The ag retail industry is in a state of transition as farm operations continue to consolidate. Ron Farrell, a consultant with nearly 50 years of experience working with leading agricultural companies, says that as consolidation continues, it is likely that about 20% of U.S. crop acres will be farmed by growers who will prefer to buy direct and apply their own fertilizer and crop protection products; another 20% of the acres will be smaller farms where the operator is also employed off-farm and will require additional support services from their farm supplier; and the remaining 60% will be farmed by growers looking for more sophisticated risk management and precision agriculture services from their ag retailers.
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Recent surveys have found that more than 80% of ag retailers see their farm customers doing more precision agriculture in the next five years. “As commodity prices drop to more sustainable levels, growers will focus on maximizing their return per dollar invested. Precision ag provides the best opportunity to do that,” says Farrell, whose company,Farrell Growth Group, LLC, provides consulting to ag companies and facilitates peer groups of top-level ag retailers.
Retailerswho help growers determine the most viable practices through precision ag data analysis, on-farm research and custom precision services will gain business, according to Farrell. “The ag retail industry is segmenting as quickly as farmers are consolidating. Those retailers that build up their team to be knowledgeable on all components of precision ag and on maximizing return on investment will thrive. Those that don’t will struggle to maintain business in this sector,” he says.
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