ARA 2012 Observations: Big Buts
The feeling at this year’s annual Agricultural Retailers Association’s meeting was generally positive, despite a few notes of caution for the future.
December 3, 2012
Like most who work in the ag retail community, I’ve just returned from this year’s annual Agricultural Retailers Association (ARA) meeting in San Diego, CA. Not only was the event very well attended, but most of the folks I spoke with were generally positive, both in terms of how 2012 has played out and regarding the early outlook for 2013.
However, despite this overall “good feeling” among ag retailers, I couldn’t help noticing several unspoken “buts” at the end of these positive sentences. For instance . . .
During 2012, everyone in the business was initially worried about how the nationwide drought might impact their operations. Yet, when all was said and done, retailers reported healthy crop nutrient and protection product sales nonetheless – and they remained cautiously optimistic that 2013 sales would stay strong.
But . . . other folks reported that some of their grower-customers have never seen such dry conditions across parts of the West and Southern Midwest and fear that another dry year in 2013 could spell trouble in the sales department.
In his speech to ARA members, CHS’s Carl Casale pointed out that U.S. agriculture in 2013 should continue to prosper as long as China keeps buying lots of American-grown corn and soybeans. “As long as China continues to grow, we will all do well,” said Casale.
But . . . if for some reason China’s Gross Domestic Product growth rate drops below 6% (it currently stands at around 20%), then grain imports to the country will likely drop significantly as a result.
Retailers at the meeting were also very confident in their ability to keep turning a profit in the current environment of higher commodity prices. “Things are as good now as they have ever been,” said several retail executives at ARA.
But . . . aggressive market moves by Wall Street-backed investors could lead to a wave of retailer consolidations in 2013, which could spark input/service price wars in certain areas of the country and further squeeze already tight margins.
So in conclusion, I am optimistic about the future for the ag retailer business. But . . . I am not wildly optimistic.
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Sfiligoj is the Editor for both CropLife and CropLife IRON magazines. He travels regularly to cover industry events and has been dedicated to the ag retail industry since he joined the staff in 2000.