Shifting Ground: Mega-Mergers to Realign Farm Retailers

The stressed farm economy and intense competition have driven gross margins to near- or below-breakeven levels for seed and crop protection suppliers. Manufacturer rebate programs are helping keep these agribusinesses afloat, but the slew of crop protection and seed company mega-mergers mean that these programs are likely to change – possibly requiring larger volumes for rebates and tying together discounts for seed and crop protection products.

In the face of this challenging business environment, many retailers will face critical operational decisions, and may consider strategies including:

• Exiting some seed and crop protection business lines and redirecting resources to other areas.
• Reducing the number of brands they offer and partnering with one manufacturer to maximize rebates.
• Offering competing products to increase bargaining power with manufacturers.
• Cooperating or consolidating with other agricultural retailers to gain bargaining power while preserving variety and maximizing rebate program discounts.

Learn more about the impact of mega-mergers on farm retailers from CoBank’s Knowledge Exchange.