Lower commodity prices are putting the squeeze on farmer profits, but they are also hurting some of the nation’s largest agribusinesses. Dow AgroSciences released their 3rd quarter earnings on Thursday which reflected the slump in the US and world farm economy. According to their report, Dow AgroSciences’ third quarter sales was $1.2 billion, down from $1.4 billion in the year-ago period. Sales were impacted by lower crop commodity prices in Latin America, high channel inventories, and significant currency headwinds.
Crop Protection reported decreased sales due to price declines driven by high channel inventories, currency headwinds, and lower volume, primarily in Latin America. Demand remained strong for new product technologies (up 8 percent year-to-date), led by spinetoram insecticide and ISOCLAST™ active insecticide. Seeds reported decreased sales on the shift of acreage from corn to soybeans in Latin America and North America, as well as inventory pressures. On a year-to-date basis, Dow AgroSciences gained market share in Brazil in both Seeds and Crop Protection.
Reuters reported that falling crop prices and rising fertilizer output have triggered consolidation among farm-focused companies.”Everyone is talking to everyone,” Dow Chief Executive Andrew Liveris said on a conference call.
Dow’s best option may be to merge its agri unit with Monsanto Co or Dupont or sell it altogether, SunTrust Robinson Humphrey analyst James Sheehan said. Monsanto is looking to grow through acquisitions after its failed bid for Syngenta AG. Speculation of a tieup between Dow’s agri unit and Dupont intensified this month after Dupont Chief Executive Ellen Kullman stepped down.