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.
As part of our continuing efforts to provide clients with clear indication of the performance of the U.S. crop protection industry, Kline is offering the Crop Protection In-Season Market Update: U.S. Market Analysis. This report delivers updates through the first three quarters of the 2015 calendar year and provides clients with an up-to-date market analysis of the performance of eight of the leading manufacturers that represent almost 80% of the industry total. The report provides percent changes from the previous year on each of the five chemistry segments of the crop protection industry by company and major crop.
Information is obtained through a variety of means including a thorough analysis of quarterly reports and discussions with key industry people. At the request of clients, sales performance is recorded at the “ground level,” indicating the activity taking place within the distribution channel. In addition, we provide estimates of year-end supplier crop protection sales and total size of the market. This thirty-page report will prove to be useful for marketing, sales, and strategic planning for the 2016 year.
Findings and opportunities will be discussed in a webinar covering these aforementioned reports and will be held Wednesday, November 18, 2015 at 9:30 AM EDT. If you are interested in joining the session, you may register by clicking here.