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
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