an Arkansas shooting.) The damage is linked to Monsanto's Roundup Ready 2 Xtend soybeans that tolerate dicamba. Monsanto released the Xtend varieties for planting in 2016 before there was approval of the herbicide component. In late 2016, the EPA approved Xtendimax with Vapor Grip Technology for use on Roundup Ready Xtend soybeans in 2017. BASF also had Engenia, a stand-alone dicamba herbicide, approved in late December for Roundup Ready 2 Xtend Crop System. These approvals will add additional tools available to farmers to manage weeds - but they'll also require increased management.
5. Hurricane Matthew Brings Devastating Damage to North Carolina Farms
When Hurricane Matthew hit North Carolina in October, it brought widespread loss to farmers. Crop farmers who had been unable to harvest crops before Matthew arrived were further delayed when rain drenched already saturated soils. In addition, up to 5 million poultry birds were killed as a result of the hurricane.
6. Commercial Approval for UAS
On August 29, the Part 107 rule for commercial use of small, unmanned aircraft (UAS) took effect. This long-awaited rule was a significant step forward for the industry. It outlines safety regulations that will pave the way toward fully integrating UAS into the nation's airspace.
Part 107 is a great first step, Thomas Haun, executive vice president of PrecisionHawk says. "The new rule allows for a much broader access to drone technology that can be used by a wider audience. Up until now, you needed a special exemption from the FAA. With this new rule, as long as you meet a few pretty minimal requirements and operate safely, you can legally operate drones in agriculture. What I think you're going to see is a movement from a few very select companies operating drones to a broad community of farmers having access to the technology."
7. Pork Powerhouses Report Shows Glut of Pigs
Successful Farming's annual Pork Powerhouses ranking showed that the largest 35 producers in the U.S. showed an increase of 123,000 sows from one year ago.
8. Slow Progress for Data Solutions
As an industry, agriculture is still wrestling with how to make farm data tangible. Many companies, like AGCO, John Deere, Farmers Edge, Farmobile, and Farmers Business Network, worked to push the industry forward in 2016. Yet, progress has been slow. As we look ahead to 2017, continued movement in this area will mean companies will have to come together to offer a seamless solution.
There is a plethora of FMIS point solutions that address a single, often tiny, aspect of an operation, notes Douglas Hackney, president of Enterprise Group, Ltd. "The resulting data is not integrated, and custom data integration solutions are required to build a meaningful, valuable, overall view of the data from these systems," he says.
Data will continue to make headlines in the coming year. "Data visualization will continue to be a big theme, but what's exciting about that is that there will be more data to cross-analyze than ever before, revealing the hidden correlations between key performance factors, such as weather and seed variety, for example. And once these advantages are discovered, the market will all compete to be the most data-driven. Think moneyball, but for farming. We think this tipping point will come in 2017," says Jason Tatge, Farmobile.
9. Young and Beginning Farmers Face Challenges
There were a number of concerns for young and beginning farmers in 2016, including access to land, weed control, and not enough help from USDA.
10. Record Number of Ag Tech Investments
Although investment dollars are projected to be down this year, the ag tech sector still saw a record number of investments.
"The number of deals grew 7% year-over-year, as we recorded 307 deals this half compared to 286 during the first half of 2015," says Rob Leclerc, Ag Funder. "The number of investors coming into the sector climbed 52% from 280 in the first half of 2015 compared with 425 in the first half of 2016, which suggests that investors are getting more comfortable with the sector."
Aaron Magenheim, Ag Tech Insight, says, "We saw investments trend more toward smaller and earlier stage investments without the expectation of every one being a billion dollar company but rather a profitable $100 million company that provides great solutions for farmers and is sustainable."
Experts anticipate that funding will continue as this market matures. "Ultimately, it will be the innovations that emerge over the next five to 10 years that will make this sector more investable to investors," says Leclerc.