The Road Not Yet Taken

As an editor, I take immense pleasure in many of the projects I regularly work on. Perhaps my proudest achievement each year is compiling our magazine’s annual CropLife 100 report. After working for months crunching the numbers and reading through the returned survey forms from the nation’s top retailers, I love seeing the completed issue being figuratively devoured by readers, especially those at the annual Agricultural Retailers Association (ARA) meeting.

This past year was a bit different, however. Just as the issue was hitting the ARA show floor, the two largest members of the CropLife 100Agrium Retail and United Agri Products (UAP)  — announced plans to merge their operations. With one fell swoop, the newly released CropLife 100 had been reduced to the CropLife 99.

Now as much as having our CropLife 100 diminished by the news was disheartening, it had me wondering if this latest consolidation in the retail world wouldn’t lead to something bigger — perhaps industry altering. As I’ve stated in many previous columns, the industry I formerly covered, soft drinks, went through an endless rollercoaster of years with and years without consolidation throughout the decades. But once the major players The Coca-Cola Co. and PepsiCo started buying during the late 1980s, consolidation became a virtual tidal wave, sweeping away many long-time companies in the process.

Why do I think 2008 might be the pivotal year for ag retailer consolidation? Consider these three factors:
1. The Agrium-UAP Domino Effect. Now that the nation’s top two retailers have announced plans to consolidate, other top retailers might want to do the same to keep pace. At the 2007 ARA show, buzzwords like “synergy” and “efficiency” were in abundance as other retailers talked about the Agrium-UAP deal. Also, when I joked about the fact that my CropLife 100 was now a CropLife 99, one large retailer representative smiled back at me and said: “If my company has anything to say about it, you could be down to a CropLife 98 or CropLife 97 before too long.”

2. The No Higher Value Effect. By all accounts, 2007 was an exceptional year for both ag retailers and their grower-customers. According to market observers, net grower income increased to a record $87.5 billion last year. Like­wise, CropLife 100 retailers took in inputs and services revenue of $14.7 billion. Basically, then, dealerships today are probably worth more than they ever will be. If some older owners are looking to “cash out and retire,” 2008 could be the ideal time to do so.

3. The Manufacturers Effect. A few months back, I speculated what might happen to retailer consolidation if manufacturers jumped whole-heartedly into the mix. At the time, most readers told me it wouldn’t happen. But according to several sources, there were two other potential buyers of UAP before Agrium stepped in — a basic crop protection company and a post-patent supplier. Even though they ultimately lost out on UAP, one or both could still be looking to add a retailer network to their company portfolio.

So it’s very possible that one or all of these factors will come into play during 2008 and push the ag retail industry down an entirely different road than it’s ever been on before. We’ll just have to wait and see …

Leave a Reply

Latest News
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
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
InsecticidesSyngenta Recommends Soybean Scouting To Prevent Economi…
July 22, 2015
Proper soybean insect pest control begins with scouting. As the warm weather continues, Syngenta encourages growers to implement a scouting Read More
Crop InputsH.J. Baker Launches Fall Sulphur Campaign
July 22, 2015
H.J. Baker has launched their “Keep Your Future Green – Use Tiger This Fall and Win Big” campaign. The campaign Read More
Central Valley Ag Randolph, NE
Retail FacilitiesStueve Construction Builds Fifth Facility For Central V…
July 21, 2015
Central Valley Ag partnered with Stueve Construction Co. to successfully design and build its Monroe, Oakland, Wakefield and Royal hub facilities Read More
FertilizerNew Research Could Lead To Less Reliance On Nitrogen, E…
July 21, 2015
Farmers often are required to apply nitrogen fertilizers to their crops to maintain quality and improve yields. Worldwide, farmers used Read More
Seed/BiotechMonsanto Targets Farmers, AFBF In Syngenta Takeover
July 21, 2015
As Monsanto Co. struggles to convince rival Syngenta AG to discuss a potential merger, the seed and agrochemical giant is Read More