Elders boss Mark Allison feels generational change in the farm services industry, plus rising wage bills and labour shortages are set to push increasing numbers of independent agents to sell up.
The 182-year-old agribusiness received approaches from 39 other businesses before making five acquisitions in the first half of this financial year.
Its gradual expansion agenda is set to gain considerably more pace in the next six months with a further 17 active candidates currently on the radar.
Recent store acquisitions have included Esperance Rural Supplies in Castletown, WA - a state which generates about 20pc of Elders' retail earnings - Sunfarm in Queensland's horticultural hot spot, Bundaberg, and South Australia's YP Ag Services.
Independent family-owned or regional business groups operate about 620 stock and station agency and farm services businesses around Australia.
They complement the big national players Elders and Nutrien Ag Solutions, and several smaller corporates including NSW-based Delta Agribusiness and members of the national AgLink farm supplies network.
However, despite the bullish mood in agribusiness and strong seasonal and market prospects, the good times have not been without considerable stresses and business challenges.
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Much improved seasons since 2020 have resulted in declining livestock numbers for sale which, in turn, has chewed into livestock agent commissions, while at the same time serious regional labour shortages have left many business owners working harder to service their farmer customers.
The coronavirus pandemic has also left fewer staff regularly at work, less reliability in product supply lines and plenty of social distancing and workplace health precautions to be worked around.
Hard work
"The rural services industry has had to work very hard to get products on the ground and keep pace with some extraordinary demand during challenging times," Mr Allison said.
He believed agriculture was getting "very good value" from its service sector under the circumstances, but it was not easy and it had been costly.
"We've already seen some wage inflation happening," he said.
"There is a lot of competition for staff out there, and not just people with specialist technical skills.
"In regional towns you're just as likely to lose someone to the likes of Bunnings or Woolies if they have any retail experience and they like the offer.
"Even mum and dad farmers are so busy on their own places these days so there aren't many of them available to fill gaps at our stores either."
Building numbers
After reporting a 34 per cent lift in net profit after tax to $91.2 million this week, Elders wanted to build on its own business momentum, making itself "a company people want to join".
The company has also been happy to promote its status as regional Australia's most trusted agribusiness brand, according to last year's Roy Morgan industry risk survey.
Mr Allison said Elders was working hard to invest in innovation and target strategic branch expansion to improve its customer offering, but it also had a keen respect for cost control and generating strong returns on capital investment.
Acquisitions were invariably made "at low multiples", yet there was still plenty of inquiry from potential new enterprises to recruit to the group.
Succession plans
In many cases independent business owners were near to, or had reached, the point where business succession was top of mind, but their own families were not so inclined to follow in their footsteps.
"The kids have grown up, gone to uni and are choosing careers that don't involve coming back to take over from mum and dad," he said.
Independent owners were not necessarily looking to retire immediately, but many had taken over or started businesses having previously worked for corporates, and were therefore open to returning to the fold, with Elders at least.
In fact about 95pc of the strategic acquisitions completed by Elders in recent years had involved the original owners staying on.
Elders also gained extra footprint when some members of the Ruralco and the CRT farm supplies group deserted that network after the Nutrien takeover in 2019.
Several of the company's more recent acquisitions have been regional real estate businesses, but it also added six new points of presence in the past half year as part of a push to capture more property sales and management opportunities.
Real estate gross margins contributed 10pc or $33.3m to the company's total $326m gross margin result - a 37pc increase on the division's contribution for the same period last year.
The biggest gross margin performers were agency services, up 11pc to $82m and agricultural chemical sales, up 62pc to $79m.