Seeing all the recent volatility in the economic world, I’m glad that I work in agriculture. As global financial markets, institutions, and governments are experiencing daily bouts of bad news and desperate measures, ag seems to be humming along just fine. Still, even silver linings can have clouds, as I will explain.
First, however, let’s consider things in general. I remember thinking when credit and money markets began to tighten (or dry up completely) across many parts of the economy that agriculture could also be affected. As I watched commodity prices begin to fall, I was sure it was only a matter of time before grower-customers started pulling back on their plans for the upcoming 2009 season as a consequence.
Fortunately, this hasn’t happened. According to a news report from Monsanto, lenders are not cutting back on loans to growers, with some loan institutions actually increasing credit lines to customers to purchase crop inputs for the upcoming season.
“A grower on solid financial footing should have no trouble gaining access to any credit they need to run their normal operations,” said Terry Crews, Monsanto’s chief financial officer. “There continues to be confidence in the availability of credit for growers.”
Of course, all this is great news for ag retailers, promising to extend the good times they’ve enjoyed in recent years. Although the data is still coming in at this point, preliminary information from the 2008 CropLife 100 survey show increased sales across the board. Once all the figures are tallied, the industry’s top retailers should have sales in the $18 billion range, up $3 billion from 2007. Better still, all four categories tracked in the survey — fertilizer, crop protection, seed, and custom application — will end the year on the upswing for the first time since 2006.
Now for the downside of being so up. In October, Jimmy Sanders agreed to be acquired by a New York City-based investment company, JSI Parent. Although the company’s name won’t change, the Sanders family — which has operated the business since 1953 — won’t be running the show.
With the way things are, this begs the question — why would the Sanders family exit the industry now? Actually, that probably is the answer. Previously, I worked at a family-owned publisher. In 1995, a year when our market share and revenues were at all-time highs, the owner suddenly announced he had sold out. Years later, after I’d left that company, I ran into my former owner at a trade show. Over a drink, I asked him why he had picked such a profitable time to sell his family’s prize asset.
“Because it was worth more at that point then it probably ever would have been,” he said. “The market was at its peak and I didn’t see it going higher.”
We can probably expect more long-time ag retail families to exit the business in 2009 for this same reason. The industry will undoubtedly transition into something different, more business-like in scope and feel.
I, for one, will miss the families. Family-run businesses tend to seem more like extended families themselves and not simply “places of work.” The industry will be a much poorer place for losing these advocates and friends.
