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

Featured Stories
Matt Hopkins5 Bold Predictions For Ag Retail In 2015
January 21, 2015
This past year was filled with ups and downs for the nation’s top ag retailers, but what will 2015 have in store? Read More
FertilizerTFI President To Give Update On Nutrient Management Efforts At Annual Conference
January 19, 2015
The Fertilizer Institute President Chris Jahn will give the keynote address at the 2015 Ohio AgriBusiness Association Industry Conference February 4. Read More
Green Valley Ag facility
Paul SchrimpfRightsizing Ag Retail
January 9, 2015
Seeking the right balance of facilities, efficiency and customer service will make our businesses stronger and, truth be told, more capable of competing effectively with the likes of Pinnacle. Read More
Matt Hopkins10 Best New Agriculture Apps For 2015
December 15, 2014
Has the app market reached a saturation point? Consider Google Play and the iTunes App Store combined have more than Read More
Top 100 Articles
CropLife 100The Andersons Starts Venture Capital Subsidiary
January 26, 2015
The Andersons has established Maumee Ventures, a venture capital subsidiary designed to foster promising innovations that strategically align with the company’s core businesses. Read More
CropLife 100CHS Partners With Northern Partners Coop On Fertilizer Warehouse
January 21, 2015
In addition, the two companies will form a joint venture to build and operate a grain barge loading facility that will handle corn, soybeans and wheat for export through the CHS terminal at Myrtle Grove, LA. Read More
CropLife 100Wilbur-Ellis Move To Colorado Complete
January 20, 2015
Wilbur-Ellis Co. announces the opening of its new Agribusiness Division location in the Denver, CO, Metro Area. The new facility will host key personnel as the company shifts the base of its Agribusiness operations from California to Colorado. Read More
CropLife 100United Suppliers, McGregor Co., Five Others To Form Aligned Ag Distributors
January 20, 2015
These companies will continue to operate as independently owned and operated businesses, however, their crop protection divisions will now be formally aligned under the umbrella of Aligned Ag Distributors. Read More
CropLife 100Bozeman Named SEEDWAY Chief Operating Officer
January 16, 2015
He succeeds Donald Wertman, who will retire at the end of August 2015 after 40 years with the GROWMARK subsidiary. Read More
CropLife 100Wilbur-Ellis’ Craig Bair Honored For Safety Contributions To Ag Aviation
January 14, 2015
The William O. Marsh Safety Award recognizes significant achievements in safety, safety education or an outstanding operational safety program. Read More
Latest News
FertilizerThe Fertilizer Institute President Jahn Testifies Befor…
January 28, 2015
The committee hearing, "Freight Rail Transportation: Enhancing Safety, Efficiency, and Commerce," looked at challenges facing our nation's freight rail network created by higher demand, rules and regulations and infrastructure needs. Read More
HerbicidesPurdue University Acquires Technology For Herbicide Mol…
January 28, 2015
Protea's LAESI DP-1000 Instrument System will be used in Purdue's College of Agriculture, the Department of Botany and Plant Pathology, for the molecular imaging of herbicide active ingredients and other related compounds to optimize herbicide applications and improve weed management.  Read More
FertilizerH.J. Baker Hires New Crop Peformance Marketing Manager
January 27, 2015
As Marketing Manager for the Crop Performance division, Usman Khalid will work out of H.J. Baker’s global headquarters in Westport, CT, and will drive new initiatives for the division. Read More
CropLife 100The Andersons Starts Venture Capital Subsidiary
January 26, 2015
The Andersons has established Maumee Ventures, a venture capital subsidiary designed to foster promising innovations that strategically align with the company’s core businesses. Read More
Exclusive state-of-the art Stueve Construction designed “Vista View” Elevated Control Room.
Eric Sfiligoj2015 Agricultural Market Read: Mixed
January 26, 2015
The agricultural market could look radically different this year, profit-wise, depending upon which segment you do business in. Read More
Edward Chell Biosafe
Crop InputsBioSafe Systems Names Ed Chell California Territory Man…
January 26, 2015
BioSafe Systems has announced the recent addition of Ed Chell as California Territory Manager for the agrichemical division, supporting the crop protection, water treatment and food safety business segments. Read More
InsecticidesBayer CropScience Introduces Sivanto Insecticide
January 26, 2015
Sivanto precisely targets key damaging pests at multiple insect life stages to prevent damage to plants and help minimize the spread of diseases from insect carriers. Read More
ManagementRetail Collaboration, Communicating Agriculture’s Good …
January 23, 2015
Editors Paul Schrimpf and Eric Sfiligoj discuss the recent creation of Aligned Ag Distributors, and the US Farmers and Ranchers Read More
FertilizerOSU Expert: Toledo Water Crisis A Turning Point For Ohi…
January 23, 2015
The August 2014 water crisis in Toledo, OH, impacted Ohioans’ views of Lake Erie algae problems by increasing the attribution of blame of algae growth on agriculture. Read More
FertilizerH.J. Baker Launching TIGER XP
January 22, 2015
Tiger-Sul introduces this next generation sulphur-bentonite product with a proprietary activator – ensuring farmers have a well-balanced nutrient replacement program. Read More
Crop InputsH.J. Baker Expands China Sales Force
January 21, 2015
Global Agricultural firm H.J. Baker announced that sales veteran Shi Dongshen has joined their Shanghai office in China. This newest hire follows the recent opening of their Lianyungang Sulphur Bentonite Plant. Read More
CropLife 100CHS Partners With Northern Partners Coop On Fertilizer …
January 21, 2015
In addition, the two companies will form a joint venture to build and operate a grain barge loading facility that will handle corn, soybeans and wheat for export through the CHS terminal at Myrtle Grove, LA. Read More
Matt Hopkins5 Bold Predictions For Ag Retail In 2015
January 21, 2015
This past year was filled with ups and downs for the nation’s top ag retailers, but what will 2015 have in store? Read More
SoftwareDeere Launches App Center
January 20, 2015
The John Deere App Center provides users the ability to search and find apps most useful to their business or operations. Read More
Crop InputsNew Syngenta Herbicide Approved In Soybeans, Sunflowers
January 20, 2015
Syngenta will sell BroadAxe XC herbicide in 2015 for use on soybeans, sunflowers and dry peas Read More
CropLife 100Wilbur-Ellis Move To Colorado Complete
January 20, 2015
Wilbur-Ellis Co. announces the opening of its new Agribusiness Division location in the Denver, CO, Metro Area. The new facility will host key personnel as the company shifts the base of its Agribusiness operations from California to Colorado. Read More
Crop InputsNovozymes Sales Figures Up For 2014
January 20, 2015
Novozymes announces its sales growth in 2014 was in line with expectations as sales grew by 7% compared with 2013. Read More
CropLife 100United Suppliers, McGregor Co., Five Others To Form Ali…
January 20, 2015
These companies will continue to operate as independently owned and operated businesses, however, their crop protection divisions will now be formally aligned under the umbrella of Aligned Ag Distributors. Read More