The Wrath of Consolidation in Ag Retail

The Wrath of Consolidation in Ag Retail

But no matter what way you slice it, 2019 is shaping up to be an oddball all its own. Take what’s happened this year in consolidation.

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Now, consolidation across the agricultural marketplace the past few years is nothing new. In fact, since 2015 market observers have watched as the largest crop protection/seed and fertilizer companies on the planet have merged and consolidated their operations. Inevitably this led to several smaller suppliers (such as United Phosphorus and Arysta) bringing their companies together in response to this consolidation trend — not to mention equipment makers such as John Deere and Hagie formally joining forces under a single corporate umbrella.

As the supplier community embraced this “urge to merge,” ag retailers began looking to bring their companies together as well. In fact, over the course of the past four years, dozens of ag retailers have worked to combine their operations in this manner. Examples of this include Farmers Cooperative and West Central Cooperative in Iowa (to form Landus) and South Dakota Wheat Growers and North Central Farmers Elevator in the Dakotas (to form Agtegra). In each of these cases the board of directors/owners of these ag retailers realized that joining forces in today’s environment “made good economic sense.”

And this consolidation trend in the ag retail market space has continued in 2019. But what makes it unique and different is the timing.

During the ag retail consolidations that took place between 2015 and 2018, most of these primarily did so in the fall or early winter. And from an economic standpoint, this made perfect sense. This is the time of year most companies close their books and know how much money they made or lost. Ag retailers selling at this time of year seemed normal, and that trend would persist year over year.

But this is what makes 2019 so strange. Here we are, only a few months into the year — at the very start of the growing season — and several high-profile ag retail acquisitions have already occurred. This includes Wilbur-Ellis buying Wiles Brothers Fertilizer in February and Nutrien Ag Solutions purchasing Van Horn in March.

And these moves seemed to be about more than simple economics. “We see this as a great opportunity for our employees to benefit from the expanded scale and growth opportunities that will come along with joining an industry leader in ag retail,” said Van Horn’s President/CEO Dan Mogged.

It will be interesting to see how this latest wrinkle in the consolidation game ultimately plays out once 2019 really gets underway.

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