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

CropLife 100Pinnacle Agriculture Agrees To Credit Agreement Amendment
February 9, 2017
Pinnacle Operating Corp. has entered into an amendment (the “Amendment”) to its First Lien Credit Agreement that will provide for, Read More
Greystone Construction built the tension membrane fertilizer storage building (left) and steel seed treater building (right)
CropLife 100Pinnacle Agriculture Reaches Agreement With Major Shareholders And Creditors
January 31, 2017
Pinnacle Operating Corp. has reached agreement with the majority of the holders of its First-Lien Term Loan and Second-Priority Notes Read More
Andersons Retail Store
CropLife 100The Andersons To Close All Retail Stores; Shutdown Doesn’t Affect Plant Nutrient Group
January 16, 2017
In a stunning announcement to the Toledo area, The Andersons Inc. said on Sunday that it would close its two Read More
Olson Ag Enterprise
CropLife 100Wilbur-Ellis Acquires Nebraska Seed Retailer
January 13, 2017
Wilbur-Ellis’ Agribusiness, a recognized leader in precision agriculture technology and the distribution and marketing of plant protection, seed and nutritional Read More
Trending Articles
Farmer and aptop
Matt Hopkins10 Warning Signs Your Website Is Grossly Outdated
February 8, 2017
Your Website is often a visitor’s first impression of your ag retail business. A positive first impression can set the Read More
AgriSync
Matt Hopkins17 Agriculture Apps That Will Help You Farm Smarter In 2017
December 9, 2016
Ag professionals are working smarter, not harder, than ever before. Smart farming technologies have enabled them to reduce costs, maximize Read More
R4023 Sprayer, John Deere
CropLife 100Ag Retail Equipment Report: The Green Party Continues
December 7, 2016
In the annual race for sales in the ag retail equipment marketplace, the color schemes for participants are a little Read More
Mike Stern
Precision AgClimate Corp. CEO Talks Retailer Support For Digital Ag
December 1, 2016
CropLife Magazine’s sister publication, AgriBusiness Global, recently sat down with Mike Stern, CEO of The Climate Corp., following the Monsanto subsidiary’s Read More
Precision AgTrimble Debuts End-to-End FMIS Platform
November 28, 2016
October’s inaugural PrecisionAg Vision Conference left this author with many thoughts and things to ponder in the coming months. Probably Read More
CHS Primeland
CropLife 100The 2016 CropLife 100 Report: Reviewing The Many Bulls And Bears Impacting This Year’s Marketplace
November 28, 2016
For virtually all of 2016, the nation was wholly focused on the big Presidential election. Some folks aligned themselves with Read More
Latest News
Roy Blunt
LegislationARA Recognizes Blunt, Heitkamp For Legislative Efforts …
February 17, 2017
Agricultural industry continues to face federal regulatory challenges. Thankfully, agriculture’s allies in the U.S. Senate stepped forward. The Agricultural Retailers Read More
LegislationThe Fertilizer Institute Commends Senate On Confirmatio…
February 17, 2017
The Fertilizer Institute (TFI) President Chris Jahn issued the following statement on the Senate confirmation of Oklahoma Attorney General Scott Read More
Trump, Senate, Cabinet
LegislationBREAKING: Trump EPA Nominee Scott Pruitt Confirmed by S…
February 17, 2017
Scott Pruitt, who as Oklahoma’s attorney general spent years suing the Environmental Protection Agency over its efforts to regulate various Read More
ManagementFebruary Road Trip Edition
February 17, 2017
Editors Paul Schrimpf and Eric Sfiligoj discuss their recent visits to Indiana and Kentucky. Read More
Heritage Cooperative Finished Building Aerial
ManagementHeritage Cooperative, Agland Co-op Approve Merger
February 17, 2017
Agland Co-op and Heritage Cooperative stockholders have both approved the merger agreement between Agland Co-op and Heritage Cooperative. Now begins Read More
LegislationARA Fly-In: Ag Retail Descends on Capitol Hill, Lawmake…
February 15, 2017
More than 100 agricultural retailers, distributors and suppliers headed to Capitol Hill Tuesday morning for the Agribusiness Congressional Fly-in, according to a Read More
Untreated soybean seed Heartland Coop
Seed/BiotechMarrone Bio Innovations, Groundwork BioAg Bio-stacked M…
February 13, 2017
Marrone Bio Innovations, Inc. and Groundwork BioAg, Ltd have announced successful seed treatment field trials of the world’s first all-biological Read More
NL5000 With G5 Technology
SpreadersNew Leader Introduces NL5000 Dry Nutrient Applicator Wi…
February 13, 2017
New Leader, a division of Highway Equipment Company (HECO), has announced the next generation of spreading technology with the NL5000 Read More
Fertilizer Storage
Crop InputsThe State Of The Fertilizer Industry
February 9, 2017
He’s all hat, no horse.” It’s a humorous way of describing a person who tells a good story, but is Read More
CropLife 100Pinnacle Agriculture Agrees To Credit Agreement Amendme…
February 9, 2017
Pinnacle Operating Corp. has entered into an amendment (the “Amendment”) to its First Lien Credit Agreement that will provide for, Read More
ManagementUpdates on Upcoming Trips, Dow-DuPont, and the Des Moin…
February 9, 2017
Editors Paul Schrimpf and Eric Sfiligoj review a few future travels, along with the latest on big company mergers and Read More
Championship Tractor Pull
EquipmentNational Farm Machinery Show Highlighted By Championshi…
February 9, 2017
The scream of monster engines, the stench of burning rubber and the ground-pounding vibrations of the country’s largest, loudest and Read More
Farmer and aptop
Matt Hopkins10 Warning Signs Your Website Is Grossly Outdated
February 8, 2017
Your Website is often a visitor’s first impression of your ag retail business. A positive first impression can set the Read More
Corn Field
InsecticidesArysta LifeScience, DuPont Collaborate On Rynaxpyr Prem…
February 8, 2017
Arysta LifeScience recently announced that it has entered into a global collaboration with DuPont Crop Protection for the development of Read More
Industry NewsThe Fertilizer Institute Board Elects New Chairman, Vic…
February 8, 2017
The Fertilizer Institute’s (TFI) Board of Directors has elected Chuck Magro, President and CEO of Agrium, and Tony Will, President Read More
Sonny Perdue
ManagementARA Joins More Than 600 Organizations In Support Of Per…
February 8, 2017
The Agricultural Retailers Association (ARA) recently joined with more than 600 agricultural groups on a letter of support for Governor Read More
World Agri-Tech Innovation Summit Panel 2016
Crop InputsWorld Agri-Tech Innovation Summit To Be Held In San Fra…
February 8, 2017
“Breakthrough Applications and Business Models for Sustainable Farming” is the theme of the World Agri-Tech Innovation Summit to be held Read More
Cedar Country Cooperative
Eric SfiligojConsolidation In Agriculture: More Middle Movement
February 7, 2017
If you’ve regularly followed my column, you know I’m something of a movie junkie. Like many, one of my favorite Read More