The role of the agricultural retailer is forever changing as the industry continues in an unprecedented sales free-fall of U.S. crop protection products, according to an executive with one of the nation's largest retailers.
Dan Vradenburg, executive vice president of the Wilbur-Ellis, the nation's third largest retailer with 130 locations nationwide, said the industry would survive the biggest changes it has experienced in decades because farmers and ranchers need the services they provide.
Some contend the ag retailer will fall by the wayside in the wake of manufacturing consolidation and eventual direct marketing to farmers.
Vradenburg told the annual California Agricultural Production Consultants Association conference he disagrees. The ag retailer will continue to have a sustainable role in American agriculture because of the hundreds of millions of dollars already invested in plants, people and equipment, the need for highly trained people to transfer information and to service producers, and the role of managing risks in product performance.
Nevertheless, there will be changes ahead, including more formal business relationships between the retailer and its farmer customers. “Friendships will only go so far,” said Vradenburg.
“Growers will only pay for tangible results” in the future, said Vradenburg.
And, ag retailers and distributors will ally with fewer suppliers.
As technology becomes even more complex, Vradenburg said the role of the ag retailer and its sales force will become increasingly important in understanding and delivering that technology to customers. “This will be the real key in going forward,” he emphasized.
This will be even more critical as food becomes increasingly important in health care. He said there is great potential for higher value from what is produced from what the ag retailer's customers produce.
“What we do in production agriculture is vitally important in feeding the world,” he said. That will be even more challenging with an ever diminishing farmland base.
Vradenburg said this increasing pressure to produce more per acre is the main reason production agriculture will continue to rely on farm chemicals.
However, there will be fewer total product sales. The U.S. crop protection product market was worth $6.1 billion in 2001. He forecast that that will shrink to $4.5 billion by 2005, about half what it was a decade ago.
That downturn means the industry must shrink still more. “The industry is overweight. Most businesses in the industry could service 20 to 30 percent more people without adding any new people or equipment,” he said.
The reality of that is that 25 percent of those in ag retailing today will have to change industries or careers.
This downturn is being driven by falling prices on expired-patent products as well as a much more informed buyer working to obtain low-cost farming inputs. Intense competition and low commodity prices as well as advances in seed technology also are contributing to the slide in crop protection product sales.
“We have seen more change in the past three years than we have in the previous 20 years,” said Vradenburg.
Those who survive will have a strong financial backing and good risk management skills willing to offer a total “crop solutions” approach to their customers, he said.
It will take dedicated, passionate, committed, highly trained people to survive in ag retailing, he said.
e-mail: [email protected]