October 6, 2011


Ag Growth International raises questions on farming's resilience



Ag Growth International has raised questions over the resilience of agriculture spending, stating that lower yield outlook had made farmers hold back orders.


The Canada based maker of silos and crop conveyors blamed "farmer uncertainty" for a fall in sales of items such as portable grain handling equipment and temporary crop stores in the July-September quarter.


This sentiment had been instilled by a cocktail of US crop "challenges", Gary Anderson, the Ag Growth chief executive said, citing "delayed planting, then a hot dry summer and now highly variable weather conditions as we enter harvest".


"The heat stress of the summer coupled with varied weather conditions in recent weeks has resulted in lower yield expectations and reduced crop production estimates," the company said, estimating trade sales would fall US$5-US$81 million in the quarter.


"These factors in combination appear to have created a wait and see attitude in many farmers' purchasing behaviour."


Ag Growth made no mention of any potential impact of global economy fears, which have been reflected in falling grain prices. Chicago corn and soy futures set fresh 2011 lows on Tuesday (Oct 4).


Its comments, nonetheless, appear at odds with assertions from many other agriculture groups, such as the big fertilizer companies, of a continuing boom in spending by growers seeking to maximise yields and cash in crop prices which, by historic standards, remain high.


Ag Growth acknowledged that, in Canada, "excellent" harvest weather had also hurt sales, as, "accordingly, the harvest was clean and efficient and the crop was generally taken off at optimal moisture levels.


"Consistent with the Company's previous experiences, a fast, dry and efficient harvest has resulted in a significant reduction in demand for portable grain handling and aeration equipment."