Federated Co-operatives Limited sold a record volume of crop supplies in 2003 and its momentum doesn’t appear to be abating.
Retail sales for the first quarter of 2004, to the end of January, are higher than the same period last year, said FCL president Dennis Banda. But it’s the next two quarters that count.
“Overall, if we get good moisture conditions we’re pretty optimistic,” he said.
If this spring mimics last year, Banda will be happy.
Agro products vice-president Mel Adams told the 400 delegates attending FCL’s 75th annual convention that improved moisture conditions at the beginning of 2003 caused a 25 percent surge in crop supplies sales over 2002 results.
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It was the primary reason farmers bought more of FCL’s private label Fieldking canola seed, fuelling more than a 50 percent increase in seed sales, a segment Federated got into four years ago.
Adams also attributed the growth in FCL’s crop input sales to the disappearance of traditional grain company outlets in some regions.
“Retails have taken advantage of the consolidation of competitor operations, expanding their traditional area in the marketing of twine, grain bins and other farm equipment.”
But it wasn’t all good news in the agro products division. A large 2002 green feed harvest, combined with the May 20 announcement of BSE in Alberta, adversely affected the wholesaler’s feed business. So did the slumping hog sector.
Given the disasters that befell the livestock industry, Banda said the 10 percent decline in pelletized feed grain sales was actually a pleasant surprise.
“It hasn’t fallen as bad as what we might have expected.”
The feed sector remains an enigma when Banda turns his thoughts to the current fiscal year. He has no idea whether customers will be holding onto their herds and requiring more feed, hay and pastureland or if they’ll be sending their animals for slaughter across the American border if it opens later this year.
Predicting what will happen with crop inputs is an easier task. He expects another strong year of seed, fertilizer and chemical sales if the moisture is there. Sales and bookings of Fieldking seed are ahead of the same period in 2003.
Chief executive officer Wayne Thompson was more guarded in his outlook, calling the first quarter results a “meaningless” predictor.
“You really have to go through the spring season,” he said.
Both executives agree that canola acres should be up barring a moisture deficit, which bodes well for input sales.
Lee Hodson, director of the Elkhorn branch of Manitoba’s Twin Valley Co-op Ltd., said sales of crop supplies have been strong in his region.
“With Agricore backing out of a lot of districts it has helped us out a lot. We’re kind of picking up a lot of their business.”
But he categorized the prospects for the upcoming crop year as “scary” because many farmers are in a financial squeeze.
“There’s going to be a lot of business out there, but it’s going to be awful careful this year. The bills haven’t been paid from last year,” said Hodson.
