Farm Supplies Wholesalers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 4,845 farm supplies wholesalers in the US purchase animal feeds and additives, fertilizers, agricultural chemicals, pesticides, plant seeds, and bulbs in bulk and resell them to customers in smaller volumes. Primary customers include farms, other distributors, farm and garden supply retailers, nurseries and greenhouses, and landscaping businesses.

Farm Consolidation and Specialization

Large-scale farms – those with gross cash farm income (GCFI) of $1 million or more – represent about 3% of US farms but account for nearly half (47%) of US farm production, according to USDA figures for 2021.

Weather

Changes in area weather conditions affect demand for agricultural products.

Industry size & Structure

A typical farm supplies wholesaler operates out of 1-2 locations, employs fewer than 25 workers, and generates $29 million annually.

    • The farm supplies wholesaler industry consists of about 4,845 companies that employ 117,300 workers and generate $140 billion annually.
    • The industry is somewhat concentrated with the 20 largest firms representing 50% of industry revenue.
    • Large domestic companies include Southern States (VA), Central Farm Supply (KY), Coastal Agriculture Supply (TX), and Heartland Ag (IL).
                                Industry Forecast
                                Farm Supplies Wholesalers Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Jan 23, 2024 - Employment Costs Rise
                                • Employment by farm supplies wholesalers ticked up in November compared to a year ago, while average industry wages rose nearly 5% year over year. However, the average hourly wage for employees at farm supply wholesalers declined by nearly $1 from its record high in October. Seasonally-adjusted sales for miscellaneous nondurable goods wholesalers, which includes farm supplies, fell in September year over year and from the previous month. Sales for the US farm supplies wholesalers industry are forecast to grow at a 2.02% compounded annual rate from 2023 to 2027, slower than the growth of the overall economy, according to the Interindustry Economic Research Fund.
                                • Ongoing uncertainty surrounding the federal budget is making it difficult for the USDA and producers to plan for the future, Agriculture Secretary Tom Vilsack told attendees at the American Farm Bureau Federation's (AFBF) annual convention in January. Vilsack said that while the latest Continuing Resolution (CR) purportedly keeps funding at certain levels, potential cuts in any final budget deal could create greater shortfalls in the middle of the year. “As long as there’s uncertainty, it’s very difficult for farmers potentially to make long-term decisions or long-term planning.” The previous CR passed in November included an extension of the 2018 farm bill at current levels through Sept. 30, 2024. Calling for a new Farm Bill, AFBF President Zippy Duvall said “The current farm bill was written before the pandemic, before inflation spiked, and before global unrest sent shock waves through the food system. We need programs that reflect today’s realities.”
                                • The US Gulf Coast has become a magnet for fertilizer companies looking to produce climate-friendly blue ammonia thanks to generous federal subsidies and its existing export structure, Reuters reports. So-called blue ammonia is a low-emissions compound consisting of hydrogen and nitrogen used to make fertilizer. Facilities under construction include a 1.1 million metric ton per year plant at Beaumont, Texas built by Dutch fertilizer producer OCI. The OCI plant, slated to open in 2025, would be the world's first new commercial facility to capture and sequester 95% of the emissions produced by making ammonia. Norway’s Yara is looking to invest in a blue ammonia plant in Ingleside, Texas that would capture about 95% of the carbon emissions. Other companies looking to build low-emissions ammonia projects along the Gulf Coast include Exxon Mobil, BASF, and LOTTE Chemical, Mitsubishi and RWE, according to Reuters.
                                • Inflation-adjusted net farm income – a broad measure of farm profitability – is expected to decline by 25.4% in 2023 compared with 2022, according to the most recent US Department of Agriculture Economic Research Service’s Farm Sector Income Forecast. The forecast blames the $48 billion decline on lower government payments and higher production costs. Compared to 2022, 2023’s government payments in aggregate will be 19% lower while production expenses (including dwelling expenses) will rise by 6.9%, per the report. The cost of fertilizer, seeds, living expenses, and interest rates are all rising, squeezing profitability. Despite the expected decline, net farm income of $141.3 billion in the calendar year 2023 will be 22.6% above its 20-year average (2003–22) of $115.2 billion in inflation-adjusted dollars. Farm sector equity is forecast to rise to $3.57 trillion in 2023, a 6.8% increase relative to 2022 in nominal dollars.
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