Contract Killing

There’s an old mariner quote: “Once ashore, we pray no more.” In other words, sailors in dire situations will promise to change their evil ways in exchange for salvation, but only until they are rescued.

I heard this saying quoted recently listening to a National Public Radio report discussing what lessons U.S. financial institutions have learned from the credit crisis of 2008 and 2009. Basically, the analyst being interviewed was saying that, after being rescued by the government bailout, most financial institutions have returned to their shortsighted, pre-crisis ways.

Sadly, I think many ag retailers suffer from this same shortsightedness. This seems to be particularly true when it comes to fertilizer contracts.

I remember, almost two years ago now, sitting down with several fertilizer industry insiders and retailers at the Missouri Agribusiness Association winter meeting. We were there to discuss the future of fertilizer wholesaling and retailing following the rollercoaster ride of price hikes and crashes that occurred in 2008. The question on everyone’s mind was the same — how can our industry avoid this kind of financial meltdown in the future?

Bill Jackson of AgriServices of Brunswick perhaps summed the industry’s predicament up best. “We’ve been a handshake industry forever, but many of the customers in 2008 that bought high didn’t want to pay high,” said Jackson. “So that obviously has to change.”

Later in 2009 at the Agri­cultural Retailers Association (ARA) meeting, J. Stephen Lucas of Jayhawker Consulting, came to the same conclusion. “I’m horrified that people buy and sell stuff without contracts,” said Lucas. “Sure, you can view your grower-customer as friends and good old buddies, until there’s a $100 per ton difference in the fertilizer price. Then, without a formal contract in place, you may find out that grower-customer isn’t such a good old guy after all.”

The takeaway from this was that ag retailers needed to begin using formal contracts with their fertilizer customers. To this end, ARA introduced an industry document earlier this year.

Given these facts, I put a question on our annual CropLife 100 survey asking retailers if they now use formal contracts for their fertilizer sales. Naturally, I expected the majority of respondents to say that this practice was now standard operating procedure for their outlets.

Not quite. Only 5% said they’ve always use contracts, with another 40% saying that they have started to use them in the past few years. But the remaining 55% are not using fertilizer contracts regularly, with 36% responding that they have “never” used them.

It seems as if retailers, coming off a very profitable year in 2010, feel our industry is safely ashore and the praying to change our ways can stop.

In my mind, all this calls to mind another famous quote: “Those who do not remember the past are condemned to repeat it.” I pray I’m wrong.

Leave a Reply

Latest News
Patriot 4440 Sprayer close up
ManagementFlashing Back And Moving Forward On Spray Drift
May 3, 2016
The potential for pesticide drift remains an unavoidable feature of modern agriculture. Here, too, history repeats itself. “When Roundup debuted, Read More
Giant Ragweed
HerbicidesSurvey Provides Insights On Giant Ragweed In The Corn B…
May 2, 2016
A new survey published in the journal Weed Science offers insights into the distribution and management of giant ragweed, a Read More
Truck dumping dry fertilizer
FertilizerFertilizer Logistics Q&A: Southern States’ Joe Wlod…
May 2, 2016
Joe Wlodkoski, Director of Agronomy Procurement, Fertilizer, Southern States Cooperative, is a 40-plus year fertilizer industry veteran. He is quite Read More
Eric SfiligojReasons For Hope In Commodity Prices
May 2, 2016
For many months now, the doomsayers have ruled the day in agriculture. Too much supply with too little demand would Read More
West Central Dome structure
FertilizerFertilizer Logistics 2016: All Clear, So Far
May 1, 2016
After a relatively hairy early start to the spring fertilizer movement season with flooding in Louisiana and St. Louis, things Read More
BAICOR
CropLife 100BRANDT Acquires Utah Specialty Fertilizer Company
April 28, 2016
BRANDT, a leading agriculture retailer and manufacturer of specialty ag products, has acquired a majority interest in BAICOR, L.C. BAICOR, Read More
Soybean field
Industry NewsVerdesian Life Sciences Adds Vice President Of Business…
April 28, 2016
Verdesian Life Sciences has announced the addition of Marc Treurniet to the plant health and nutrition company’s management team. Treurniet Read More
ManagementBiotech Crops Developments and Millennials
April 28, 2016
Editors Eric Sfiligoj and Paul Schrimpf talk about the latest activities in biotech crops and a major shift in the Read More
Industry NewsNachurs-Alpine, Pathway Biologic Extend Marketing Agree…
April 28, 2016
Nachurs-Alpine Solutions (Marion, OH) and Pathway Biologic (Plant City, FL) announce an extension to their exclusive marketing agreement specific to Read More
MicronutrientsCharah Add Three Warehouses For SUL4R-PLUS Fertilizer
April 28, 2016
Charah, Inc., a total solutions company providing unparalleled service and innovation for the coal-fired power generation industry, announced today that Read More
Spenser Forgey, Yahama Fortix
FungicidesIndiana Farmer Wins Arysta LifeScience FORTIX Fungicide…
April 28, 2016
Arysta LifeScience North America recently presented Spenser Forgey, a grower from Young America, IN, with a new 2016 Yamaha Grizzly Read More
Corn Field
HerbicidesNew Wilbur‐Ellis Herbicide Targets Volunteer Corn
April 28, 2016
Wilbur‐Ellis Co., a recognized leader in marketing and distribution of crop protection products, as well as precision agriculture technology, has Read More
StewardshipNRCS To Help Farmers Measure Conservation Impacts On Wa…
April 27, 2016
The USDA has announced the availability of $2 million to help farmers install edge-of-field stations that monitor water quality as Read More
Planter in Iowa
EquipmentTop 10 Twitter Pics For #Plant16
April 27, 2016
Despite some wet weather in parts of the Midwest, growers and ag retailers are working feverishly to plant this year’s Read More
HerbicidesHELM AGRO Launches New HELM Sulfentrazone 4F Herbicide
April 26, 2016
HELM AGRO US, Inc. has announced the federal Section 3 registration of its new HELM Sulfentrazone 4F herbicide. Classified as a Read More
Valley Irrigation Valley 8000 series on corn
EquipmentValley Irrigation Receives Environmental Stewardship Ho…
April 26, 2016
Valley Irrigation has been recognized as a Groundwater Guardian Green Site by the Groundwater Foundation. The Groundwater Guardian Green Site Read More
Eric SfiligojMissing The Family Ties In Agriculture
April 25, 2016
By its nature, the agriculture market is cyclical. Up and down cycles come and go with a regular pattern. For Read More
HerbicidesHerbicide Resistance In Waterhemp Continues To Grow
April 22, 2016
Twenty-five years ago, waterhemp was virtually unknown to Illinois farmers. Today, the broadleaf weed blankets corn and soybean fields across Read More