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 5,000 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.

Weather Effects Demand

The agricultural products that customers purchase can change based on the weather conditions in their area.

Farms Consolidate, Specialize

Almost 60% of farm production now comes from farms with $1 million or more in annual sales, up from 31% in the early 1990s.

Industry size & Structure

A typical farm supplies wholesaler operates out of 1-2 locations, employs less than 20 workers, and generates $28 million annually.

    • The farm supplies wholesaler industry consists of about 5,000 companies that employ 116,800 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

                                Nov 21, 2022 - Farmland Values Hit Record Highs
                                • Small farmers are being priced out of the market for farmland as competition from investors and real estate developers drives up prices across the country, The New York Times reported in November. In South Dakota, farmland values surged by 18.7% from 2021 to 2022, one of the largest increases in the country, according to the most recent figures from the Agriculture Department cited by NYTs. Nationwide, values increased by 12.4% to $3,800 an acre, the highest price on record since 1970, with cropland at $5,050 an acre and pastureland at $1,650 an acre, according to the USDA. In a recent survey conducted by the National Young Farmers Coalition, young farmers said finding affordable land for purchase was the top challenge this year. Fewer farmers may translate into fewer sales for farm supplier wholesalers.
                                • Tens of thousands of rail workers are threatening to strike, causing the nation’s freight railroads to shut down unless Congress intervenes. The International Brotherhood of Boilermakers union, which represents a fraction of approximately 115,000 rail workers involved in the contract dispute with Union Pacific, BNSF, CSX, and other railroads, voted down the contract on Nov. 14, 2022. All 12 rail unions must approve their deals to avert a strike, although no strike is imminent because all the unions have agreed to keep negotiating even if their members vote no, until a deadline early in December. Congress is expected to block a strike and impose contract terms on both sides if they can't come to an agreement before the deadline. The stakes are high for the US economy with so many industries, including distributors of farm supplies, relying on railroads to deliver their raw materials and finished products, the AP reports.
                                • The US Department of Agriculture has announced a $300 million effort to support crop producers transitioning to organic farming and to strengthen organic markets. The USDA’s Organic Transition Initiative, funded in part by the American Rescue Plan, will provide support in three main areas: mentoring and advice; direct farmer assistance; and organic market security. The USDA said the department hopes the program will reverse a trend of slow growth in farmers transitioning to organic, open opportunities for new and beginning organic farmers, and expand consumer access to organic foods. According to the USDA’s National Agricultural Statistical Service, the number of farms transitioning has dropped by 71% since 2008. Still, certified organic farming is gaining the attention of producers and distributors looking to participate in this higher-value market that commands premium prices.
                                • Fertilizer wholesalers will want to take advantage of growing demand for biofertilizers. With increasing global awareness of the importance of agricultural sustainability driving growth, the global biofertilizers market is projected to reach $4.47 billion by 2026, a CAGR of 11.9%, from an estimated at $2,55 billion in 2021, according to research from Markets and Markets. Key growth drivers of demand for biofertilizers include consumers’ growing preference for organic foods, adoption of soil fertility management practices by farmers, concern over nitrate emissions, and governmental support for the use of organic fertilizers, according to the report. Biofertilizers are organisms, including bacteria, fungi, and cyanobacteria, that enrich the nutrient content of soil.
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