Customers: Growers Cautiously Optimistic

The CropLife 100 dealers have shared their outlooks, but our editors also wanted to gauge what grower-customers are thinking. Short-term, Midwest growers are understandably cranky with weather problems throughout the season, including fall rains that delayed harvest and fertilizer application. At presstime, parts of Iowa were seeing heavy rain — to the tune of 2 inches in a night — during supposedly prime harvest time. In late fall, some fields were “lakes,” reports Tim McArdle, executive vice president and chief operating officer of Brandt Consolidated, Springfield, IL. Drying costs will be tremendous, he notes.

“Growers are going to be cash-strapped, they’re going to dependent on their lenders. And they’re probably going to be dependent on us to some degree with terms, but the concern to me is will the farmer have cash availability to conduct his normal business — here it would be to prepay the majority of his spring inputs to get a better price.”

At Mountain View Coop, Great Falls, MT, Operations Manager Frank Schumacher also expressed concern. “Our customers are frustrated with the current price of wheat — many of them did not sell their crop at the same time as they bought inputs, and wheat prices are down so revenue is not matching up with expenses — it’s out of sync with their marketing plan.

Credit and capital accounts receivable is going to be an issue, and the next 60 days will tell us how bad it is going to be.” Schumacher anticipates that growers will not be able to pay bills because they have not sold their crop — they’re not willing to sell at the price currently offered, and the situation “could get ugly.” In fact, he says if growers haven’t sold their crop by the time they need to go back to the bank for financing, banks will force them to sell because of tightening restrictions on lending.

Brent Sutton, president and general manager of Growers Fertilizer Inc., Lake Alfred, FL, has noticed that more of his customers (primarily citrus growers and ranches producing hay) need extended terms, and his company is working with the John Deere Farm Plan to help. “We’re doing more volume business with Deere than we’ve ever done in the past,” he says. “It’s a nice outlet for us to be able to get paid and give our customers help with their cash flow.”

He finds the mood among growers much more positive compared to this time last year, with citrus prices up and fertilizer and glyphosate coming down: “It’s definitely a more profitable environment for them.”

Markets have rallied for Midwest growers as well, and customers are seeing higher commodity prices now, points out Roger Oliver, president of Van Horn Inc., Cerro Gordo, IL.

“You can look at the futures prices for next year and at the input pricing we have and a lot of customers could lock in a profit for next year today,” says Jeff Eggleston, general manager of Hintzsche Fertilizer, Maple Park, IL (in late October). In fact, McArdle sees growers considering expansion, as some of his customers are aggressively seeking to rent more ground for 2010.

Complicated Relationships

Retailers say growers are approaching 2010 inputs cautiously, in part because some felt burned by last season’s price issues. In fall of 2008 many dealers used contracts to sell prepay fertilizer to customers.

“Prices were running up and we could not accept all of the risk — plus our customers wanted to lock in the best price possible,” says McArdle. When prices tumbled some growers no longer wanted to honor those contracts. “We were fortunate in that most of the product we sold was already applied, and we did not have many of these circumstances come up. I do know of dealers who did.

“What many in the supply chain do not understand is that we can force a customer to honor a contract, but possibly lose him as a customer,” he says. “We have to manage the gray areas and handle each case as required. However, I am a big proponent of contracts, as they eliminate the issues 90% of the time.”

Dealers themselves were caught by surprise by the price hikes and dips. Richard Warner of Warner Fertilizer, Somerset, KY, feels most customers aren’t bitter and don’t blame retailers for increases. Then, too, relations between dealers and their suppliers were tested. “I’d say we’re healing. Fertilizer prices have been a sore subject for retailers and distributors,” says Van Horn’s Oliver.

Most of the dealers we talked with could boast of good relationships with their growers. “In this industry, it’s all about relationships,” says McArdle. “Your customer has to trust that you’re working for his best interest at all times. If you do that, these guys will not kick you out of bed over mistakes and things that happen.”

Dealers seem to be building and holding that trust. For instance, a whopping 82% of our CropLife 100 retailers agree or strongly agree that customers buy the majority of their seed based on recommendations from local retail experts.

Crop protection product salesmen also appear to be getting respect. Dan Kennedy, general manager at Ritter Crop Services, Marked Tree, AR, tells of basic suppliers trying to get around his staff to direct-sell in the past. “I’ve wished them luck since they would have one guy vs. my 19.”

For 2010, he sees business getting back to normal. “Our business has been here for more than 100 years. Relationships with growers will stay the way they have always been, and we will take care of our customers the fair way,” he says.

McArdle believes growers have changed. Many second- and third-generation growers have gotten ag degrees. “I constantly tell my guys that if they’re not smarter than a grower is on a specific subject and can’t provide him with relevant information, he doesn’t need you,” he explains.

Growers Take The Wheel

Are dealers worried about more customers no longer needing custom application services? One quarter of our CropLife 100 does see the move to growers doing their own spray work as a threat.

“I think there’s been a lot of sprayers sold to farmers in the last five years,” says McArdle. But it all comes down to labor, and some farms just don’t have the staff to handle application as well as planting, tillage, and more — though McArdle has found some families with second generations coming into the business will have the human resources to do it themselves.

Dave Coppess, vice president of sales and marketing at Heartland Coop, West Des Moines, IA, has seen a half-dozen very large commercial growers — with their sons joining the business — doing their own custom work in his territory. “They’ve invested in a sprayer, and last year they invested in a dry box. They already have semis and can go to the river and buy a truckload of fertilizer, paying the same price we do. Some may even doing some spraying for a neighbor.”

In addition, fertilizer blender manufacturers tell Coppess that a number of growers have installed their own blenders for the first time. This activity highlights the region’s changing landscape: “A lot of guys out there are 65 years old and exiting the business. The land is going to go to more commercial farms — these are people that are willing to pay for the things they want, so we have to find services they value and are willing to pay for,” he says.

That’s when “a new way of working with the customer” comes in, McArdle says. “We say: ‘Let us work with you. You’re not buying a package or mini-bulk, but you’re coming into our facility, and we can provide you with a tank. We’re going to inventory that product, blend that product so you know it’s right, with the right rate, and you pick it up and take it out and put it in your sprayer.’ Many of them are taking us up on that,” he says.

Grower application may ultimately be limited. McArdle emphasizes that his company’s customers tackling in-season spraying still come to Brandt for preplant fertilizer work. And Warner says once his customers start putting in crops, they want most fertilizer custom-applied because they’re too busy doing something else.

Selling Services

Grower application was one topic that CropLife editors brought up at a recent informal meeting of leading retailers to discuss industry trends. A conclusion: Farmers are being encouraged to do more application work themselves because retailers haven’t accurately justified the costs to growers. Participants are concerned that they’ve given too much away to growers over the years in the form of services — and that the whole structure of product movement to the grower will have to change from the current system. Their feeling is retailers have to decide what value they want to bring to big customers who will be around for the next 10 years. If smaller customers don’t want to pay for services, a dealer won’t be able to provide them service.

Sutton of Growers Fertilizer in Florida would stand by the complimentary services his company offers. “Salesmen are out in the field constantly bug checking and making recommendations for sprays,” he explains. His staff usually finds a problem before a grower is even aware of it. Soil sampling with fertilizer recommendations is also a free service.

And while precision agriculture services have been growing, CropLife 100 retailers say some growers will always hit a wall with the technology. “A vast majority of people out there are not really into precision,” says Oliver. “Our customers aren’t really willing to pay for it.”

McArdle agrees: “About 35% to 40% of our customers are doing some sort of precision agriculture. For others the learning curve is steeper, but we feel the investment is justified and profitable.”

Risk management tools will be a big opportunity to get in solid with the more professional grower, believes Coppess. “Our sales team is focused on their technical ability to help the grower choose the right seed, the right crop nutrients, crop protection products, but I am not sure the farmer, and in particular the commercial grower, finds as much value in that as they used to,” he says.

“I feel we have to shift as ag retailers to understand what the growers are going to value. The growers have told us that grain marketing skills are what they do value, so I think that, over the longer term, we have to shift the focus of our sales team to become more farm manager-type people,” Coppess says.

Leave a Reply

Management Stories

ManagementThink You Know Water? Take WinField United’s ‘Unchartered Waters’ Quiz Via NatGeo
March 22, 2017
Water is among our most precious resources, and arguably the hardest working, with just one percent available for human use, Read More
Corn Field
LegislationTFI Hopes Court Dismissal Is ‘Final Chapter’ Of Des Moines Water Works Lawsuit
March 20, 2017
The Fertilizer Institute (TFI) released the following statement from President, Chris Jahn on the March 17, 2017, federal court dismissal Read More
ManagementSnowstorms, Asset Sales, and Soybeans Prices
March 16, 2017
Editors Paul Schrimpf and Eric Sfiligoj discuss the weather, precision ag, crop protection company mergers, and commodity prices in this Read More
Management2017 Commodity Classic Review
March 10, 2017
Editors Paul Schrimpf and Eric Sfiligoj discuss what happened at the recent Commodity Classic in San Antonio. Read More
Trending Articles
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
AgriSync
Matt Hopkins17 Agriculture Apps That Will Help You Farm Smarter In 2017
December 9, 2016
Ag professionals are working smarter, not harder, than ever before. Smart farming technologies have enabled them to reduce costs, maximize Read More
R4023 Sprayer, John Deere
CropLife 100Ag Retail Equipment Report: The Green Party Continues
December 7, 2016
In the annual race for sales in the ag retail equipment marketplace, the color schemes for participants are a little Read More
Mike Stern
Precision AgClimate Corp. CEO Talks Retailer Support For Digital Ag
December 1, 2016
CropLife Magazine’s sister publication, AgriBusiness Global, recently sat down with Mike Stern, CEO of The Climate Corp., following the Monsanto subsidiary’s Read More
Latest News
Pam Marrone
Crop InputsMarrone Bio Innovations Enters Biostimulants Market Wit…
March 23, 2017
Marrone Bio Innovations, Inc. is expanding beyond biopesticides and crop protection and into the biostimulant market by commercially launching Haven Read More
Nutrients for Life Foundation Teacher
FertilizerNutrients For Life Foundation Celebrates 10 Years Teach…
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
ManagementThink You Know Water? Take WinField United’s R…
March 22, 2017
Water is among our most precious resources, and arguably the hardest working, with just one percent available for human use, Read More
Corn Field
LegislationTFI Hopes Court Dismissal Is ‘Final Chapter’…
March 20, 2017
The Fertilizer Institute (TFI) released the following statement from President, Chris Jahn on the March 17, 2017, federal court dismissal Read More
Wheat Growers
Industry NewsWheat Growers CEO Dale Locken To Retire
March 20, 2017
CEO Dale Locken has announced that he plans to retire from Wheat Growers. Locken has served almost 15 years as Read More
Bayer Monsanto
Eric SfiligojBayer-Monsanto: Life, LibertyLink, And The Pursuit Of R…
March 20, 2017
As the calendar officially turns to spring, life is in full renewal mode. Flowers are blooming, birds are singing, and Read More
Corn Field
Crop InputsUltra Yield Micronutrients Acquires Kronos Micronutrien…
March 16, 2017
Ultra Yield Micronutrients, Inc. ”Ultra”, an affiliate of Cameron Chemicals, Inc., is pleased to announce that it has acquired the Read More
ManagementSnowstorms, Asset Sales, and Soybeans Prices
March 16, 2017
Editors Paul Schrimpf and Eric Sfiligoj discuss the weather, precision ag, crop protection company mergers, and commodity prices in this Read More
Soybean Field
Seed/BiotechBayer Invests $8.1 million In Soybean Advancement In Th…
March 16, 2017
Growers in Illinois and across the Midwest now have the added benefit of a state-of-the-art soybean research facility, increasing accessibility Read More
CHS
CropLife 100CHS Acquires Western Co-op Transport Association
March 16, 2017
CHS Inc., North America’s leading farmer-owned cooperative and a global energy, grains and foods company, has purchased Western Co-op Transport Read More
Young corn plants in soil
HerbicidesBest Management Practices To Control PPO-Resistant Weed…
March 14, 2017
Weeds resistant to the class of herbicides called protoporphyrinogen oxidase (PPO) inhibitors are spreading at a faster rate than weed Read More
Photo credit: The United Soybean Board/The Soybean Checkoff.
Eric SfiligojFungicide Resistance On The Horizon
March 13, 2017
For many years now, the agricultural market has struggled to keep ahead of an ever-growing number of herbicide-resistant weeds. According Read More
Management2017 Commodity Classic Review
March 10, 2017
Editors Paul Schrimpf and Eric Sfiligoj discuss what happened at the recent Commodity Classic in San Antonio. Read More
Farmer using AgriSync
ManagementMajor AgriSync Update Aims To Extend Ag Experts’ Power …
March 10, 2017
AgriSync announced a major update to its leading collaboration and service management tool for professional ag advisors and their farmer Read More
Agrible Pocket Spray Smart App
EquipmentNew Agrible Pocket Spray Smart App Alleviates Spraying …
March 10, 2017
There’s a new app to help farmers decide when to spray their fields. Pocket Spray Smart is a free iOS Read More
BPIA logo
Crop InputsBiological Products Trade Association Changes Name, Exp…
March 9, 2017
The Biological Products Industry Alliance (BPIA), formerly the BioPesticide Industry Alliance, is the new name of the rapidly growing U.S.-based Read More
BBI MagnaSpread Salford BBI
Equipment14 Fertilizer Spreaders For 2017
March 9, 2017
Application equipment manufacturers stressed flexibility and accuracy with this year’s crop of fertilizer spreaders. From AGCO’s TerraGator TG9300B and Case IH’s 810 Read More
Sonny Perdue
LegislationARA: Sonny Perdue Confirmation Delay Simply A Paperwork…
March 9, 2017
It’s been seven weeks since the White House named former Gov. Sonny Perdue (R-Ga.) as the nominee for the next Read More