The Pros & Cons of Consolidation

It has been said that “when the rate of change outside your company exceeds the rate of change inside your company, the end is in sight.” North American agriculture is undergoing rapid and significant change throughout all links in the supply chain.

As agricultural retail dealers, we have witnessed the levels of consolidation — both upstream through the basic manufacturers and distributors as well as downstream at the farm gate — for a number of years. But the rapid consolidation at our retail dealer level has been tremendous over the last couple of years as well, and more can be expected.

Upstream for dealers, crop nutrients have undergone consolidation for nitrogen in the last several years, and phosphate more recently. Meanwhile, potash has experienced less consolidation in the last decade, but it entered with fewer players to begin with.

Upstream consolidation has also occurred in crop protection basic manufacturers as well as with seed companies.

Finding The Positive

This consolidation has not necessarily been bad news for retailers, but it has been different, and has required all of us to adopt new strategies. Some distinct positives have come from the upstream consolidation. Today, the financial performances of these basic manufacturers are in record ranges. This is important to dealers who depend upon consistent supply, investments in research and development, and innovation. It is also important to dealers in that some level of long-term reliability has been established, which is positive for lasting relationships.

Downstream from retailers, we continue to see the consolidation of farming operations. More acres are being planted by fewer operators. This consolidation has imposed new conditions upon dealers as we work to discover methods of working with these mega-farmers. The information — both agronomic and market conditions — are essential requirements in today’s dealer toolbox when dealing with this customer segment. Additional demands come from their increased consumption capacity. Tractors, planters, and combines can cover so many more acres in a single day than ever before. Dealers must have the right product at the right time in order to meet these new demands. 

This has some positive aspects in that the dealers who can meet the requirements for the larger farmers often find that they can also apply those same skills and tools across many other acres to improve the return on the investment.

Down On The Outlet

Another trend of consolidation is at the retail dealer level. As shown in the annual CropLife 100 listing, the big continue to get bigger. This year alone, we may well see the combination of the 2007 CropLife 100’s no. 1 and no. 2 (Agrium Retail U.S. and United Agri Products, respectively). Efficiency gains often are the driving force behind many of the dealer consolidations; better utilization of assets, purchasing, and distribution advantages are realized. This, too, can be advantageous to farmers who want some stability in their local dealer as well as some level of supply assurance. 

There are positives for dealers as well as we focus our efforts in defining our value proposition and differentiation in the marketplace. The market tends to be more disciplined as regulatory and compliance issues are more closely adhered and a focus upon return on investment is installed.

Of course, no article would be complete without some mention of globalization, which too carries some forms of consolidation. The growing demand around the world for the products we as retailers require has also implied the importance of consolidation. The expanding length of the supply chain has changed many dealer purchasing habits. The luxury of picking up the phone and acquiring crop nutrients, crop protection products, or seed looks to be a thing of the past. Today, dealers must find and cultivate partnering opportunities both upstream and downstream in order to assure supply and manage risk throughout the length of the supply chain. 

This, too, is a positive for dealers as we work to identify and eliminate inefficiencies and balance our risk/reward conditions. 

Not all of these consolidation issues have been welcomed with open arms, but in the long term, they will make the system from manufacturer to consumer more cost-effective and sustainable.

Leave a Reply

Management Stories

ManagementConsolidation Update
June 22, 2017
Editors Paul Schrimpf and Eric Sfiligoj discuss progress on manufacturer consolidation, and another big move for Midwest cooperative Central Valley Read More
ManagementPlotting Corn, AGCO/Asmark’s Applicator Training Center, and Bayer-Monsanto Sell-Off News
June 15, 2017
Editors Paul Schrimpf and Eric Sfiligoj talk about their recent visits to Columbus, OH, and Bloomington, IL, along with an Read More
ASMARK AGCO Applicator Training Center
EmployeesAsmark, AGCO Open Training Center for Beginning Applicators
June 13, 2017
AGCO Corp. and the Asmark Institute have opened a new Applicator Training Center, created in a collaboration between the two Read More
CHS St. Paul, MN fertilizer terminal
LegislationICGA Praises President Trump’s Remarks on Waterways Infrastructure
June 12, 2017
Illinois Corn Growers Association President Justin Durdan, a farmer from Utica, issued the following statement regarding President Donald Trump’s comments Read More
Trending Articles
PrecisionAg Vision Conference
Precision AgPrecisionAg® Vision Conference: Focused on the Future
June 13, 2017
PrecisionAg® is pleased to announce the return of its PrecisionAg Vision Conference, October 10-12, 2017. Based on overwhelmingly positive response Read More
Redbanded-stinkbug-on-soybean-Photo-credit-Thomas-County-Ag
Crop InputsExperts: Mild Winter, Early Planting Will Increase Soybean Insect Threat
June 12, 2017
Higher than average temperatures this past winter affected much of the nation, especially the South and Midwest. The National Centers Read More
Eric SfiligojMonsanto ‘Picks Its Battles’ by Nixing Deere Deal
May 23, 2017
Having been in the trade journalism game since the mid-1980s, I remember several watershed moments during my career. One of Read More
Migrant farm workers
LegislationTrump: Immigration Crackdown Won’t Impact U.S. Agriculture
May 16, 2017
President Donald Trump said he would seek to keep his tough immigration enforcement policies from harming the U.S. farm industry Read More
AGCO Ratliff featured
Eric SfiligojRemembering Robert Ratliff
May 15, 2017
With all the fast-paced happenings in agriculture this spring, with multiple mergers in the works and planting season in full Read More
Case sprayer nozzle closeup
EquipmentSpray Application: A Nozzle Renaissance
May 2, 2017
If you had asked four-decade ag veteran Mark Bartel, President of Wilger Inc., just a few years ago what lay Read More
Latest News
Crop InputsArkansas Plant Board Votes to Ban Dicamba — Now W…
June 23, 2017
The Arkansas State Plant Board has voted to pass a proposed emergency rule to ban the use of in-crop dicamba, Read More
Engenia soybeans
Crop InputsBASF: ‘Closely Monitoring’ Dicamba Situatio…
June 22, 2017
BASF, whose Engenia herbicide is the target of more than 200 drift complaints in Arkansas, emailed the following statement to Read More
ManagementConsolidation Update
June 22, 2017
Editors Paul Schrimpf and Eric Sfiligoj discuss progress on manufacturer consolidation, and another big move for Midwest cooperative Central Valley Read More
Palmer pigweed seedhead in cotton
Crop InputsThreat of Dicamba Ban Looms in Arkansas
June 22, 2017
The Arkansas State Plant Board has rejected a proposed ban on the use of dicamba herbicide, but a procedural error Read More
Potash Agrium
Crop InputsAgrium-PotashCorp to become Nutrien upon Merger Complet…
June 21, 2017
Potash Corporation of Saskatchewan Inc. and Agrium Inc. have announced today that once the anticipated merger transaction closes, the new Read More
Crop InputsMidwestern BioAg Hosts TerraNu Fertilizer Plant Opening…
June 20, 2017
Last Friday, Midwestern BioAg was joined by over 80 local farmers, media and staff to celebrate the grand opening of Read More
Soybean Field
Industry NewsAligned Ag Distributors Names New President
June 19, 2017
Aligned Ag Distributors LLC announced this morning the appointment of Mary Tolke to the position of President/CEO, effective July 1. Read More
ManagementPlotting Corn, AGCO/Asmark’s Applicator Training Center…
June 15, 2017
Editors Paul Schrimpf and Eric Sfiligoj talk about their recent visits to Columbus, OH, and Bloomington, IL, along with an Read More
Seed/BiotechDow AgroSciences Announces Launch of Enlist Corn for 20…
June 14, 2017
Enlist corn will be commercially available in the U.S. for the 2018 growing season. Dow AgroSciences announced the launch today Read More
ASMARK AGCO Applicator Training Center
EmployeesAsmark, AGCO Open Training Center for Beginning Applica…
June 13, 2017
AGCO Corp. and the Asmark Institute have opened a new Applicator Training Center, created in a collaboration between the two Read More
Power to Do More Contest Winners
HerbicidesDow AgroSciences Announces Three Winners in Power to Do…
June 13, 2017
Thousands of votes have been cast and three farmers have been awarded the power to do more with a $10,000 Read More
Frogeye leaf spot
FungicidesStrobilurin-resistant Frogeye Leaf Spot Threat Looms wi…
June 13, 2017
Heavy spring rainfall throughout the South and Midwest delayed planting and created the perfect environment for diseases like frogeye leaf Read More
PrecisionAg Vision Conference
Precision AgPrecisionAg® Vision Conference: Focused on the Future
June 13, 2017
PrecisionAg® is pleased to announce the return of its PrecisionAg Vision Conference, October 10-12, 2017. Based on overwhelmingly positive response Read More
CHS St. Paul, MN fertilizer terminal
LegislationICGA Praises President Trump’s Remarks on Waterwa…
June 12, 2017
Illinois Corn Growers Association President Justin Durdan, a farmer from Utica, issued the following statement regarding President Donald Trump’s comments Read More
Wheat Growers
UncategorizedWheat Growers Names Tracy Linbo as Senior Vice Presiden…
June 12, 2017
Wheat Growers has hired Tracy Linbo as Senior Vice President of Agronomy. Linbo joins Wheat Growers after having served 10 Read More
EquipmentAgTech Summit Aiming High for Modern Farming Solutions
June 12, 2017
THRIVE AgTech, in partnership with SVG Partners and Forbes, is hosting the third annual Forbes AgTech Summit June 28-29 in Read More
Central Valley Ag Randolph, NE
Precision AgLand O’Lakes Invests in EFC Systems
June 12, 2017
Land O’Lakes, Inc. has made a minority equity investment in EFC Systems, Inc., an ERP (Enterprise Resource Planning) and precision Read More
BRANDT
Crop InputsBRANDT Products Approved for Use with New Cropping Syst…
June 12, 2017
BRANDT, a leading manufacturer of specialty products for the agriculture and turf markets, has announced that 11 BRANDT formulations have Read More