Count Down Picks Up

In many ways, 2004 and 2005 were unusual years for the CropLife® 100. For the first time since the 2000s began, the list of the nation’s top retail organizations remained unchanged in terms of the companies represented on it. This definitely won’t be the case in the 2006 ranking, however. Consolidation is back — and most likely here to stay.

“This is a natural evolution of a maturing market,” says Mike Jackson, president of ABG, Inc. “There are still channel layers of inefficiencies to work out of the system. One of the best ways to accomplish this is by working together more closely and increasing asset efficiencies.”

The largest consolidation event in 2006 was the takeover of Royster-Clark, Inc. by Agrium Retail, owners of Western Farm Service and Crop Pro­duction Services (CPS). The newly combined retailer boasts more than 400 outlets across the country and annual sales approaching $2 billion. More recently, No. 1-ranked CropLife 100 retailer United Agri Products (UAP) announced plans to acquire Louisiana-based Terral Agri­Service (ranked No. 86 on the 2005 CropLife 100 list) by year-end and No. 5 Agriliance formed an alliance with No. 53 Wilco Farmers.

Myriad Reasons Why

According to industry observers, there are several reasons why retailer consolidation has picked up during 2006. Tom Warner, vice president for CPS, says that higher working capital costs and expenses for items such as fuel have put added pressure on retailers to improve their business bottom lines. Coupled with this increased cost of doing business, L. Kenny Cordell, UAP president/CEO, blames a relatively lackluster performance for crop inputs in 2006 as a key driver in consolidation.

“For the past several years, the overall crop input business was growing 3% to 4% annually,” says Cordell. “But for 2006, it looks like the market will probably be down or flat, with fertilizer and crop protection sales off the most. True, seed sales will be up again, but most retailers aren’t in a position where this will help them much. To survive in this kind of environment, your company can’t be just a crop protection company, a fertilizer company, or a seed company. You have to be all three — which is why you look at consolidating with another company that gives you these kinds of market dynamics.”

More To Come

Looking forward, it appears the retail market is primed for more consolidations. “This is not merely a 1-, 2-, or 3-year trend,” says ABG’s Jackson. “We are in the midst of a reinvention of the retailer model. Many assets are out of position or inadequate when compared with logistics requirements and the needs of today’s grower-customers, particularly in the Midwest. Longer term, this presents an opportunity for the supply chain to become more efficient, better manage inventories, and provide more services with fewer locations that are more aligned with the evolving market.”

In part, says UAP’s Cordell, this last point is behind the thinking for his company’s consolidation strategy. “Before we make an acquisition, we do an analysis to see where our distribution system has gaps in its territory,” he says. “We then go out and try to find ways to plug these gaps through acquiring existing retailers in those areas.”

Even so, adds Cordell, retailer giants UAP and Agrium Retail only control approximately one-fifth of the total industry market share combined. “That leaves plenty of room for more companies to pool their resources using consolidation as the catalyst,” he says.

Jackson agrees that consolidation will continue. “If the biggest retailers are on a quest to fill market gaps, that will involve buying several medium-sized companies to do so,” he says. “That’s why I don’t see consolidation slowing down in the next few years, even if market economics significantly improve compared with 2006.”

Leave a Reply

CropLife 100 Stories

CHS Primeland
CropLife 100CHS Businesses In Washington, Idaho Combining For Greater Efficiencies
July 27, 2016
As full-service ag retailers, CHS Primeland and CHS Farmers Co-op collectively serve farmers and other customers in 15 counties in Read More
CropLife 100GROWMARK’s Manito Transit Joins SmartWay Transport Partnership
July 7, 2016
Manito Transit, a subsidiary of GROWMARK, has been recognized by the U.S. EPA as a registered SmartWay Transport Partner. The Read More
Crop Production Services (CPS)
CropLife 100Agrium To Acquire Cargill’s U.S. Ag Retail Business
July 7, 2016
Agrium Inc. has announced a binding purchase agreement between its Crop Production Services (CPS) and Cargill AgHorizons for the acquisition of Read More
Grower Truck at retailer
CropLife 100ARA Seeks Comment on Ag Driver Sleep Apnea Issue
July 5, 2016
The U.S. Department of Transportation’s (DOT) Federal Motor Carrier Safety Administration (FMCSA) and Federal Railroad Administration (FRA) are seeking public Read More
Trending Articles
Southeast Farmers Coop - Finished Building
Retail FacilitiesNew Stueve Facilities Offer Ag Retailers Speed, Accuracy
July 9, 2016
Leading the industry in planning and constructing dry fertilizer storage and chemical warehouse solutions, Stueve Construction helped three ag retailers Read More
Heritage Cooperative
Retail FacilitiesKahler Automation Designs State-Of-The-Art Facility For Heritage Cooperative
July 4, 2016
Heritage Cooperative in Marysville, OH, needed an efficient liquid, dry and grain facility to serve the many needs of their Read More
The Andersons Waterloo
ManagementFirst Indiana Facility Certified Under 4R Nutrient Stewardship Certification Program
June 27, 2016
The 4R Nutrient Stewardship Certification Program has announced that The Andersons, Inc.’s Waterloo, IN, facility has been added to its Read More
Food IT
Industry NewsCalifornia Event Will Mix Ag And Tech Professionals To Explore IT Solutions
June 20, 2016
Silicon Valley is hot on agriculture, and an upcoming event in California will bring together the food and tech industries Read More
Monsanto Luling Plant
Eric SfiligojWhat’s Next For Monsanto?
May 31, 2016
For the folks at Monsanto’s headquarters in St. Louis, MO, it has been an eventful few weeks. Back on May Read More
Soybean Plant closeup
Industry NewsMonsanto Rejects Bayer Bid; Open To More Talks
May 25, 2016
Monsanto Co, the world’s largest seed company, turned down Bayer AG’s $62 billion acquisition bid as “incomplete and financially inadequate” Read More
Latest News
FertilizerGypsum Added To List Of Conservation Practices
July 28, 2016
Crop farmers in a growing number of states may be eligible for financial assistance from the USDA’s Natural Resources Conservation Read More
Management2016 CTIC Cover Crop Survey: 33% Report ROI From Cover …
July 28, 2016
Insight from 2,020 farmers from across the country reflected enthusiasm for cover crops and—for the fourth year in a row—found Read More
Palmer pigweed seedhead in cotton
HerbicidesStudy: Fall Weed Controls Can Make Significant Impact O…
July 28, 2016
An article published in the latest issue of the journal Weed Science shows that adopting harvest-time and post-harvest weed controls Read More
InsecticidesSyngenta: Beware Of Early Stinkbug Threat To Soybeans
July 28, 2016
With the record warm temperatures this past winter and confirmations from early entomologist reports, Syngenta encourages growers to monitor stinkbug Read More
Peanut field
Crop InputsVerdesian Introduces New Inoculant For Peanuts
July 28, 2016
As planning begins for the next growing season, Verdesian Life Sciences adds Primo Power CL, a new liquid inoculant, to Read More
Soil Young Corn
Crop InputsSmithsonian: 5 Things to Know About New GMO Labeling Bi…
July 27, 2016
On July 14, the House of Representatives passed a bill requiring large food companies to label products containing genetically modified Read More
Palmer pigweed in soybean stubble
HerbicidesSpecial Issue Of Weed Science Explores Human Aspects Of…
July 27, 2016
Weeds that evolve resistance to herbicides are a serious threat to global agricultural production. In this Special Issue of Weed Science, Read More
CHS Primeland
CropLife 100CHS Businesses In Washington, Idaho Combining For Great…
July 27, 2016
As full-service ag retailers, CHS Primeland and CHS Farmers Co-op collectively serve farmers and other customers in 15 counties in Read More
Storage Tanks at Nachurs
Crop InputsNACHURS Joins Field to Market
July 27, 2016
NACHURS announced today that it has joined Field to Market: The Alliance for Sustainable Agriculture, a leading multi-stakeholder initiative working Read More
Illinois Researchers
FertilizerMeasure Of Age In Soil Nitrogen Could Help Precision Ag…
July 26, 2016
What’s good for crops is not always good for the environment. Nitrogen, a key nutrient for plants, can cause problems Read More
Kochia
Crop InputsNufarm Launches New Herbicide for Resistant Kochia
July 25, 2016
Nufarm introduces Scorch herbicide for U.S. farmers and ranchers combating a broad range of troublesome broadleaf weeds. A unique premix Read More
ManagementNew Rabobank Report Calls for Farmer ROI Focus
July 25, 2016
As U.S. row crop farmers brace themselves for a third year of negative margins, Rabobank believes farmers must lower the Read More
Syngenta Sign
Crop InputsBloomberg: Syngenta-Chem China Deal on Track for Regula…
July 25, 2016
Syngenta AG, which has agreed to be taken over by China National Chemical Corp. for $43 billion, said talks with Read More
ManagementGROWMARK Meeting Visit, Company Takeover Updates, and R…
July 22, 2016
Editors Paul Schrimpf and Eric Sfiligoj discuss their recent speaking engagement at GROWMARK’s eastern event, crop protection company merger rumors, Read More
Crop InputsMonsanto: EU Approves Roundup Ready 2 Xtend Imports
July 22, 2016
Monsanto Co. announced today that the European Commission has granted import approval for Roundup Ready 2 Xtend soybeans. This milestone Read More
Syngenta headquarters in Basel, Switzerland
Crop InputsSyngenta Announces Alfalfa Seed Split Off
July 22, 2016
On September 1, 2016, Syngenta will transfer sales and distribution of alfalfa seed to the NEXGROW branded business that is Read More
Dow DuPont
Crop InputsDuPont, Dow Shareholders Approve Merger
July 21, 2016
DuPont and The Dow Chemical Company announced that, at their respective special meetings of stockholders held today, stockholders of both Read More
ManagementLand O’Lakes Announces SUSTAIN Business Unit, Oth…
July 20, 2016
Land O’Lakes, Inc. today announced the formal organization of a new business unit, SUSTAIN, and its leadership. SUSTAIN will focus Read More