In the past, I’ve heard that the agricultural industry has a reputation for being relatively the same, year in and year out. In fact, during an interview with an ag retailer for our magazine’s State of the Industry report, I asked how the marketplace would perform in the coming years. The respondent uttered two not surprising words: Steady state.
Yet, in some areas, the changes can be lightning quick. Later this month, ag retailers will gather in Palm Springs, CA, for the 2010 Agricultural Retailers Association (ARA) meeting. I remember just one year ago, the talk of the event was the topsy-turvy world of fertilizer. Inventory write-downs, rollercoaster prices, customers balking at buying what they agreed to buy – you name it. One of the high points of the meeting was a discussion on how ARA was in the process of putting together a formal fertilizer contract that ag retailers could use to protect themselves from unexpected market turns going forward. This was formally introduced to the marketplace earlier this year.
Well, we’ve now gone forward. The situation in fertilizer, while far from stable, has at least settled back into a pattern the industry seems comfortable with. Indeed, according to figures compiled in our annual CropLife 100 survey, fertilizer sales for retailers climbed 10% to $10.1 billion.
Consequently, talk of fertilizer contracts has significantly died down. In fact, according to a recent ARA survey of its members conducted this summer, seven in 10 respondents said they were “somewhat familiar” to “very familiar” with these documents. However, only 7% reported using them in their day-to-day businesses. Unfortunately, this low percentage is backed up by the CropLife 100 survey, where only 5% of respondents reported using fertilizer contracts with their grower-customers.
I know it’s still early in this process, but it seems incredible to me that such a cry for change has completely gone silent in just one year’s time. Hopefully, the percentage of ag retailers using contracts to protect themselves will improve in 2011 and beyond – without the need for another market meltdown to make the change reality.