Miles To Go
In a few weeks, the ag retail industry will lose one of its largest companies to consolidation. For those readers that might be unaware, Miles Farm Supply, the No. 19 ranked company on our CropLife 100 listing, has agreed to be acquired by No. 1 retailer Agrium Retail. Its 19 storefronts will now become part of the Crop Production Services family of facilities.
Although there’s no definitive answer as to why Billy Joe Miles and his family have decided to exit the ag retail marketplace (CropLife’s calls to Miles Farm Supply for comment were not returned), it’s always sad to see a family-owned company that can trace its roots back to the 1950s disappear from the marketplace. As a member of our magazine’s PACE Advisory Council observed at the recent annual meeting, “new entrepreneurs aren’t getting into the ag retail market,” and losing an acknowledged entrepreneur to acquisition is disappointing.
But this won’t be the last time this occurs. I’ve recently completed work on our magazine’s annual CropLife 100 report and one of the trends that surprised me was how stable the group was this year vs. 2009. Normally, because of consolidation, I subtract somewhere between four and seven companies on average from our listing. In 2010, however, as revenues hit new heights, there was only a single retailer that disappeared from our list. The other new additions to the listing got there through increased sales, displacing other companies in the process.
Despite this stability, however, ag retailers I’ve spoken with believe the current slow pace of consolidation will pick up once again during 2011 and beyond. “The landscape is still over-served with retail facilities, and consolidation will continue as overcapacity struggles to be profitable,” says Wade Blowers, COO at Hamilton Farm Bureau, Hamilton, MI. “Costs and overcapacity still need to come out of the market in order to keep or grow profitability by those who are still participating.”
Having watched this trend play out in other markets I’ve covered such as beverages and candy, I know this will be the case. But it makes me sad, nonetheless, that so many of the folks I’ve come to call friends during the past 10 years of covering the ag retail marketplace might not be here in another 10 years . . .