The headlines of late have been all about consolidation, mergers and acquisitions and about the global players like Agrium and Glencore moving in on Prairie agriculture.
But there’s been a quiet evolution taking place beneath the radar that has turned into a competitive force on the Prairie farm supply scene.
The same day earlier this month that Glencore announced it had received regulatory approval to transfer 210 former Viterra farm retail outlets to Agrium, making it the largest farm retailer in Canada, another celebration was taking place in Winnipeg.
Univar’s agricultural division, which supplies products and services to independent retailers across Western Canada, was celebrating 55 years in business with its staff and business associates.
Why a 55-year celebration? Because five years ago, when the company could have celebrated its 50th anniversary, quite frankly, no one felt much like celebrating.
“You had Viterra flexing their muscle thinking they were going to buy up the independents and take over the world, you had this scary entity that we didn’t really understand or know much about called CPS (Crop Production Services) that was coming across the West, and there was the independent dealer kind of caught in the middle,” Neil Douglas, general sales manager for the agricultural division, told about 150 invited guests.
“And if the independent dealer was threatened and it looked like extinction was on the horizon, then that meant that Univar wasn’t going to be around much longer either, so we really weren’t in the mood to celebrate our 50th,” he said.
Instead, it was Viterra that didn’t survive, at least as an agri-retailer. Formed as a publicly traded company through three mergers of four former Prairie grain co-operatives, it was swallowed by Swiss commodities trader Glencore in 2012. Glencore and kept most of Viterra’s grain storage and processing sites in Canada and Australia, but the rest of the company was carved up and resold — most of it to the likes of Richardson International Inc. and Agrium.
But 17 of its retail outlets are now finding their way back to local co-operatives through a transfer deal with Federated Co-operatives Ltd. Under the deal, FCL is buying the 17 sites from Viterra, and will then transfer those sites‘ ownership and operations to local retail co-ops that have already agreed to accept the facilities. FCL’s 235 retail co-op owners already operate over 140 ag retail centres in the West through the Co-operative Retailing System (CRS).
Meanwhile, Univar — the company who thought its sun was setting — is experiencing its second year of unprecedented growth.
What just happened?
To borrow from Mark Twain, reports of the independents’ death have been greatly exaggerated.
“With all the consolidation in the industry, nay sayers said the independents wouldn’t survive,” said Rick Pierson, vice-president at Univar Canada. “We’ve seen two consecutive years of record growth. Independent retail sales are stronger than ever.”
Things have changed, no doubt. Univar, for example, defines itself as much more than a middleman, but rather a supply chain partner to the corps of independents across the West, providing stocking services, rapid delivery, inventory protection, supply management and dealer financing.
The independent dealers it works with have parlayed their local connections into a market share Pierson estimates of nearly 45 per cent.
“I think part of that is growers like to shop local and the independent dealer lives in the town, he spends money in the town, his kids go to school there and he raises his family there. It’s a local thing.
“People like to spend their money locally,” he said. “I think that’s a big part of it.” But he’s also found the independent dealers are on the forefront in offering new technology and agronomic support that is tailor-made to their service area.
It seems that as farms grow larger, and farming becomes more time sensitive, having access to local advice becomes more essential. If that local dealer can remain price competitive via its supply chain partnerships, all the better. It probably doesn’t hurt if he or she is on a couple of local volunteer boards as well.
Above all else, the independent is invested in the industry.“They’ve put their own money and sweat into making it successful,” Pierson said.
The big players aren’t going away. In fact, they keep getting bigger. But it appears the smaller players continue to get stronger.
Farmers apparently see value in maintaining local expertise and access to supply, whether it is through local independent retailers, or local co-ops.