A group of independent crop input retailers is becoming a little less independent.
Fourteen retailers across the three prairie provinces are forming a company that will help them network together and communicate more efficiently with manufacturers and distributors.
They are adopting a business model that AgLink Australia has developed over the last 30 years and have lured that company’s chief executive officer to Canada to help form AgLink Canada.
“It’s not a buying group or anything like that,” said CEO Bill Dowdle. “It’s more of a marketing group.”
AgLink Canada chair Dennis Bulani, who is also CEO of the Rack, said the consolidation occurring in the crop protection and seed business is making big companies even bigger.
By working collectively, the independents can make it easier and more cost effective for manufacturers and distributors of crop inputs to introduce the new technologies they are bringing to market.
“We want to be more accessible and make it easier for them to deal with us, and as they get larger we feel that is important going forward,” said Bulani.
However, he believes an even bigger benefit of forming AgLink is the networking opportunity it will provide to the 14 founding members.
“When you’re the sole owner of one small company in one small town, it can be a little lonely, so when we network it’s really quite positive,” he said.
Bulani believes that networking ability will also make it easier to pass his business along to his daughters because they will have a group of peers who will be able to answer their questions and be a sounding board for new ideas.
Dowdle said training opportunities will be another core service provided by AgLink. The Australian company provided 6,000 hours of training last year for everyone from shop floor staff to senior executives.
“That is something that independent businesses have missed out on,” he said.
AgLink will also conduct research and development activities on behalf of suppliers and help sort through the “tsunami” of new technologies to find the valuable nuggets for its members.
Bulani said customers should not misconstrue this venture as independents being unable to compete with corporately owned outlets on their own.
“Nothing can be further from the truth,” he said.
Prices may be higher at independent outlets, but the service, product availability and commitment to the community is next to none, said Bulani.
He said a lot of farmers are concerned that independents are going to be gobbled up by the big players in the crop input business.
“They’re saying, ‘are you guys viable? Are you going to sell next?’ ”
They shouldn’t worry because independents still control an estimated 28 percent of the crop protection business in Western Canada, said Bulani.
“There is a very healthy base of independent retailers in Western Canada and will continue to be so.”
Dowdle said it’s a similar story in Australia. Independents are thriving despite long-running predictions of their demise.
“They were going to be run off the face of the earth in Australia 20 years ago, and they are the strength of the market now,” he said.
The 16 Australian independents that are members of AgLink Australia have combined annual sales of $1.2 billion and control 23 percent of the crop input business in that market.
Bulani estimates the 14 companies that formed AgLink Canada generate about $500 million in annual sales and are eager to add more like-minded members to the organization.
Members have to pay a fee to become an AgLink shareholder. Bulani wouldn’t divulge how much it is but indicated it is fairly costly.
“The entry level is quite significant because our operating budget is quite expensive,” he said.
Bulani said the board of directors hasn’t determined how much it is going to pay AgLink Australia for providing the business model and guidance for forming AgLink Canada, but there will be remuneration of some type.
“We’re probably three years ahead of where we would have been if we had not worked with them,” he said.
List of AgLink shareholders:
- Agro Plus Inc., Lethbridge, Alta.
- Agro Plus Solutions Ltd., Dunmore, Alta.
- McEwens Fuels and Fertilizers, Fort Saskatchewan, Alta.
- The Rack Petroleum Ltd., Biggar, Sask.
- Aylsham Agro, Aylsham, Sask.
- Emerge Ag Solutions Inc.,Eston, Sask.
- Agri Team Services Inc., Glaslyn, Sask.
- Orchard Transport Ltd., Delisle, Sask.
- Veikle Agro Ltd., Cut Knife, Sask.
- Clearview Agro Ltd., Foam Lake, Sask.
- Ag Advantage Ltd., Marquette, Man.
- Redfern Farm Services Ltd., Brandon, Man.
- Jackson Seeds Ltd., Inglis, Man.
- Jonair (1988) Ltd., Portage la Prairie, Man.