Will AGCO-Trimble Deal Spark More Consolidation in Ag Tech and Equipment Sector?
October 7, 2023 As I write this week’s column, I’m actively digging through the data compiled in our magazine’s annual CropLife 100 survey of the nation’s top ag retailers. For 40 years now, CropLife has attempted to capture not only how the industry has performed in the current growing season, but also look forward at some of the key issues expected to shape the marketplace during the upcoming season. The answers provided to this open-ended question are always fascinating.
For example, in the 2023 survey, respondents cited many of the same issues that have perpetually shown on each and every year – labor, margin pressures, and water issues (for those ag retailers located west of the Mississippi River). However, this year, an issue that has appeared only a few times has reappeared – consolidation.
Now this being an open-ended question, none of the respondents so far have absolutely identified what “consolidation” has them concerned. So, let’s speculate a little.
I don’t think it means input supplier consolidation. This was a trend about a decade ago – particularly among crop protection product companies. However, since then, this part of the business has seemed relatively quiet.
Grower-customer consolidation also doesn’t qualify. According to survey respondents, only 34% saw more consolidation among growers during 2023, a decline of 7% from the previous year’s survey results. Likewise, ag retail consolidation has slowed considerably, with only one company from the 2022 CropLife 100, United Farmers Cooperative, disappearing from the 2023 list (having merged with NEW Cooperative).
Instead, I think the consolidation trend worrying some ag retailers going into 2024 might be because of what’s happening in the ag tech/equipment sector. Here, consolidation has really picked up over the past year-and-a-half. First, CNH – the parent company of Case IH and New Holland – purchased Raven Industries. In turn, both entities purchased Augmenta in March. And at the end of September, AGCO Corp. announced it had acquired the assets of Trimble, a long-time supplier of technological products for agriculture.
Loading ...These moves might indicate that a new wave of ag tech/equipment company consolidation is upon the industry. And this could be worrying to ag retailers for obvious reasons – fewer manufacturers means fewer potential partners to source an increasing array of ag technology products.
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