2012 PACE Report: 6 Key Issues To Watch For Ag Retail

Last fall in Chicago, 26 members of the PACE Advisory Council spent a full day discussing lessons and learnings from the past year, and considered prospects for the year ahead. Below are six key topics covered during the meeting:

1. Environmental Policy Challenges Looming. Diverse programs across states that are working on the issue of watershed improvement have the potential to place serious restrictions on agriculture if the industry is not involved on the local level. Unfortunately, there isn’t much consistency across these efforts. The Fertilizer Institute’s 4Rs program has created a dialog and is a part of the solution, but retailers must work with local watershed initiatives to ensure its voice is heard and considered. On the national front, at the time just one week ahead of the presidential election, concern was expressed about the potential for more pronounced regulatory overreaching by EPA in the wake of a second term for the Obama administration.

2. Weed Resistance ‘Opportunity.’ Manufacturers have responded in force to deliver solutions to mitigate the degradation of weed control programs in the form of new seed and herbicide products, as well as agronomic recommendations. The cost and complexity of weed control is a necessary evil for growers because the cost of yield loss with today’s crop prices makes it worth every penny. The opportunity for retailers is vast. In-depth knowledge of traits and seed, the handling, timing and application of herbicides, and agronomic expertise makes the weed resistance “challenge” a significant opportunity for the full-service retailer.

3. Changing Approaches To Grower Customers. Retailers continue to struggle to adequately service the needs of a diversifying grower customer base. Many farming operations — in general, ones that control more acreage — have needs that are less predictable and require a more individualized approach. Their service needs from the retailer’s standpoint are all over the spectrum, from “reliable supplier of products” to “risk management consultant” to the traditional full service agronomic adviser. Of concern are growers who take it several steps further, hiring in managers for business and agronomy, building storage infrastructure and handling more of the traditional retail services on their own. Growers who still look to retailers to provide value are generally looking for a more consultative relationship with a retailer — not “what can I sell you?” but “what problems can I help you solve?” Several PACE council members felt retailers in general may not be fully prepared with a properly trained and tasked sales force to handle the change.

4. Impending Retirements Present A Threat. Virtually every ag business is facing the specter of losing signifi cant corporate intelligence through the retirements of key personnel over the next three to fi ve years. On top of that, there’s a lack of graduates that are willing to take a job in agriculture, in particular retailing, largely because of the brutally harsh seasonal hours during peak times. Recruitment and retention programs and internships will play a role in minimizing the plight.

5. The “New Normal” Still Unknown. The 2012 season’s drought-stricken yield totals once again failed to adequately test the voracity of high commodity crop prices. To varying degrees, council members are concerned about the affect a bumper crop, or even simply a normal crop will have on commodity prices at the end of 2013. A big drop-off in price with staying power would signifi cantly impact 2014 crop plans. While no one expects a return to $2.50 corn, virtually everyone expects a reset from current high-fl ying price levels to a “new normal.”

6. Monsanto IFS Program On The Watch. Monsanto will pilot launch its Integrated Farming System (IFS) in 2013, a system by which it will provide growers with hybrid and plant population recommendations based on historic fi eld and yield data. Retailers who sell Monsanto seed and who are involved in the pilot have gone through extensive training and will be an integral part of the IFS program. There is concern in principle about a national supplier getting involved in localized agronomic recommendation, and also concern about retailers receiving fair compensation for their contribution to the IFS education and sales process. Retailers will be watching this pilot program very closely through the 2013 season.

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