Agriculture is a market awash in highs, lows, and everything in between. This is certainly true in the world of crop protection manufacturing.
When I started covering this market in the late 1990s, I was in charge of a big, multi-client print project covering the then-shiny-new Food Quality Protection Act. Sponsors, mostly research-based “basic” manufacturers, numbered in the double digits. Within a decade, the ranks would shrink to a scant six big basics, as biotechnology turned the world upside-down for manufacturers and the distribution channel.
Along with a spate of consolidation in the retail/distribution ranks here in the U.S., businesses made a lot of adjusting. Profit margins on herbicides plummeted, and crop protection overall as a percentage of profit dropped precipitously. This began our long and often frustrating drive to build seed businesses, and to charge for agronomic services. Both continue to be elusive for many retail operations.
To me, this year marks another watershed moment in the crop protection market. Not quite the “perfect storm” that hit us a couple of decades ago, but notable nonetheless.
The most obvious is the impending consolidation of six basic manufacturers down to just four. With the increasing cost of new product development and the challenge of servicing an increasingly complex and diverse global market, the movement of manufacturers to get larger and more diversified was only a matter of time.
In response, we’re seeing a significant increase in the strength of what I would call the upper- and middle-tier post patent crop protection manufacturers who see opportunities to expand and grow business with all of you. Mergers force product spin-offs, and companies are stepping up to acquire and keep them on the market.
These spin-offs are occurring as we move through a three-to five-year period where a number of heavyweight crop protection products will be coming off patent, and become available for manufacturer.
We’re also noting that a number of post-patent companies that had been content to stand in the shadows and take a more “guerrilla” approach to marketing and relationships are looking to build more formal relationships and step up their brand visibility and total market engagement at industry conferences and events.
Of course, standing in the middle of the maelstrom are dealers and distributors, who rely on iron-clad product performance, and rock-solid relationships with manufacturing partners to ensure customers are served and satisfied.
This kind of upheaval is really a key time for you to manage and monitor your manufacturer relationships, engage the manufacturers you consider your “partners,” and potentially look beyond the familiar. Your business has to be continually earned — increasing competition and expanding options for products provides you with the opportunity to re-evaluate and re-engineer your approach to crop protection.