The U.S. crop protection chemical industry experienced a 3.5% decrease among distributors at the cost of goods sold (COGS) level during 2015, according to the recently published report Leading Distributors in the U.S. Crop Protection Industry: A Strategic Market Analysis by global management consulting and market research firm Kline. The report tracks the leading 20 distributors, which account for over 95% of the total sales of crop protection chemicals within the United States. Total 2015 COGS at the distributor level are over USD 10 billion.
The 2015 crop protection industry began with challenging market conditions due to lower commodity prices and tight farmer economics, ultimately resulting in lower corn planted acres and affecting crop protection sales for most manufacturers of crop protection products. High inventories rolled over from the 2014 season forced distributors to provide incentives to growers.
Notable acquisitions during the year include: Land O’Lakes (Winfield) and United Suppliers announce merger of their crop input businesses, Wilbur-Ellis acquires Lacey’s Farmacy, Triangle Chemical acquires Cardinal Chemicals and Pinnacle acquires three agricultural retailers. According to Joe Prochaska, Project Manager in Kline’s Agriculture/Specialty Pesticides practice, “Consolidation continued during the year as the distribution channel looked for ways to grow their business during a down market. With consolidation there is a need for improved efficiency, and as a result, managers must identify inefficiencies within the combined business and take actions to drive out the additional costs of the new entity.”
The report indicates the U.S. crop protection industry as mature yet dynamic on a year-to-year basis with plenty of business opportunities for companies within the distribution channel willing to take educated risks. Market drivers identified within the agricultural distribution channel include: improving efficiencies, managing new regulations, customer relationships, and adopting new streams of revenue.
Copyright by Institute for the Control of Agrochemicals,Ministry of Agriculture ,P.R.China