CHS leans into supply chain investments as profits tank

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Dive Brief:

• Farm co-op and agribusiness giant CHS Inc. is building out its global supply chain and agronomy services as it navigates a drop-off in grain prices.
• The grain trader recently announced a new fertilizer terminal in St. Louis to increase shipping capacity. Earlier this month, it also closed on the acquisition of West Central Ag Services, which provides agronomy services to farmers.
• CHS first quarter net income fell by more than half over the previous year, the company said in an earnings report released Jan. 8. Net income reached $244.8 million compared to $522.9 million last fiscal year.

Dive Insight:

Lower crop and fertilizer prices, combined with compressed refinery margins, have created a difficult market for traditional agribusinesses and prompted many to expand into new service areas to try and offset losses.

CHS’ purchase of West Central Ag Services, for example, creates a new ag retail business unit that will provide farmers with grain marketing and risk management services. The new division, called CHS West Central, will also offer products in crop nutrients, seeds, crop protection and animal nutrition.

As grain farmers struggle with a profound loss of income, more are looking for services or products that could boost profits, save costs or add efficiencies. Merger and acquisition activity in the agronomy space has picked up in the last few months, with provider FarmQA buying out data platform Farm Dog in November.

CHS is also building out its transportation supply chain to speed delivery of fertilizers as it plans to introduce six new products to increase farm yields. The company is increasing shipping capacity through an exclusive agreement with Ingram Barge Company’s subsidiary, SCF Lewis and Clark Terminals LLC.

“Just as we have for nearly 100 years, CHS is leveraging our efficient global supply chain, strong relationships and expertise to navigate these changing markets, while strategically investing to meet our owners’ future needs,” Debertin said in a statement following the company’s earnings release.

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