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

Allen Summers Asmark Institute PSM Training
EmployeesAsmark Institute Sponsors 25 ResponsibleAg Auditor Training Scholarships
June 21, 2016
The Asmark Institute has announced plans to provide 25 scholarships through their affiliated State fertilizer and agrichemical associations to help encourage Read More
LegislationVilsack Christens WinField Crop Adventure, Talks Monsanto-Bayer, GMO-Labeling and TPP
June 17, 2016
The WinField Crop Adventure grand opening ceremonies at Fair Oaks Farms (near Winemac, IN) welcomed USDA Secretary of Agriculture Tom Read More
Crop InputsFields of the Future: WinField Doubles Down with Agri-Education Center Investment (w/Photo Gallery)
June 16, 2016
Land O’Lakes, Inc., joined by Agriculture Secretary Tom Vilsack, today will host Fields of the Future, a live broadcast about Read More
Trending Articles
Food IT
Industry NewsCalifornia Event Will Mix Ag And Tech Professionals To Explore IT Solutions
June 20, 2016
Silicon Valley is hot on agriculture, and an upcoming event in California will bring together the food and tech industries Read More
Monsanto Luling Plant
Eric SfiligojWhat’s Next For Monsanto?
May 31, 2016
For the folks at Monsanto’s headquarters in St. Louis, MO, it has been an eventful few weeks. Back on May Read More
Soybean Plant closeup
Industry NewsMonsanto Rejects Bayer Bid; Open To More Talks
May 25, 2016
Monsanto Co, the world’s largest seed company, turned down Bayer AG’s $62 billion acquisition bid as “incomplete and financially inadequate” Read More
Eric SfiligojPity The Monsanto Haters
May 23, 2016
An old saying goes thus: “Be careful what you wish for. You just might get it.” Given current events, there Read More
Monsanto Luling Plant
Crop InputsReport: Bayer Eyeing Monsanto For Possible Mega-Merger
May 16, 2016
Bayer AG is exploring a potential bid for U.S. competitor Monsanto Co. in a deal that would create the world’s Read More
Aerial Drone
Precision AgA Deeper Dive Into The Future Of Precision Ag
May 9, 2016
For about two decades now, through the good and the bad times, the ups and the downs inherent in agriculture, Read More
Latest News
Allen Summers Asmark Institute PSM Training
EmployeesAsmark Institute Sponsors 25 ResponsibleAg Auditor Trai…
June 21, 2016
The Asmark Institute has announced plans to provide 25 scholarships through their affiliated State fertilizer and agrichemical associations to help encourage Read More
Kennebec Elevator
CropLife 100Wheat Growers Celebrates Kennebec Elevator Grand Openin…
June 21, 2016
Over 250 patrons and guests were on hand to celebrate Wheat Growers’ Kennebec Elevator grand opening. South Dakota Secretary of Read More
Land O Lakes
Industry NewsLand O’Lakes To Acquire Ceres
June 20, 2016
Land O’ Lakes, Inc. and Ceres, Inc. have announced that they have signed a definitive merger agreement under which Land O’Lakes Read More
Food IT
Industry NewsCalifornia Event Will Mix Ag And Tech Professionals To …
June 20, 2016
Silicon Valley is hot on agriculture, and an upcoming event in California will bring together the food and tech industries Read More
LegislationVilsack Christens WinField Crop Adventure, Talks Monsan…
June 17, 2016
The WinField Crop Adventure grand opening ceremonies at Fair Oaks Farms (near Winemac, IN) welcomed USDA Secretary of Agriculture Tom Read More
Crop InputsFields of the Future: WinField Doubles Down with Agri-E…
June 16, 2016
Land O’Lakes, Inc., joined by Agriculture Secretary Tom Vilsack, today will host Fields of the Future, a live broadcast about Read More
Bayer sign
Crop InputsMonsanto Turns Back Bayer Again
June 14, 2016
Bayer AG’s bid to buy Monsanto Co. for more than $60 billion has hit an impasse that could pose a Read More
Young Corn Field
Crop NutritionNext Generation Of Nitrogen Efficiency Technology Conve…
June 13, 2016
Commodity price projections indicate farmers will continue to face tight margins again this year. Delivering higher yields and more bushels Read More
Industry NewsLa Crosse Seed Acquires Cover Crop Solutions Brand
June 10, 2016
La Crosse Seed announces that it is the new and exclusive owner of the entire family of brands of Cover Read More
ManagementTravel Plans and EU Rejection of Glyphosate, Biotech Cr…
June 9, 2016
Editors Paul Schrimpf and Eric Sfiligoj talk about upcoming trips and the latest in the European Union’s moves against glyphosate Read More
Aspire with Boron
Crop InputsStudy: Aspire with Boron Ups Alfalfa Yields
June 8, 2016
Alfalfa growers are successfully improving yields through the cutting season by applying an important micronutrient. In a recent study, The Read More
Industry NewsAGCO Announces Tragic Death of Longtime Employee
June 8, 2016
It is with deepest regret that we announce the passing of our dear friend, colleague and customer advocate-in-chief Kevin W. Read More
Wheat Field North Dakota
Industry NewsBASF Inks Northern Seed for Clearfield Wheat R&D Li…
June 6, 2016
BASF has licensed Northern Seed LLC to perform research and development of BASF’s proprietary and patented Clearfield technology in wheat. Read More
ManagementBayer/Monsanto, EU/Glyphosate, Corn/Soybeans
June 2, 2016
Editors Paul Schrimpf and Eric Sfiligoj discuss the latest regarding industry mergers, the glyphosate debate in Europe, and an update Read More
Growers looking at soybeans
Industry NewsKoch Licenses 2 Marrone Products For North American Dis…
June 2, 2016
Koch Agronomic Services (Koch), with support from its affiliate, Koch Biological Solutions, has secured exclusive rights to sell REGALIA Rx Read More
Gypsum
Industry NewsBeneficial Reuse Management Launches GYPSOIL BLENDABLE
June 2, 2016
Beneficial Reuse Management (BRM) has introduced GYPSOIL BLENDABLE, a new high-quality pelleted gypsum fertilizer that supplies 17% sulfate sulfur and Read More
StewardshipAgrible Joins Field To Market To Pursue Sustainable Sou…
June 1, 2016
Agrible, Inc. has joined Field to Market: The Alliance for Sustainable Agriculture as an associate member. As a leading multi-stakeholder Read More