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

Fall Creek Seth Harden The Nature Conservancy
StewardshipLocal Farmers’ Watershed Initiative: Continuous Improvement Is Possible In 5 Key Areas
January 13, 2017
The goal in the Big Pine Watershed Project is to more intentionally do what local farmers and responsible ag retailers Read More
ManagementDeere-Precision Planting Update and the Ag Secretary Wait Continues
January 12, 2017
Editors Paul Schrimpf and Eric Sfiligoj provide the latest on the court date for John Deere/Precision Planting and the quest Read More
ManagementAg Land Values In Limbo In 2017
January 10, 2017
Several factors will come into play in 2017 that will determine the direction of land values. Randy Dickhut, senior vice Read More
ManagementThe Frontrunner for Ag Secretary and What to Watch in 2017
January 6, 2017
Editors Paul Schrimpf and Eric Sfiligoj discuss the possible new Secretary of Ag and what trends they will be looking Read More
Trending Articles
AgriSync
Matt Hopkins17 Agriculture Apps That Will Help You Farm Smarter In 2017
December 9, 2016
Ag professionals are working smarter, not harder, than ever before. Smart farming technologies have enabled them to reduce costs, maximize Read More
R4023 Sprayer, John Deere
CropLife 100Ag Retail Equipment Report: The Green Party Continues
December 7, 2016
In the annual race for sales in the ag retail equipment marketplace, the color schemes for participants are a little Read More
Mike Stern
Precision AgClimate Corp. CEO Talks Retailer Support For Digital Ag
December 1, 2016
CropLife Magazine’s sister publication, AgriBusiness Global, recently sat down with Mike Stern, CEO of The Climate Corp., following the Monsanto subsidiary’s Read More
Precision AgTrimble Debuts End-to-End FMIS Platform
November 28, 2016
October’s inaugural PrecisionAg Vision Conference left this author with many thoughts and things to ponder in the coming months. Probably Read More
CHS Primeland
CropLife 100The 2016 CropLife 100 Report: Reviewing The Many Bulls And Bears Impacting This Year’s Marketplace
November 28, 2016
For virtually all of 2016, the nation was wholly focused on the big Presidential election. Some folks aligned themselves with Read More
Monsanto sign
Crop InputsMissouri Governor Meets With Bayer CEO To Discuss Monsanto Merger
November 21, 2016
Missouri Gov. Jay Nixon visited Bayer AG global headquarters in Leverkusen, Germany, on November 18 to discuss the proposed Bayer-Monsanto Read More
Latest News
Corn
Eric SfiligojThe Mood From Madison? In A Holding Pattern
January 16, 2017
Last week, I had the chance to attend the annual Wisconsin AgriBusiness Classic show in Madison, WI. It’s been a Read More
Syngenta Sign
Crop InputsAccenture Helps Syngenta Transform Its Global Logistics
January 13, 2017
Syngenta, a leading agriculture company, has collaborated with Accenture to design and implement a new digital logistics operating model across Read More
Fall Creek Seth Harden The Nature Conservancy
StewardshipLocal Farmers’ Watershed Initiative: Continuous Improve…
January 13, 2017
The goal in the Big Pine Watershed Project is to more intentionally do what local farmers and responsible ag retailers Read More
HerbicidesEPA Expands Enlist Duo Herbicide Registration To 34 Sta…
January 13, 2017
The U.S. EPA has expanded the geography for application of Enlist Duo herbicide from 15 to 34 states. This means Read More
Olson Ag Enterprise
CropLife 100Wilbur-Ellis Acquires Nebraska Seed Retailer
January 13, 2017
Wilbur-Ellis’ Agribusiness, a recognized leader in precision agriculture technology and the distribution and marketing of plant protection, seed and nutritional Read More
ManagementDeere-Precision Planting Update and the Ag Secretary Wa…
January 12, 2017
Editors Paul Schrimpf and Eric Sfiligoj provide the latest on the court date for John Deere/Precision Planting and the quest Read More
Monsanto sign
Seed/BiotechMonsanto, NRGene Form Agreement For Big Data Genomic An…
January 12, 2017
Monsanto Co. and NRGene have announced that the companies have reached a non-exclusive, multi-year global licensing agreement on NRGene’s genome-analysis Read More
AGCO Custom applicator
SprayersAGCO, Asmark Institute To Offer Training For Beginning …
January 11, 2017
AGCO Corp. and the Asmark Institute are collaborating to offer a new training program dedicated to educating and developing custom Read More
ManagementAg Land Values In Limbo In 2017
January 10, 2017
Several factors will come into play in 2017 that will determine the direction of land values. Randy Dickhut, senior vice Read More
Industry NewsPattison Agriculture Positioned To Be Leading Canadian …
January 10, 2017
Pattison Agriculture Limited (Pattison Agriculture), a division of The Jim Pattison Group (the Pattison Group), has announced the merger of Read More
Fertilizer Tender close-up
MicronutrientsHow Micronutrients Fit Into 2017 Fertility Plans
January 10, 2017
Where do micronutrients stand going forward in fertility plans? For one thing, Tim Mundorf, Field Representative with Midwest Laboratories, says Read More
Fertilizer application
State of the IndustryCautious Optimism On Fertilizer In 2017
January 10, 2017
What kind of fertilizer rates are growers and retailers looking at in 2017 and beyond? According to stakeholders CropLife magazine Read More
Asmus Farm Supply crop protection products in storage
State of the IndustryCrop Protection Products Market: Complexity Begets Oppo…
January 10, 2017
While other key market segments in agriculture continue to see tumultuous shifts in sales volumes going forward (large equipment sales are Read More
RoGator RG1300B AGCO
Sprayers10 Sprayers That Will Showcase The Latest Application T…
January 10, 2017
Sprayer manufacturers continue to step up their games with the latest in application technology. From direct injection systems and four-wheel Read More
Soybean Field
FungicidesGrowers Report Yield Boost, Extended Residual Disease C…
January 9, 2017
With the new growing season around the corner, it’s time to start thinking about inputs for 2017. As growers weigh Read More
Donald Trump
Eric SfiligojTrump’s New Ag Secretary Coming Soon?
January 9, 2017
As agricultural experts are quick to point out, incoming President Donald Trump largely has the nation’s growers to thank for Read More
Bayer Monsanto
Crop InputsThe Path Ahead For Mergers & Acquisitions In Agricu…
January 9, 2017
Bayer AG’s proposed $66 billion takeover of Monsanto would create, by far, the industry giant capturing more than a quarter Read More
Jeff Troike Ceres Solutions
CropLife 100Troike Named CEO Of Newly Formed Ceres Solutions Cooper…
January 6, 2017
Jeff Troike has been named President and CEO of the newly formed agribusiness known as Ceres Solutions Cooperative. Ceres Solutions Read More