NASHVILLE, TENNESSEE, US — The current agricultural cycle may extend longer and provide more ups and downs than is historically usual, but leaders at The Andersons, Inc. say their company’s focus on its core business in the ag supply chain and disciplined growth can provide resiliency amid uncertainty.
Bill Krueger, president of Trade and Processing at The Andersons, who will become the new chief operating officer on Dec. 1, and Brian Valentine, executive vice president and chief financial officer, spoke at the Stephens Annual Investment Conference on Nov. 15 in Nashville, Tennessee, US, a gathering of public and private companies and investors.
“Specific to this ag cycle, I think that we have several reasons why this cycle may extend longer than most have historically, and we’ve all been through them,” Krueger said, noting global disruptions across the grain industry, particularly Russia’s invasion of Ukraine and transportation issues related to low Mississippi River levels.
Krueger also mentioned greater demand for renewable diesel and its impact on the production of soybeans, corn and wheat, and stronger farm incomes from higher prices that, while not necessarily extending the cycle, might allow more participants to benefit during its duration.
“Lastly, I do think that through the balance of this cycle, we’re going to continue to see more volatility in the futures than maybe we have historically, where you’re just in a straight bull market,” Krueger said.
US grain exports will be tested in two areas, Krueger said: Where China sources its imports even as demand ebbs and flows with challenges related to COVID-19, and supplies reaching world markets from the Black Sea region, where Russia’s invasion of Ukraine in February continues to stoke uncertainty.
Amid these ongoing challenges, The Andersons has been streamlining its operations in recent years and growing its core grain and fertilizer businesses, including premium products focused on food, feed and fuel as it seeks to solidify its position as a complete North American ag supply chain company.
“Our belief is that it is going to make us more resilient to the typical ag cycles,” Krueger said of the company’s moves.
The Andersons recently acquired pet food ingredients specialist Bridge Agri Partners, Inc., and agronomy company Mote Farm Service, Inc. In the past four years, The Andersons also has acquired the Lansing Trade Group, divested its rail segment and opened a trading office in Switzerland.
“So we have a much more focused business. Growing organically, utilizing some of our core competencies, we now trade more than 40 million metric tons of grain, feed ingredients and fertilizer. We really feel like we have a good strategic focus,” Valentine said.
While larger deals are always on the table, smaller steps such as these can build momentum organically toward bigger goals, he said.“Would we love to do something that would maybe be a little bit larger? Well sure, but there are few and far between that would make sense … and we want to make sure we maintain that discipline,” Valentine said.