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
Allen Summers Asmark Institute PSM Training
EmployeesAsmark Institute Sponsors 25 ResponsibleAg Auditor Trai…
June 21, 2016
The Asmark Institute has announced plans to provide 25 scholarships through their affiliated State fertilizer and agrichemical associations to help encourage Read More
Kennebec Elevator
CropLife 100Wheat Growers Celebrates Kennebec Elevator Grand Openin…
June 21, 2016
Over 250 patrons and guests were on hand to celebrate Wheat Growers’ Kennebec Elevator grand opening. South Dakota Secretary of Read More
Land O Lakes
Industry NewsLand O’Lakes To Acquire Ceres
June 20, 2016
Land O’ Lakes, Inc. and Ceres, Inc. have announced that they have signed a definitive merger agreement under which Land O’Lakes Read More
Food IT
Industry NewsCalifornia Event Will Mix Ag And Tech Professionals To …
June 20, 2016
Silicon Valley is hot on agriculture, and an upcoming event in California will bring together the food and tech industries Read More
LegislationVilsack Christens WinField Crop Adventure, Talks Monsan…
June 17, 2016
The WinField Crop Adventure grand opening ceremonies at Fair Oaks Farms (near Winemac, IN) welcomed USDA Secretary of Agriculture Tom Read More
Crop InputsFields of the Future: WinField Doubles Down with Agri-E…
June 16, 2016
Land O’Lakes, Inc., joined by Agriculture Secretary Tom Vilsack, today will host Fields of the Future, a live broadcast about Read More
Bayer sign
Crop InputsMonsanto Turns Back Bayer Again
June 14, 2016
Bayer AG’s bid to buy Monsanto Co. for more than $60 billion has hit an impasse that could pose a Read More
Young Corn Field
Crop NutritionNext Generation Of Nitrogen Efficiency Technology Conve…
June 13, 2016
Commodity price projections indicate farmers will continue to face tight margins again this year. Delivering higher yields and more bushels Read More
Industry NewsLa Crosse Seed Acquires Cover Crop Solutions Brand
June 10, 2016
La Crosse Seed announces that it is the new and exclusive owner of the entire family of brands of Cover Read More
ManagementTravel Plans and EU Rejection of Glyphosate, Biotech Cr…
June 9, 2016
Editors Paul Schrimpf and Eric Sfiligoj talk about upcoming trips and the latest in the European Union’s moves against glyphosate Read More
Aspire with Boron
Crop InputsStudy: Aspire with Boron Ups Alfalfa Yields
June 8, 2016
Alfalfa growers are successfully improving yields through the cutting season by applying an important micronutrient. In a recent study, The Read More
Industry NewsAGCO Announces Tragic Death of Longtime Employee
June 8, 2016
It is with deepest regret that we announce the passing of our dear friend, colleague and customer advocate-in-chief Kevin W. Read More
Wheat Field North Dakota
Industry NewsBASF Inks Northern Seed for Clearfield Wheat R&D Li…
June 6, 2016
BASF has licensed Northern Seed LLC to perform research and development of BASF’s proprietary and patented Clearfield technology in wheat. Read More
ManagementBayer/Monsanto, EU/Glyphosate, Corn/Soybeans
June 2, 2016
Editors Paul Schrimpf and Eric Sfiligoj discuss the latest regarding industry mergers, the glyphosate debate in Europe, and an update Read More
Growers looking at soybeans
Industry NewsKoch Licenses 2 Marrone Products For North American Dis…
June 2, 2016
Koch Agronomic Services (Koch), with support from its affiliate, Koch Biological Solutions, has secured exclusive rights to sell REGALIA Rx Read More
Gypsum
Industry NewsBeneficial Reuse Management Launches GYPSOIL BLENDABLE
June 2, 2016
Beneficial Reuse Management (BRM) has introduced GYPSOIL BLENDABLE, a new high-quality pelleted gypsum fertilizer that supplies 17% sulfate sulfur and Read More
StewardshipAgrible Joins Field To Market To Pursue Sustainable Sou…
June 1, 2016
Agrible, Inc. has joined Field to Market: The Alliance for Sustainable Agriculture as an associate member. As a leading multi-stakeholder Read More