Fertilizer Prices Going up

Discussion in 'General Industry Discussions' started by Tony DiMauro, Jan 16, 2008.

  1. Tony DiMauro

    Tony DiMauro LawnSite Member
    Messages: 8

    As most of us in the green industry know, John Deere Landscape purchased Lesco, Inc. last year and would officially take total control in January 2008.
    Well this week,and it sure didn't take long, most of us landscape contractors and lawn care companies in Texas were informed that JDL raised the prices of their fertilizers by fifty (plus) percent --YES, FIFTY- (PLUS)- PERCENT!
    Being in business for several years, I realize that prices do go up, but give me a break. Us landscape contractors would lose all of our contracts if we tried to raise our contract price by fifty percent!

    I not only feel completely abused by this move, but I feel that JDL does not even give a hoot about their customers.
    Why not raise the prices in increments over the next several month.
    In addition, they waited until the first of the year to tell everyone.
    All of our 2008 on-going contracts have been increased and signed.
    In addition, most management companies bid their properties at the end of the year . Many companies will be losing thousand of dollars.
    I'm p***** off by this move. I would love some feed back from other companies who are experiencing the same thing.
  2. Runner

    Runner LawnSite Fanatic
    Messages: 13,497

    This has NOTHING to do with JDL. Do some research on Urea Futures, and fertilizer price increases. It is a combination of two things. First, it is brought on rising oil (fuel) prices, which plays an intricate role in the manufacturing of nitrogen.
    Second, and an even LARGER role in these price increases is the demand of Urea brought on by the increase of production of corn for to meet up with the ethanol demand. All the corn farmers and farmers that don't even HARVEST corn are getting on this corn bandwagon. Now, here is what sucks...the majority of this fertilizer for raising these crops is headed where,...to our midwest? Nope,...guess again....China.:gunsfirin
  3. topsites

    topsites LawnSite Fanatic
    Messages: 21,653

    Yes I do believe some customers would find it odd that if the price of one supply goes up by 50 percent you would have to raise their entire contract price that much.
  4. Tony DiMauro

    Tony DiMauro LawnSite Member
    Messages: 8

    Have you EVER pulled into a gas station or anywhere for that matter and the product price went up fifty percent from the previous week or two? - NO!
    It's how JDL is handling this take over in a market that they are not accustom to. Just ask many of the Lesco service centers managers!
    All of us know that fertilizer prices have been going up, but come on man, to spring a fifty percent increase on good customers all at once, is not good business practice!
    They are a multi-billion dollar company, #2 on the NYSE - they can afford to bring the prices up in increments and allow us contractors, who really do not make millions in this competitive industry, a chance to cover out butts in the next year.
    I truly expect, and I hope I'm wrong, in the next few years that JDL will ruin everything that Lesco did for us contractors the past decade. Currently they are in motion to buy out many landscape nurseries in North Texas and dominate that part of the industry to. Just what do you think is going to happen prices when they do? When someone dominates products, we will have no other choice than to pay their price!
    I believe that's all in their long term plan!
  5. DavidR

    DavidR LawnSite Member
    Messages: 180

    Interesting. I would like to read more about this...do you have an article or something that I could read?
  6. Tony DiMauro

    Tony DiMauro LawnSite Member
    Messages: 8

    No- My company who does in excess of $30,000.00 (plus) worth of business each year with Lesco has been courted, so to say, by the JDL company the past half year. They have been trying to get us to buy our irrigation supplies and landscape materials from them as well. Both managers mentioned a few times that they were looking to acquire landscape nurseries in our area.
    Think about it, they have a nursery facility, why in the world would they want more? ONLY TO MONOPOLIZE -- This could be the only reason. If they simple want to be larger, buy more land and expand the business.
    It's kind of like Service Master acquiring Chem lawn and many other larger landscape companies some years ago. They try and monopolize the industry so you will be purchasing from them one way or the other.
    Only it backfired on service master and it will backfire on all big corporate purchases sooner or later. When it comes to the nut's and bolt's of any business, most customer's want personal attention from knowledgeable people.
    Hell, how many owners and or presidents of these big corporate companies were out pushing mowers like you and I when we started our companies. NONE!!
  7. B_gerrits

    B_gerrits LawnSite Senior Member
    Messages: 297

    Homedepot also thought buying out the competition was the answer to their sagging sales. It backfired on them as well. People were to pay a little extra to deal with Yardbirds because they could get service there.
  8. Tony DiMauro

    Tony DiMauro LawnSite Member
    Messages: 8

    Absolutely - Just like Home Depot!
  9. PR Fect

    PR Fect LawnSite Bronze Member
    Messages: 1,076

    First off let me say that I see no positives in the JD buy out of Lesco for the average LCO. I was not a Lesco lover, but this makes things even worse. We did use Lesco for most of our fert and chemical purchases. But may need to change now that JD is running it their way.
    David here is a link from the Fertilizer Institute that tells about the 14% increase in demand on a world market, and how the corn growers are effecting the price. http://www.tfi.org/publications/pricespaper.pdf

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