The Quest to Find Scale, Stay Local Is Paramount in Ag Retail Mergers

For all the hype and fanfare that follows the announcement of a merger (or, in the genteel parlance of ag cooperatives, “unification”), there are few people that would deny that the process is a colossal undertaking.

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Now, this is not to diminish the value of a well-conceived and executed joining of forces, whether by merger or acquisition. There are myriad examples of tremendous outcomes. But getting from “we see the possibility of tremendous synergy and economy of scale,” and “this is not just one plus one equals two,” to that greener pasture will require an arduous process of difficult “sausage making,” as the saying goes.

As a proud member of the ag media ranks for more than two decades, I’ve played witness to literally hundreds of mergers and acquisitions over the years. The relatively recent coming together of mega-players DuPont and Dow to emerge as Corteva, and Bayer’s acquisition of Monsanto, have actually been awe-inspiring. The layers and complexity of these organizations created a degree of difficulty that, from a distance, seemed insurmountable. And while those in the thick of it would surely say, “we’re still working through it,” both companies have emerged on pretty sound footing.

Closer to the ground, you in our ag retail audience continue to evaluate the future of the input distribution channel through the lens of your own organizations.

Do I have the right channel partners? Am I delivering the services and products my farmer customers need? Is my sales force capable of building deep, consultative relationships with our customers? Do I need a stronger digital presence in the market? Finally, is my business at a level of scale that allows us to invest where we need to invest to answer the challenge of operating efficiently and profitably in the years ahead … and if we do scale up, can we maintain that local connection to customers?


Related:
CropLife 100 and Consolidation: 12 Biggest Ag Retail Deals in the Last 5 Years


So, knowing all this is happening in the background, I was intrigued when I heard about cooperative Landus and its “optimization” alternative to unification.

I caught up with Matt Carstens, Landus Cooperative’s President and CEO, to talk about the concept. Essentially, the idea is to create efficiencies by combining specific business functions with other cooperative organizations while limiting disruption — in particular, disruption in the retailer-customer connection. Nothing farmer facing can change.

After demonstrating the value through factors such as better balance sheets, improved service, and better product access, coop members can determine a path forward: Continue with the optimization program; Propose a merger; or Sever the relationship.

Creating a “try before you buy” scenario reduces pressure on cooperative managers to merge if cultural differences stymie progress, or previously unseen roadblocks emerge. The process should satisfy those that are ready to move forward now, and those who want to advance more cautiously.

Balancing scale and local responsiveness will be a key consideration for years to come, and it will be interesting to see if the “optimization” model pans out for Landus.

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