Storage Tanks and Containment: Key Factors Influencing the Market in Ag Retail - CropLife

Authentic.

Steel dike containment system. Photo: AgraLiners

J.C. Ramsdell’s poured corrugated tank elevation rings on the floor of the containment system for the customer to place and anchor tanks

A drone’s-eye view of a wood loadpad. Photo: J.C. Ramsdell

Heartland Tank LLC has constructed over 890 API 650 field-erected, above-ground liquid storage tanks.

Heartland Tank's containment liner.

Heartland Tank inspection.

A DAKK-installed containment system.

DAKK tank liner installed.

Precision Tank’s Stainless Steel Nurse system.

Enviropac distributes fiberglass, stainless steel and mild steel tanks that store fertilizer products.

That was dictionary publisher Merriam-Webster’s word of the year in 2023. In a world where deep-fake and gaslighting (2022’s word of the year) have become commonplace, authenticity is a nice contrast.

For the providers of tanks and containment systems (and really any business), delivering an authentic experience for customers is critical. CropLife® magazine spoke with several providers to learn how they delivered solutions in 2024 and what they expect to happen next year.

“The market is still emerging from the post-Covid era,” says Salvador Villagran, President, Heartland Tank Services. “There were many unknowns throughout the COVID years, and we are just starting to see the dust settle.”

Despite variants delivering a resurgence in COVID in the back half of this year, many have put concerns over the illness behind them. Perhaps the 2024 word of the year will be “Post-COVID.” Whether or not the pandemic is at the forefront of concerns for business, there’s little doubt markets continue to adjust to the new normal.

“It seems everyone is adjusting to the resulting higher costs across the board,” Villagran continues.

Higher costs have delayed purchases for many planning on purchasing or upgrading their tanks.

“The market for new tanks this year seems to be much weaker than the last couple of years but the focus on containment has stayed strong,” says Dale Pedersen, Business Development Manager, Agra Liners.

One reason for that might be the cost of borrowing money.

“Interest rates seem to be holding back a lot of projects if capital funding is required,” Pedersen continues.

After several years of strong sales, 2024 has seen Precision Tank return to a more normal sales cycle.

“The market so far in 2024 has been good,” says David Hemming, President, Precision Tank. “Over the past three years our business has been ‘crazy good’ so this summer we are back to a more normal business pattern.”

Concerns about how climate affects crop yields is pretty common, but it affects other areas of the industry, including tanks and containment.

“This year started out great with higher-than-expected temperatures in the first quarter in the Midwest which was helpful to perform work earlier in the season than is typical,” says Tony Julson, Sales/Estimator at J.C. Ramsdell Enviro Services, Inc. “Unfortunately, the second quarter took a turn for the worse with extreme rain events that caused havoc in the region; continued storms through the same areas have delayed site construction for many customers throughout the region.”

Storms might delay the purchase of new tanks, but they helped create a need for the latter half of tanks and containment systems.

“Rain management in secondary containment is a big concern for customers,” J.C. Ramsdell’s Julson says.

In addition, as with many aspects of agriculture, the price of commodities influences purchasing plans.

“With the price of corn and beans being down and interest rates higher than normal, many clients are hedging that these items will change in their favor in the near future and therefore have pushed some projects towards the future rather than tackling them immediately,” says Paul Butler, Regional Sales Project Manager (east of the Mississippi river), Agra Liners.

There are several factors that will likely influence end-users’ purchase decisions. One that’s usually only discussed every four years will reveal itself in November.

Next month’s election will go a long way to determining how the tanks and containment market will fare. “A lot of it is going to depend on this upcoming election, will there be more regulations or less?” asks Agra Liners’ Pedersen.

Even though the next administration won’t take over until January 2025, Heartland’s Villagran says uncertainty has kept some potential customers delaying committing to a new project.

“Many clients are being more strategic in their expansion projects so far this year,” he says. “Many are being cautious going into an election year due to the volatility in the markets. Crop pricing and commodity fluctuations, coupled with higher interest rates, make people think twice before committing to a project.”

The aforementioned COVID pandemic changed the way many retailers operated. Disruptions shifted the supply chain.

“Clients are still stating the need for storage is paramount to their business since manufacturers no longer carry the storage capacity and require retailers to take receipt of product well before the planting season begins,” Agra Liners’ Butler says.

That could be a boon for the storage side of the equation, says Ramsdell’s Julson.

“We expect new and expanded containment installations to continue steadily as many providers will continue to add storage tanks requiring secondary containment,” he says. “Continued corporate mergers should encourage site renovations and expansions as the industry reaps the benefits of good crop prices and high yields.”

As the saying goes, the only constants are death and taxes. Increasing regulatory oversight might be a close second. And it’s not just a change at the federal level that could impact the future of the segment.

“Several states are looking at tightening up their containment requirements due to a major and minor fertilizer spill into streams and rivers this year,” Agra Liners’ Pedersen says. “People are still very interested in protecting their investment in their tanks plus staying in compliance with the state regulatory agencies.”

Daniel Solis, Owner of DAKK Liners, agrees.

“There is a greater emphasis on environmental compliance, with companies prioritizing better tank maintenance to meet state standards,” he says. “Customers are concerned about the condition of their older tanks and are exploring the use of tank bladders as a solution to extend the lifespan of their tanks.”

“We understand nobody likes government regulation and the costs to remain compliant,” Ramsdell’s Julson says. “When it comes to secondary containment, the cheapest is not always the best. We’ve observed more sub-par secondary containment installations from inexperienced installers recently. Many customers and engineers don’t have a good understanding of liner systems, so when an installer does inadequate work, they don’t always know what to look for.”

DAKK has seen a shift in the type of system end-users interested in upgrading or adding to their existing operation want.

“We see a growing demand for liquid fertilizer storage, leading to more new installations and the replacement of old tanks and containment systems,” Solis continues. “We will be introducing new liners specifically designed to address the cold cracking issues associated with the current industry-standard 40-mil PVC.”

In the past decade, the industry has seen a number of mergers and acquisitions. That’s something Agra Liners’ Pedersen expects to continue.

“Consolidation is continuing to happen, but there are still niche markets out there for people to exploit,” he says.

Dan Jacobs is Senior Editor and Production Manager for CropLife. He has a bachelor’s degree in English literature and a master’s in education and has been with Meister Media since September 2014. Dan is a member of ASBPE and the Press Club of Cleveland and has nearly three decades of journalism experience, having worked at a variety of business publications. See all author stories here.