Agrium seeks to double retail revenue in 3-5 years

Agrium Inc, the world's third-largest nitrogen fertiliser producer, wants to double revenues from its retail operations in the next three to five years, a senior vice-president said on Thursday.
Agrium Inc, the largest US retailer of crop supplies as measured by direct sales to farmers, sees retail as a hedge against downturns in its more cyclical fertiliser business, said Richard Gearheard, head of Agrium's retail division.
Ethanol demand has fuelled optimism in the farm sector, lifting prices of potential acquisition targets, but Gearheard said Calgary, Alberta-based Agrium's target of doubling its $2 billion in retail revenue is still realistic.
"We will look at anything that's available that makes sense," he said in an interview, noting the company is keen on the US corn belt, but would look at deals in other states and Canada that would give it regional critical mass. "If you want to try to double your size, buying $5 million operations will get pretty time-consuming," Gearheard said.
Agrium has almost 8 percent of the $26-billion US market for farm supplies such as fertilisers, chemicals and seeds, he said. Major competitors include United Agri Products, which is both a retailer and a distributor, as well as farmer-owned co-operatives such as Land O'Lakes Inc and privately held Helena Chemical Co, Wilbur-Ellis Co and J.R. Simplot Co.
Retailers have consolidated as farms get bigger but the number of farmers shrink. Small independent dealers have been pressured by rising fertiliser costs, which have driven up borrowing costs for working capital, Gearheard said.
Agrium, which operates under the Crop Production Services and Western Farm Service retail banners, increased its retail business by two-thirds by acquiring Royster-Clark Ltd last year in a hostile deal worth $339 million in cash. Agrium shares have risen almost 80 percent over the past year, but were down 31 Canadian cents at C$46.95 on the Toronto Stock Exchange on Thursday.
The company recently spent $15 million to buy 32 retail centers attached to Archer Daniels Midland grain elevators, giving it a new foothold in Kansas and Oklahoma, where it hopes to further expand by buying small dealers, Gearheard said. Gearheard said he also hopes to pursue the partnership model further with the agricultural giant.