Ag Retailers Rethink Inventory Strategies As Cash Takes Center Stage
October 16, 2026 As margins tighten and borrowing costs remain elevated, ag retailers are taking a closer look at how much inventory they carry — and how much capital they have tied up in product sitting on the shelf.
CropLife® Magazine talked with Bob Trogele, CEO of Verdelis Investments/ProAgInvest, about “de-stocking.” While the trend is not new, today’s higher interest-rate environment is putting renewed emphasis on cash management across the ag supply chain. In this interview, Trogele discusses why retailers are reducing inventory, the risks of cutting too deeply, and strategies such as consignment that can help retailers preserve cash while still having the right products available when customers need them.
CropLife (CL): How widespread do you believe “de-stocking” is within ag retail right now?
Bob Trogele (BT): De-stocking probably is happening. Usually, when you get into a down cycle and margins get compressed and cash becomes king, retailers start looking at their No. 1 cost, which is inventory. Not only are you tying up capital when you’re sitting on inventory, but you’re paying interest rates on that inventory, either opportunistically or directly. Consider that if I have to finance the inventory, then I’m paying 8% or more in interest, while I could put that money in the bank and earn 5%.
The retailers are also doing this because their farmer customers are doing it. When markets are good, people buy a head of time, but that’s not the current climate.
CL: What challenges do retailers need to consider if they pursue this approach to their inventories?
BT: You don’t want to run out of products or miss sales opportunities. Customer planning is critical. You must have a good understanding of what your producers’ needs are going to be next year. When you’re talking about herbicides, you can have a tighter predictability plan because you know there will be weeds next year. However, compare that to insects, which are less predictable.
Make sure your suppliers know what your plan is and what your range of options are in terms of how much of each product you might need.
Also, consider taking the product on consignment instead of signing up for a rebate. In that model, the product is never yours and you don’t have to pay for it until you take it off the shelf and sell it. No one wants to forfeit the rebates, but this approach can save retailers money while ensuring they don’t miss any sales.
CL: Do you see this as a long-term shift in inventory management within the channel, or is this a trend that will change based on movement in interest rates?
BT: This isn’t anything new. Experience matters to executing this plan effectively. This isn’t the first time the market has gone through something like this. The only difference now compared to the last 10 years is that money isn’t cheap right now. The best-case scenario right now is that interest rates stay where they are.
Eventually, retailers can’t skinny down so far that they miss market opportunities. It’s always about having the right product at the right place at the right time and then delivering it in a tight timeframe to the user. If a producer thinks fertilizer prices are going to go up, he may buy as much as two years’ worth of product if he can store it on the farm, assuming he has the cash.
Cash is a key component of managing your business on the farm and managing your retail inventory in the channel. The big unknowns in terms of future pricing are the volatility in the Middle East and the overcapacity in China when it comes to chemicals.
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