A Necessary Ride
'Let's face it - retailers like the industry to be steady and predictable like a kiddie ride and not like a rollercoaster with big ups and downs.'
January 25, 2010
One of my favorite moments in the 1989 movie “Parenthood” occurs when the family grandmother uses a teenage memory as a metaphor for life. “You know, when I was 19, Grandpa took me on a rollercoaster,” says the grandmother. “Up, down, up, down. Oh, what a ride! You know, it was just so interesting to me that a ride could make me so frightened, so scared, so sick, so excited, and so thrilled all together. Some didn’t like it. They went on the merry-go-round. That just goes around. Nothing. I like the rollercoaster. You get more out of it.”
Now, contrast this comment to the one I heard at the recent Illinois Fertilizer & Chemical Association (IFCA) meeting, which took place last week in Peoria, IL. When I asked an attendee how ag retailers felt about 2009, this was his reply: “Let’s face it – retailers like the industry to be steady and predictable like a kiddie ride and not like a rollercoaster with big ups and downs.”
For those of you that know me, you might think I’m more inclined to agree with the IFCA attendee vs. Grandma on how the marketplace should play out each year. And you would be right. But that doesn’t mean I don’t recognize that a good old-fashioned rollercoaster ride is needed once in a while to help the industry grow and adapt to the inevitable changes that regularly spring up from one year to the next.
For instance, consider the merry-go-round years of 2006 and 2007. Market growth was steady and climbed at a nice, even pace. As a result, the majority of ag retailers didn’t have to work very hard to keep up, sell, and supply their grower-customers with crop inputs and services. Virtually no one changed their business practices under these conditions.
Then came the rollercoaster rides of 2008 and 2009. Big swings in crop inputs prices caused grower-customers to cut back or completely halt their orders. Application worked also stopped. This forced all retailers to change their business models and re-evaluate how their stocked products.
Now, moving into 2010, many retailers have made the necessary changes to their operations to ensure their survival and continued economic health. This includes adopting formal contracts for fertilizer purchases, re-evaluating the role of seed in their businesses, and adding precision agriculture services as cost-saving options for their growers to try.
At the IFCA meeting, the vast majority of attendees said they were expecting a positive growth year in 2010. Most were hoping that the ride would be more merry-go-round-like than rollercoaster-ish. Yet, without the ups and downs of the past two years, would they be in a position to be looking at the marketplace this way? That’s something to think about . . .