Ag Retailers: The Fear Of 2015

As 2014 heads towards conclusion, I have been looking back over the past 12 months trying to form some kind of opinion on the year that was. For agriculture, it’s been another great year — a string of such years dating back more than six years now.

But will there a be a seventh? At the moment, that is a very big question.

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In this edition of CropLife® magazine, you will find our annual report based upon the findings of our CropLife 100 survey of the nation’s top ag retailers. And as has been the case since the end of 2009, the numbers look pretty good. Overall sales revenue for the largest ag retailers was up 3% compared with 2013.

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However, looking more closely at the numbers tells a somewhat different — some would say more troubling — story. Take away the sales volume from one very acquisition-aggressive member of the CropLife 100 and the marketplace was basically flat. Even worse, the fertilizer category — which has been the primary growth driver for the majority of CropLife 100 ag retailers these past six years — actually lost sales volume for the first time since 2009, down 3% to $14.8 billion.

Still, as troubling as some of these numbers are, numbers alone wouldn’t scare me into thinking we might be witnessing the end of some really great financial times for ag retailers. The reason I have that particular fear comes from the feelings that CropLife 100 retailers indicated they have themselves (and from their growers) when filling out this year’s survey forms.

Each year for the past 10 surveys or so, CropLife has asked CropLife 100 ag retailers to share with us their overall level of optimism for the coming year. We ask them to base this not only on their own historic sales trends but with input from their grower-customers as well. To do this, we invite respondents to pick a number between one and 10 (one being low optimism, 10 being high) to reflect this view.

Over the past six years, the majority of CropLife 100 retailers have gone into the next year feeling very positive, with better than 50% ranking the coming season as a “seven or eight.”

But not this year. In 2014, only 34% of CropLife 100 retailers think 2015 will be a “seven or eight” kind of year. The vast majority, 49%, believe next year will only rank “a four to six.” These are by far the lowest optimism numbers I’ve seen from CropLife 100 retailers since we started asking this question on our survey 10 years ago.

Unfortunately, ag retailers aren’t alone in these views. Over the summer, I spoke with several suppliers that were also expecting 2015 to be a tougher sales year than the previous few.

“The golden age of customers replacing their equipment each year is probably gone for good,” one manufacturer representative told me this fall.

By design, winning streaks such as agriculture has enjoyed do come to an end. And I for one will fondly remember the past six years and pray the new one isn’t that bad — just like everyone else in this business will be doing.

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