Co-ops and Precision Ag: Finding an Advantage in a Changing Environment

Co-ops and Precision Ag: Finding an Advantage in a Changing Environment

The business outlook for many co-operatives offering growers retail, marketing, and agronomic services is one that has changed greatly over the last several years, writes Eric Oeth on PrecisionAg.com. Co-ops across the country are facing a variety of challenges that threaten their profitability – among them, low commodity prices, increased pressure from larger agribusinesses, and increased competition for growers’ business from increasingly large co-operatives in their areas served.

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Finding an advantage in the markets they serve, in this environment of low prices and larger businesses competing for market share, is the challenge many co-ops face today. As mentioned above, this has become more challenging in recent years due to widespread consolidation in many agricultural sectors – from the blockbuster mergers of companies like Monsanto and Bayer, to increasing consolidation among co-ops themselves.

The trend towards consolidation has been a defining factor in the co-operative landscape for a number of years now, and the pressure to scale up operations through M&A isn’t fresh news – the Wall Street Journal described this phenomenon back in 1999. In recent years, however, this trend has continued to gain steam: in 2005, there were roughly 2,900 cooperatives total in the U.S.; in 2015, that number had fallen to below 2,200 (page 76).

Given the challenge for co-ops operating under these conditions, the question for these businesses is: how can they adapt their business strategies to maintain their competitiveness in the markets they serve?

Read more at PrecisionAg.com.

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