Serving Your Customer Of The Future

One of the most important considerations for any business that’s planning for its own long term sustainability is figuring out who his customer will be, and what they will want. On this point, ag retailers arguably have as difficult a task as any group of businesses in any industry.

How the row crop grower will evolve over the next decade is a subject of great study, debate and uncertainty. Generational changeover, industry globalization, increasing demand for crops and inputs and wild market volatility each are impacting how growers are changing to sustain their own operation for the future. This, in turn, is going to significantly impact how retailers must prepare to meet the needs of these farmers of tomorrow.

We turned to a couple of individuals who have been watching and thinking about the evolution of the row crop grower for several years. Terry Kastens, a long time Extension ag economist at Kansas State University who now is an independent consultant and researcher working from his Kansas farm, and Moe Russell, a grower and president of Russell Consulting based in Iowa, both feel we are at a tipping point as far as grower size, but diverge on where they feel the retailer fits in the picture.

The slow and steady increase in average farm size has been reported ad nauseam in agriculture and popular press for many years, but both Kastens and Russell see signs that we are in the early years of a period of exponential growth.

“I can’t say exactly how fast or how large farms are going to get,” says Russell. “But the average size of farm that I consult for is probably 2,500 acres, and that could easily double over the next five to seven years.”

Ripe For Consolidation

The upbeat farm economy and positive prospects for agriculture for the foreseeable future will mean less fear of risk and an embracing of growth for progressive farmers. Kastens has seen it happening in recent years in Kansas, and believes that the trend will spread. He illustrated his point with a story.

“A few years ago, I was talking to a progressive 10,000-acre grower,” he recalls. “I asked him, if someone offered you an additional 10,000 acres, could you take it on? And he said, ‘Yes.’ So I asked him, if somebody offered him an additional 20,000 acres, could he take it? And he answered, ‘Give me one year.’ Sure enough, that grower today is farming over 30,000 acres. It can happen very quickly, and the Corn Belt is not immune.”

By “not immune,” Kastens is referring to the tidal wave that consolidated the poultry, pork and dairy industries. He believes a similar consolidation could occur among row crop growers and, like dairy, would be driven from the ground up by aggressive growers.

Kastens believes that growers could easily grow to the point of self sufficiency, and it’s possible that despite best efforts, retailers might not have anything to offer mega-growers if they establish their own relationships with suppliers, hire their own consultants and do for themselves what the retailer once did. Taking on risk is an enormous wild card in this scenario, but Kastens notes that some of the growers he works with are larger than any of the retailers in their areas.

Taken to its full conclusion, Kastens says that farming will move into a “bimodal” distribution, with a relatively smaller group of farmers working 80% of the land, and the remaining 20% being worked by smaller, part-time farmers. In this scenario, retailers will need to be geared up to service the two segments of growers separately.

Russell is more upbeat about the role of the retailer based on his work with growers because of what he says retailers bring to the table in risk management and service. “We have been encouraging our growers for years to develop long-term symbiotic relationships with input retailers,” he says. “With manufacturers pushing risk down the channel, and so much of the supply of products beholden to international markets, gone are the days when a grower can call a retailer for additional product on the fly and expect to have it delivered immediately.”

Russell asserts that it’s not exclusively the large growers that are most ripe for developing these sorts of partnerships, and that retailers should seek to work with growers of all sizes who are willing to be partners with them. In Russell’s scenario, there is a place for retailers both large and small if they focus on a few very key aspects of their business.

The first is transparency. Russell says that retailers need to make growers fully understand the background for pricing and for service to gain the grower’s trust. “Retailers need to provide detail on what they pay for product, what margins they need to cover overhead,” says Russell. “Farmers understand that, and they do not like feeling like they are playing in a poker game. It does not promote compromise and trust in a work relationship.”

The second is financial stability. With so much riding on the inputs and service they order, growers need to feel they are working with a financially solvent partner. “They are concerned about third party risk,” says Russell. “If they prepay for input will it get delivered, or could the supplier go bankrupt?”

Finally, it’s important to identify progressive growers and work to establish higher level relationships with them. Making yourself as relevant to the grower’s needs as possible will give you the best chance to sustain your business over the next decade and beyond.

Leave a Reply

Paul Schrimpf Stories

OpinionOpinion: Taking On The Farmers Business Network
April 8, 2017
Well, another round of venture capital funding has come to Farmers Business Network (FBN), followed up with the obligatory feature Read More
PA Innovation
OpinionWinter Of Learning In Precision Agriculture
March 1, 2017
Winter time is meeting time, and it usually means that I get the chance to not only attend some terrific Read More
Southern States grower in cab
OpinionPrecision Agriculture: A Place For Everyone At The Table
February 3, 2017
Over the last 30 days, I’ve been immersed in all things precision agriculture. If you received your personal copy of Read More
Co-Alliance employee
OpinionHelp (Still) Wanted In Ag Retail
December 21, 2016
What a year for the industry and for me! My home city of Cleveland, OH, ended its sports championship curse. Read More
Trending Articles
Crop InputsFlying Under the Radar No More, FMC Goes Big
April 13, 2017
Describing FMC as “under the radar,” admittedly, is probably a stretch. But in a snap of the fingers, FMC upped Read More
Young Corn Plants
Crop NutritionStill Hunting Yields
April 1, 2017
There’s no denying it — the agricultural marketplace today is undergoing a fundamental shift in fortunes. Not too many years Read More
Nutrients for Life Foundation Teacher
FertilizerNutrients For Life Foundation Celebrates 10 Years Teaching Fertilizer Education
March 23, 2017
Those in agriculture know fertilizer is a vital ingredient to grow strong, productive crops. In fact, fertilizer is responsible for Read More
AdjuvantsA New Weed-Control Era Begins: But First, One Last Obstacle
March 4, 2017
There is trepidation, there is reluctance, and there is excitement. Ag retailers feel it all about the new dicamba and Read More
LIFT Academy video screenshot
Crop InputsLIFT Agriculture Academy: A Q&A With West Central Distribution’s Dean Hendrickson
March 1, 2017
West Central Distribution recently launched its LIFT Agriculture Academy, a new, premiere training and professional development resource for West Central’s ag Read More
Farmer and aptop
Matt Hopkins10 Warning Signs Your Website Is Grossly Outdated
February 8, 2017
Your Website is often a visitor’s first impression of your ag retail business. A positive first impression can set the Read More
Latest News
ManagementWashington Update, Dow-DuPont Earnings, and the Passing…
April 27, 2017
Editors Paul Schrimpf and Eric Sfiligoj talk about the latest Beltway news, crop protection company 1st quarter numbers, and the Read More
BRANDT
CropLife 100Former PotashCorp COO Joins BRANDT Board
April 27, 2017
BRANDT has announced the appointment of another industry veteran to its board of directors. David Delaney, most recently EVP and Read More
Syngenta headquarters in Basel, Switzerland
Crop InputsFortune: Inside China’s $43 Billion Bid for Food …
April 26, 2017
(Via Fortune.com) The worst famine in human history occurred in China from 1959 to 1961. An estimated 34 million people Read More
Syngenta Sign
Crop InputsSyngenta Announces Changes in Board of Directors
April 26, 2017
ChemChina and Syngenta announced changes relating to the new Board of Directors of Syngenta following the closing of the ChemChina Read More
Crop InputsBioSafe Systems Introduces PerCarb Broad-Spectrum Bacte…
April 26, 2017
BioSafe Systems announces PerCarb (Sodium Carbonate Peroxyhydrate), a new alternative to potassium bicarbonate and lime sulfur products for use in Read More
Deere Twitter
EquipmentTop 10 Twitter Pics for #Plant17
April 26, 2017
Despite some wet weather in parts of the Midwest, growers and ag retailers are working feverishly to plant this year’s Read More
Donald Trump
Crop InputsTrump Targets Agriculture with Latest Executive Order
April 26, 2017
(Via UPI.com) President Donald Trump on Tuesday took executive action in an effort to help grow the domestic agriculture industry Read More
AGCO Ratliff featured
EquipmentAGCO Mourns Passing of Company Founder, Industry Vision…
April 25, 2017
AGCO Corp., a worldwide manufacturer and distributor of agricultural equipment and solutions, mourns the passing of founder and former President, Read More
Engenia soybeans
Crop InputsINNVICTIS CROP CARE Introduces VANDAL MOC Soybean Herbi…
April 25, 2017
INNVICTIS CROP CARE, LLC has announced the U.S. EPA registration for VANDAL MOC, a combination of sulfentrazone plus metolachlor. VANDAL Read More
Kochia
HerbicidesINNVICTIS CROP CARE Launches STAVE Post-Emerge Broadlea…
April 25, 2017
INNVICTIS CROP CARE, LLC has introduced STAVE as the newest addition to­ its expanding portfolio. STAVE will be a great Read More
Sonny Perdue
LegislationSonny Perdue Confirmed by Senate as Next Agriculture Se…
April 25, 2017
After months without a secretary of agriculture, the Senate voted Monday evening to confirm former Georgia Gov. Sonny Perdue to Read More
BPIA logo
Seed/BiotechBPIA Files Comments with USDA
April 24, 2017
The Biological Products Industry Alliance (BPIA) has filed comments with the USDA’s Animal and Plant Health Inspection Service (APHIS) Plant Read More
Eric SfiligojHope for Application Equipment Sales
April 24, 2017
The old saying goes that a “rising tide lifts all boats.” If this is indeed the case, then things may Read More
Stewardship video screenshot
ManagementNew Video Raises Awareness of 2,4-D Stewardship
April 24, 2017
A new public service video developed and produced by the 2,4-D Research Task Force, in conjunction with the American Soybean Read More
ManagementAn Inside Look at Award Winning Ag Retailer Gar Tooteli…
April 20, 2017
CropLife Editor Eric Sfiligoj discusses An Inside Look at Award Winning Ag Retailer Gar Tootelian Read More
Students Soybean Field
Industry NewsMACA Announces 2017 Young Leader Scholarship Recipients
April 19, 2017
The Mid America CropLife Association (MACA) Board of Directors selected 11 college students to receive the MACA Young Leader Scholarship Read More
Growmark FS Outlet
SoftwareKnoa Software Solution Helps GROWMARK Boost System Perf…
April 19, 2017
Knoa Software, a leading provider of user experience management (UEM) software, has announced that GROWMARK, Inc., a regional agricultural cooperative Read More
Crop InputsFBN Publishes ‘Voice of the Farmer’ Agricul…
April 17, 2017
Farmer’s Business Network (FBN) released today its “The Voice of the Farmer”, which the company is describing as “a special Read More