Building Up Ag Retail

Eric Sfiligoj By Eric Sfiligoj|July 1, 2015

MRGA siteIn the oftentimes unpredictable world we live in, it’s nice to know some things can be reliably countered on to always be there. This might be a favorite TV show (always on at the same time), a good meal (at a trusted restaurant) or a get-together with great friends (who’ve been there through thick and thin).

For the past few years, ag retailers have had a somewhat reliable run of good fortune. Weather issues in many parts of the country since 2010 — not to mention increased demand for crops — have kept commodity prices higher than their historic averages for several growing seasons in a row. This, in turn, has meant grower-customers were more than willing to do whatever it took to boost their crop yields, spending lavishly on crop inputs and customer application services in the process.

Of course, the downside to all this good market fortune has been the increasingly “I need it yesterday” nature of the agricultural business. As many ag retailers have commented over the past few years: “My grower-customers increasingly expect our outlet to have everything they need, at a moment’s notice. This has created an environment where predicting what is needed goes hand-in-hand with having a retail facility that can deliver on this customer desire. Otherwise, we risk losing this business to a competitor that can keep delivering what the grower wants.”

Top Articles
CropLife Retail Week: Nutrien Mine Tour, Farm Loans, and Remembering Ag-Chem Equipment Founder Al McQuinn

Not surprisingly, this has given rise to a strong desire to construct new ag retail facilities or significantly upgrade older ones with faster, more efficient product delivery systems. In fact, during the early years of the 21st century, many agricultural market watchers regularly noted that the ag retail construction business was growing at “a steady, rapid pace.”

At CropLife® magazine, we obviously took note of this very visible market trend. Each year, our publication conducts a general poll on ag retail industry issues and growth opportunities through our CropLife 100 survey. This is sent out each summer to the nation’s top ag retailers, asking for information on their yearly sales, crop input volumes and other current market data.

Starting with the 2013 CropLife 100 survey, we began asking respondents to tell us more about their own companies plans when it came to building or expanding outlets. And the numbers that came back were very eye-opening. When asked how the nation’s largest, most progressive ag retailers were spending money to improve their businesses, 81% responded this revenue was being spent on building new outlets or upgrading old ones.

And this trend has continued into the current growing season as well. When ag retailers were asked to pick the best way to summarize their overall expenditure plans for plant construction and renovation in 2015 compared with 2014, more than 75% indicated they planned to spend as much or more money on this portion of their business. Less than 15% responded that they planned to spend less money than in 2014.

Based upon industry insider information, this is exactly what’s happening in 2015 when it comes to ag retail outlet construction.

“A lot of the old infrastructure is being replaced right now,” says Steve Anderson, corporate/national accounts manager, sales & marketing at Stueve Construction Co. “The main drivers continue to be to keep ahead of fertilizer shipment delays, both on the rail and in trucks, and overall product availability during the ‘busy’ season by retailers.”

Furthermore, adds Anderson, this building trend at ag retail cuts across all parts of outlet scope. “There continue to be a wide array of buildings being built,” he says. “Large buildings, 20,000 tons or greater, continue to go up at a good clip. Buildings in the 7,500- to 15,000-ton range are also very prevalent. But buildings in the 2,500- to 6,500-ton range are also popular right now. And plants under 2,500 tons continue to be moving well in terms of going up across the country.”

To tie into this trend, CropLife decided a publication highlighting some of the best of these ag retail construction projects was in order. So in July 2014, we put together the first Facilities Report as an insert to the main magazine. This featured information, pictures and specs for six different ag retail outlets from seven different builders/suppliers.

Obviously, this trend shows no signs of slowing down. This year, the second Facilities Report is now a stand-alone publication because of its size. Across these pages, you will find information on 14 different ag retail facilities courtesy of nine different builders/suppliers.

“Replacing older, inefficient facilities is keeping the market robust right now,” says Anderson. “In ag retail, it’s all about speed-to-market; that continues to be the industry’s focus.”

View these slideshows for a sampling of what’s inside The Facilities Report:

 

0

Sfiligoj is the Editor for both CropLife and CropLife IRON magazines. He travels regularly to cover industry events and has been dedicated to the ag retail industry since he joined the staff in 2000. See all author stories here.

Advertisement