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
ManagementMACA 2014: The State Of The Agricultural Industry, And Then Some
October 9, 2014
The trade association’s annual gathering featured speakers from across agriculture and beyond. Read More
StewardshipA Multi-Layered Approach To Water Quality
October 6, 2014
Illinois event highlights research and technology designed to better monitor and improve water quality — and the benefits of cooperative, coordinated effort. Read More
StewardshipMichigan Agriculture Leaders On Toledo Water Ban: We Want To Be Part Of The Conversation
August 8, 2014
Leaders of Michigan agricultural organizations said Thursday that the government should not have a “knee-jerk reaction” based on last weekend’s water ban in Toledo due to fertilizer run-off in Lake Erie. Read More
ManagementRussia Bans U.S. And EU Ag Product Imports In Ukraine Sanctions Battle
August 7, 2014
Russian President Vladimir Putin has banned the import of agricultural goods from countries that have imposed sanctions on Russia. Read More
Top 100 Articles
Wheat Growers, North Central Farmers Elevator Pursue Merger
CropLife 100Wheat Growers, North Central Farmers Elevator Pursue Merger
March 3, 2015
Two CropLife 100 retailers — South Dakota Wheat Growers (ranked No. 11) and North Central Farmers Elevator (No. 19) — have entered into a Letter of Intent to unify the two companies into a newly named cooperative. Read More
Growmark Group
CropLife 100GROWMARK In 2015: Back, To The Future
March 2, 2015
The nation’s third largest ag retail organization is simultaneously moving forward while remembering its past. Read More
CropLife 100Pinnacle Expands Sanders Brand In The South
February 27, 2015
Pinnacle has acquired Hopkins Seed and Chemical in Qulin, MO, which expands the company's Sanders brand to nine Southern states. Read More
CropLife 100Pinnacle Launches New Providence Agriculture Location In Indiana
February 27, 2015
Pinnacle Agriculture Holdings — ranked No. 6 on the CropLife 100 — has established a new retail location in New Castle, IN, which will operate as part of Pinnacle's Providence Agriculture brand. Read More
CropLife 100Cooperative CHS Returns $518 Million To Owners
February 23, 2015
The 2015 cash return to owners is based on CHS net income of $1.1 billion, the company's second highest on record. Read More
corn field
CropLife 100The Andersons’ Humic DG Now Available In Canada
February 13, 2015
The Andersons, Inc. Turf & Specialty Group has announced its Humic DG product is now available to customers in the Canadian turf, agriculture and horticulture markets. Read More
Latest News
RR2X soybeans surround untreated check (center)
Industry NewsArysta Hires New Midwest Territory Sales Manager
March 5, 2015
Arysta LifeScience North America recently named Jonathan “Jon” Tone as the Territory Sales Manager in the Midwest sales region. Read More
Fertilizer360 Yield Center: Try These 5 Steps To Fine Tune Nitrog…
March 5, 2015
Yield Center 360 advises that an effective nitrogen management plan needs to focus on how much N a particular field and corn crop needs, as well as how to properly manage N throughout the growing season — with adjustments along the way. Read More
Precision AgFarmobile Coming Online In 2015
March 5, 2015
A new startup is looking to make collecting and selling ag data a more rewarding proposition for growers. Read More
Crop InputsCommodity Classic 2015 Sets Attendance High Mark
March 4, 2015
With nearly 8,000 total attendees, the 2015 Commodity Classic convention and trade show, which took place last week in Phoenix, AZ, shattered previous records for the landmark event, Read More
Young corn plants
FertilizerNew Nitrogen Stabilizer From Simplot Protects Fertilize…
March 4, 2015
By using OmniPierce Technology, Eclipse-N from Simplot Grower Solutions coats and protects more nitrogen, increasing nitrogen efficiency and decreasing loss due to volatilization. Read More
Industry NewsOhio Corn And Wheat Growers Association, Ohio Soybean A…
March 4, 2015
The associations truly appreciate the comprehensive approach and diligent work that the Ohio House of Representatives has dedicated to addressing water quality and House Bill 61. Read More
Mahindra Implement
Industry NewsMahindra USA Aligns With Paladin Attachment For Impleme…
March 4, 2015
Mahindra USA will begin utilizing Paladin Attachments as its implement supplier in April 2015. Read More
Crop InputsValent BioSciences Acquires Mycorrhizal Applications
March 4, 2015
The acquisition adds another strategic platform to VBC’s rapidly expanding global biorational business, providing additional tools for the Biorational Window platform being developed with its parent, Sumitomo Chemical Co., Ltd. Read More
Nutrients for Life Foundation - Plant Nutrient on the Farm Station
Industry NewsNutrients For Life Foundation Launches New Station Prog…
March 4, 2015
This ready-to-implement station provides an interactive opportunity for farms to showcase crop nutrients’ important role in growing healthy crops. Read More
Adjuvants loading
AdjuvantsAdjuvants Continue Upward Trend
March 4, 2015
A dizzying array of developments in crop protection technologies promise to make specialty adjuvants a crucial piece of the puzzle going forward. Read More
Wheat Growers, North Central Farmers Elevator Pursue Merger
CropLife 100Wheat Growers, North Central Farmers Elevator Pursue Me…
March 3, 2015
Two CropLife 100 retailers — South Dakota Wheat Growers (ranked No. 11) and North Central Farmers Elevator (No. 19) — have entered into a Letter of Intent to unify the two companies into a newly named cooperative. Read More
10 Tips for Spring Planter Preparation
Equipment10 Tips For Spring Planter Preparation
March 3, 2015
Kinze Manufacturing offers advice on how to ensure your planter is ready before you hit the field. Read More
Industry NewsOABA 2015 LAUNCH Program Recognizes 20 New Graduates
March 3, 2015
Twenty Ohio agribusiness leaders are being recognized as the latest graduates of Ohio AgriBusiness Association’s LAUNCH program. Read More
EquipmentNew AGCO Website Helps Customers Shop For Certified Pre…
March 3, 2015
RoGator sprayers are among the wide range of CPO equipment available through AGCO's site. Read More
Enlist spray Demo
HerbicidesGuiding New Herbicide Systems’ Launches
March 3, 2015
Under careful watch, the new 2,4-D- and dicamba-tolerant crops hit more acres this season. Read More
Eric SfiligojCommodity Classic 2015: Playing The Waiting Game
March 2, 2015
There was plenty of future-talk at this year’s event as companies (and growers) are largely in a holding pattern of sorts. Read More
Industry NewsHighway Equipment Appoints New Director Of Business Dev…
March 2, 2015
Cory Venable, who joined Highway Equipment Company (HECO) in 2013 as OEM Account Manager, has been promoted to Director of Business Development. Read More
Prairieland FS employees
Eric SfiligojWorkforce Worries
March 2, 2015
Finding good employees almost always ranks as the No. 1 or No. 2 problem for ag retailers in our annual CropLife 100 survey. Read More