2016: The Year Of Consolidation
April 4, 2016 Usually when we are putting together our end-of-the-year wrap up stories here at CropLife magazine, we generally can categorize any given 12-month period as “The Year of _____.” Over the past dozen years or so, this blank space has been filled with such terms as “Ethanol,” “High Commodity Prices,” or “Caution.” Normally, these labels don’t become completely clear until the last quarter of the year.
But that doesn’t appear to be the case in 2016. It’s only April, but I’m tempted to already affix a label to this year – The Year of Consolidation. To list all the merger notices that have hit my inbox since the start of 2016 would take up way too much space for this column, but a partial list would include examples across the agricultural board. Crop protection suppliers (Dow and DuPont), big equipment makers (John Deere and Hagie), and numerous cooperatives have led the way, however.
Loading ...“Merging two strong cooperatives allows further diversification throughout our supply chain and opens local and global opportunities for added value and growth on behalf of our members,” said Milan Kucerak, CEO of the newly formed Landus Cooperative, a merger of Farmers Cooperative Co. and West Central Cooperative based in Ames, IA.
And the rumor mill says more such mergers are actively being discussed. As for way this is taking place in 2016, most economists point to the slowing agricultural economy worldwide and general marketplace uncertainty as the main culprits. But there also seems to be a fear of missing out on “the merger game” in the big picture. “More consolidation is inevitable,” wrote David Frabotta, Editor of sister publication AgriBusiness Global in his April 2016 column. “When consolidation occurs, suitable partners begin to disappear, and so do the options for growth, market share, and regulatory approval.”
In other words, the agricultural industry should anticipate plenty more merger notices over the next nine months.
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