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Profitability

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Commodity prices are softening, input costs are on the rise and access to land is a …

Commodity prices are softening, input costs are on the rise and access to land is a
key concern. To stay competitive, growers must closely manage their operations to
get the most out of every resource.


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  • 1. % of respondents 40% 34.5% 20.1% 20% 17.5% 16.1% 10% 18.0% 7.8% 30.3% 20.3% 19.6% 20.3% 10.6% 15.8% 13.4% 5.5% 4.1% 3.6% 5.6% 5.1% 2004 2005 2006 2007 Satellite/aerial imagery for internal use 20.5% 9.2% 6.2% 0% 30.0% 26.8 % 19.1% Field mapping (GIS) for legal/billing/insurance 31.6% 30.4% 2005 28.3% 30% Soil electrical conductivity mapping 13.3% 12.3% 10.9% GPS for logistics 8.2% 2008 2009 2011 2013 2013 Base: 171 1. Device ownership and Internet usage as reported by growers with 250+ corn acres based on study completed by Pioneer. 2. Jacqueline K. Holland, Dr. Bruce Erickson, and David A. Widmar, “2013 Precision Agricultural Services Dealership Survey Results,” November 2013, 26–27. PROFITABILITY Commodity prices are softening, input costs are on the rise and access to land is a key concern. To stay competitive, growers must closely manage their operations to get the most out of every resource. U.S. agriculture land, acres in millions Primary grower input costs 2 1 0% 234 232 Labor 4% 1990 2020 e Profit margin pressure 3 $ per bushel Machinery 19% Land 35% 7.00 6.50 6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 Seed, Chemicals, etc. 42% 2013 Corn-production budgets —indexed values 4 Land Inputs +8% Machinery +6% +10% 233 197 169 100 2004 2013 Season-average price Cost per bushel 100 2004 2013 2004 100 2013 2004 2013 1. Pioneer Worldwide Agricultural Forecast (PWAF). 2. Michael Duffy, “2013 Estimated Costs of Crop Production in Iowa,” Iowa State University Extension and Outreach. 3. Chad Hart, “Corn and Soybean Price Outlook,” Iowa State University, December 2013. 4. Michael Duffy, “Estimated Costs of Crop Production in Iowa - 2014,” Iowa State University Extension and Outreach, January 2014, 13, https://www.extension.iastate.edu/agdm/crops/pdf/a1-20.pdf. SUSTAINABILITY Improving sustainability is both a business requirement and good business. Growers must produce more from every acre while efficiently managing inputs and being good stewards of the environment. Global population growth anticipated to be 2–3 billion people over the next 40 years 1 Walma right d rt steps in cut ch irection to fertilizemicals, er 2 +70% Increase in food demand by 2050 p crop swa PepsiCo: emissions helps cut 3 2

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