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

ManagementTechnology and agriculture: a Futurist’s Perspective
July 30, 2015
Futurist David Zach, speaking at this week’s InfoAg Conference in St. Louis, shared thoughts on the benefits and limitations of Read More
StewardshipOhio Water Quality Project To Determine How Much Phosphorus Is Leaving Fields
July 27, 2015
Researchers with the College of Food, Agricultural, and Environmental Sciences at The Ohio State University are looking for farmers in Read More
ManagementFCI Trade Summit Update & Precision Tank Turns 50
July 23, 2015
Editors Dave Frabotta and Eric Sfiligoj discuss the upcoming FCI Trade Summit in Las Vegas, NV, and how Precision Tank Read More
ManagementUpdates On UAV Rules & Crop Conditions
July 16, 2015
CropLife’s Paul Schrimpf and Eric Sfiligoj provide updates on the ongoing UAV regulations debate and how the nation’s crops are Read More
Top 100 Articles
CropLife 100Allied Ag Distributors Adds Four New Owners
July 30, 2015
Aligned Ag Distributors LLC has announced the addition of four new customer/owners to Franklin Holding Co. LLC. They are: The Read More
CropLife 100Pinnacle Purchases California-Based Specialty Crops Retailer
July 20, 2015
Pinnacle Agriculture Holdings has successfully acquired California-based NH3 Service Co.  Operating as part of Pinnacle’s Performance Agriculture brand, the new locations Read More
Asmus Farm Supply liquid fertilizer facility features 20,000 square feet
CropLife 100Slideshow: Asmus Farm Supply Shows Off Its New Liquid Fertilizer Facility
July 15, 2015
Asmus Farm Supply, Rake, IA, recently added a new liquid fertilizer facility to its company operations. The new liquid fertilizer Read More
CropLife 100Wilbur-Ellis Feed Division Facilities Receive Safe Feed/Safe Food Certification
July 13, 2015
Wilbur-Ellis Co.’s Feed Division, a marketer and distributor of value-added feed ingredients for the aquaculture, livestock and pet food industries Read More
CropLife 100BRANDT Expands To Brazil With Acquisition
July 8, 2015
BRANDT has acquired a majority interest in Target Brasil Fertilizantes Ltda. through its Brazilian subsidiary. Target Brasil manufactures, distributes and Read More
Milan Kucerak, president/CEO, West Central
CropLife 100West Central Cooperative And Its New President Are A Match Made In Deviation
June 29, 2015
To appreciate just how unique West Central Cooperative is in the world of ag retail, an observer need only consider Read More
Latest News
CropLife 100Allied Ag Distributors Adds Four New Owners
July 30, 2015
Aligned Ag Distributors LLC has announced the addition of four new customer/owners to Franklin Holding Co. LLC. They are: The Read More
FungicidesReport: Sudden Death Syndrome Symptoms Appearing In Soy…
July 30, 2015
Last week, symptoms of sudden death syndrome (SDS) began to appear in April 15-planted soybeans at the University of Illinois’s Read More
Seed/BiotechAdvanta Seeds Adds New Phoenix Corn Hybrids
July 30, 2015
Corn growers in the High Plains and Western states have new options available for the 2016 growing season from Advanta Read More
ManagementTechnology and agriculture: a Futurist’s Perspective
July 30, 2015
Futurist David Zach, speaking at this week’s InfoAg Conference in St. Louis, shared thoughts on the benefits and limitations of Read More
Biofuels Plant in Lousiana
Industry NewsIdle Biofuels Plant In Louisiana To Reopen As Ammonia F…
July 30, 2015
A Lithuania-based company plans to spend $265 million to reopen an idle biofuels refinery in Grant Parish as an ammonia Read More
FFA at Monsanto Booth at the 2015 National Farm Machinery Show
Industry NewsFive Students Receive The 2015 Monty’s Plant Food Compa…
July 29, 2015
This fall, five college-bound students will have financial support through the Monty’s Plant Food Company FFA Scholarship. All five scholarship Read More
GYPSOIL Blendable Pellets
Crop InputsBeneficial Reuse Management Launches Pelletized Gypsum …
July 29, 2015
Beneficial Reuse Management (BRM) announced this week at Ag Media Summit that its GYPSOIL Pelletized Products Division will open a Read More
StewardshipOhio Water Quality Project To Determine How Much Phosph…
July 27, 2015
Researchers with the College of Food, Agricultural, and Environmental Sciences at The Ohio State University are looking for farmers in Read More
FertilizerKoch Agronomic Services Launches N-TEGRATION Technology
July 27, 2015
Koch Agronomic Services, LLC (KAS) has launched  N-TEGRATION Technology, a process technology platform designed to enable production of enhanced efficiency fertilizers at Read More
HerbicidesExpert: IARC Herbicide Classifications Leading To Confu…
July 24, 2015
Few people in the crop protection industry had heard of the International Agency for Research on Cancer (IARC) before this Read More
ManagementFCI Trade Summit Update & Precision Tank Turns 50
July 23, 2015
Editors Dave Frabotta and Eric Sfiligoj discuss the upcoming FCI Trade Summit in Las Vegas, NV, and how Precision Tank Read More
Palmer pigweed seedhead in cotton
HerbicidesUSDA Deregulates Dow AgroSciences’ Enlist Cotton Trait
July 23, 2015
The USDA today issued its decision deregulating Dow AgroSciences’ Enlist cotton trait in the U.S. The USDA has now completed its Read More
Industry NewsVerdesian Life Sciences Showcases Versatile Product Por…
July 23, 2015
Technology has revolutionized agriculture by bringing farmers, retailers and distributors to the forefront of the digital age. To meet the Read More
FertilizerWSJ: Cf Industries Exploring Merger With Dutch Chemical…
July 23, 2015
U.S. fertilizer maker CF Industries is in advanced merger talks with Amsterdam-listed chemical company OCI NV, the Wall Street Journal Read More
HerbicidesNufarm Releases New Panther SC Herbicide
July 23, 2015
Nufarm has announced the availability of new Panther SC herbicide. Panther SC is the first liquid formulation of flumioxazin available Read More
EquipmentFarmLink Launches Farm Equipment Sharing Program
July 23, 2015
FarmLink has introduced a new online farm equipment sharing community – MachineryLink Sharing – leveraging this new economy business model Read More
HerbicidesCould The South’s Most Troublesome Weed Represent A Thr…
July 22, 2015
Palmer amaranth is undoubtedly the most troublesome weed in the southern United States, taking a devastating toll on both cotton Read More
Industry NewsH.J. Baker Hires New Director Of International Sales
July 22, 2015
Global Agriculture firm H.J. Baker announced today that Steve Langley has joined the company’s Crop Performance Division and Animal Health Read More