Consolidation: Slowed But Inevitable
When it comes to consolidation, 2010 was a slower year than normal in ag retail. But some retailers think 2011 is likely to change.
December 28, 2010
In 2010, as profits soared, consolidation among retailers slowed down significantly. In an average year, approximately four to seven companies will exit the CropLife 100 listing via consolidation. In 2010, however, only one — Premier Ag — left via this route, acquired by Wilbur-Ellis Co. Another, Miles Farm Supply, was acquired by Agrium Retail Nov. 16. (see "Agrium Acquires Miles Farm Supply").
In 2011, however, most retailers polled for the State of the Industry report believed consolidation would become more prevalent once again. "Consolidation has been minimal in our market, but if it becomes difficult to make a reasonable profit, consolidation could increase," says Frank Schumacher, agronomy division manager for Mountain View Co-op, Black Eagle, MT. "The independent dealer that is first generation is the most likely candidate to sell."
Wade Blowers, COO for Hamilton Farm Bureau, Hamilton, MI, agrees. "I would expect [consolidation] to pick back up," says Blowers. "The landscape is still overserved with retail facilities, and consolidation will increase as the overcapacity struggles to be profitable. Longer term, costs and overcapacity need to come out of the market in order to grow profitability by those who are still participating."