In case you haven’t heard, something big – and I mean really big – is happening tomorrow. It’s Election Day in the United States, and the entire world is waiting for the outcome with bated breath. While we’re certainly interested in whether there will be another four years of President Trump or a transition to President Biden, the history nerds at the Glowlit office have been having a somewhat different election-inspired debate. We’re talking about a topic that has been of central importance since the days of the American Founding Fathers: consolidation.
In 1791, just 3 years after the United States Constitution was ratified, James Madison published an article in the National Gazette beginning with the above quoted line. Madison, a Founding Father and author of the Federalist Papers, went on to become the fourth President of the United States. Back then, consolidation was a major topic of interest. Federalists like Madison were keenly aware that the problems of the country stemmed from the weaknesses of the central government created by the Articles of Confederation. However, they feared that too strong a centralized government was a certain path to abuse of power and monarchy. The American Founding Fathers were – as you might imagine – trying to avoid that bloody fate.
So what does all of this have to do with us? At Glowlit, we talk a lot about industry consolidation – the good, the bad, and the data. In the last 30 years, we’ve witnessed immense vertical and horizontal consolidation across the agriculture industry. In global animal feed additives, 60% of the market share is now held by five major industry players. Driven by the need for growth amidst low profit margins and increased regulations, supplier consolidation has brought with it an opportunity for reduced costs, increased service and support, and improved and standardized quality. The Federalists likely argued for some of these same benefits.
Consolidation has brought one major challenge however, particularly in industries where the base of the supply chain has remained highly fragmented. Both buyers and suppliers face barriers and bottlenecks to data. Buyers lack the ability to compare quotes or follow market changes to ensure that they’re paying a fair market price. Suppliers face an overwhelming amount of data as they become further separated from their final customers. Their inability to see down the supply chain means that they lack information on geographic price distribution and volume demand. All of this creates imbalances in supply and demand leading to volatility.
That’s where Glowlit comes in. In a world where knowledge is power, we believe in the democratization of data. Glowlit facilitates information sharing up and down the supply chain, making data freely available to everyone from the largest manufacturer to the smallest feedmill. This exchange ensures that information does not become overly concentrated, so that we can take the best from consolidation and leave the rest. We think James Madison would have agreed.
Director Business Development, Glowlit
In honor of Election Day, this week’s newsletter is brought to you by another member of the Glowlit Team, Sasha Belenky. Sasha received her Master in Public Policy from the John F. Kennedy School of Government at Harvard University, and voted early in her home state of Kentucky.