Ag Retailing In Today’s Economic Climate

Most business professionals in agriculture are optimistic about the future — at least in the short run, but larger, more sophisticated growers are demanding much more from their suppliers. Volatile markets for both crops and inputs are putting greater pressure on growers to produce crops more efficiently and achieve the highest yields possible.

How retailers take advantage of these unique market opportunities was the subject of CropLife Media Group’s (CLMG) recent Webinar, “Ag Retailing In Today’s Economic Climate,” presented by Dr. Dave Downey, executive director and professor emeritus for the Center for Food and Agricultural Business, Purdue University. The Webinar was part of CLMG’s State of the Industry coverage, which is sponsored by Mon­santo’s Acceleron Seed Treatments, Raven Industries, AGCO’s RoGator and TerraGator, Specialty Fertilizer Products (SFP) and SST Software.

Our Changing Marketplace

The challenges ag retailers face today are greater than ever because of rapid changes taking place in the marketplace, Downey said.

“One of the most exciting things driving market changes has been the world population explosion,” he said. “By the year 2050, there are going to be a lot more people to feed and that’s good for agriculture. And it’s not just the population that is growing, but the income level of many countries is growing as well, particularly in India and China. It has become a global marketplace.”

Downey said there is also significant volatility in the market. “Countries like China can enter the marketplace and compete with U.S. companies for the same resources,” he said. “This can suddenly make things unstable, and we’ve seen this happen in the fertilizer industry.”

Other major changes occurring within agriculture include advances in crop protection, genetics and farm equipment, Downey said.

“More knowledgeable farmers are using better technology to get much more precise application,” he said. “Farming has moved from just a way of life to a truly industrialized process.”

Ag continues to face concerns regarding the availability of water, energy and labor, Downey added. There’s also an increased focus on sustainable agriculture, food safety and worldwide government trade policy and regulation.

How Farmers Are Changing

One of the most important issues that has impacted ag retailers has been farm consolidation, Downey said. According to one 2007 study, 42% of the acres in the Midwest were controlled by 6% of farmers — a trend Downey said is likely to continue.

“It’s purely a matter of economics,” he said. “There is significant data that shows farm size is correlated with profitability.”

In addition, more large farmers have purchased their own application equipment, according to the 2008 Purdue University Large Commercial Producer Study.

“That’s a really interesting phenomenon since a substantial portion of ag retailers’ income comes from services they offer,” Downey said. “Yet, we continue to find that larger farmers outsource services less and do more on their own.”

Downey also said larger farmers are more serious today when it comes to purchasing inputs. “We are finding larger, more industrialized farmers are spending their time planning and negotiating what they want from their suppliers,” he said. “Some farmers believe they often know more than their local supplier. Ag retailers have to make sure farmers see them as the primary source of the latest information.”

Keys To Success For Ag Retailers

Downey emphasized throughout the webinar growing an ag retail business today requires new and more sophisticated approaches.

“Historically, retailers have given away service and information,” he said. “They knew it would be covered by the margins of fertilizer, seed and crop protection products.”

Because retailers haven’t insisted on getting paid for their added-value services, it has created a culture that has been difficult to overcome. “There’s great temptation to use services and information as a negotiating tool and to give it away to our favorite customers,” Downey said. “Once that happens, it’s extremely hard to change it so you get paid for those services.”

Ag retailers have now entered an era of industrialized marketing where success is based on value created, Downey said. Those who understand who their customers are, what services they are willing to pay for, and how to communicate that value effectively can gain a competitive edge.

“Much of a retailer’s differential advantage will depend on the unique value created for targeted customers,” he said. “Ag retailers who strive to understand their changing marketplace and adapt their business proactively are in a strong position to grow.”

Leave a Reply

State of the Industry Stories

Liquid Fertilizer Storage tanks
State of the IndustryComplex Fertilizer Market Brings Mixed Feelings
January 5, 2016
Declining fertilizer prices and plentiful supplies should be good news for growers facing low crop prices. But they and their Read More
Asmus Farm Supply crop protection products in storage
State of the Industry2016 Crop Protection Outlook: The Guessing Game
January 4, 2016
One would naturally assume that retail sales of crop protection products in a contracted market would themselves be contracted, but Read More
Seed corn bags in storage
Special ReportsThe Outlook For Seed In 2016
January 3, 2016
Among all crop input categories going into 2016, the seed category has as many questions regarding which direction it will Read More
Wilbur-Ellis’ new fertilizer blending facility, located in Mott, ND, was designed by A.J. Sackett & Sons.
State of the IndustryBuying Intentions Survey: Retailers Taking A Prudent Approach In 2016
January 2, 2016
The CropLife® magazine Buying Intentions Survey made its debut last year to gauge current industry trends against the retailer’s plans Read More
Trending Articles
The Andersons Waterloo
ManagementFirst Indiana Facility Certified Under 4R Nutrient Stewardship Certification Program
June 27, 2016
The 4R Nutrient Stewardship Certification Program has announced that The Andersons, Inc.’s Waterloo, IN, facility has been added to its Read More
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
Latest News
Heritage Cooperative
CropLife 100Heritage, Agland Co-op Explore Mutual Merger Interest
June 30, 2016
According to a report in The Ohio Country Journal, Heritage Cooperative and Agland Co-op have entered into negotiations to consider Read More
Soybean Plant closeup
Crop InputsDow Launching New Soybean Burndown Herbicide
June 30, 2016
With the 2016 growing season nearing the halfway mark, many growers are scouting soybean fields to find unwelcome marestail plants Read More
ManagementUpdates on Glyphosate Use in the EU and Bayer/Monsanto
June 29, 2016
Editors Paul Schrimpf and Eric Sfiligoj discuss the latest important developments on these crop protection fronts. Read More
Industry NewsCompass Minerals Names Protassium+ Sales Director
June 28, 2016
Compass Minerals, the producer of Protassium+ sulfate of potash, has named Scott Johnson director of sales for Protassium+ North America. Read More
Eric SfiligojThe British Leave Vote Impact On EU Agriculture
June 27, 2016
Like virtually everyone else in the world this past week, I’ve watched the global reaction to Britain’s vote to exit Read More
Valent David Nothmann
Crop InputsValent Names David Nothmann Vice President Of Marketing
June 27, 2016
Valent U.S.A. Corp. has announced the appointment of David Nothmann as vice president of marketing. Nothmann will be responsible for Read More
The Andersons Waterloo
ManagementFirst Indiana Facility Certified Under 4R Nutrient Stew…
June 27, 2016
The 4R Nutrient Stewardship Certification Program has announced that The Andersons, Inc.’s Waterloo, IN, facility has been added to its Read More
CropLife 100BRANDT Contributes To Mayo Clinic
June 27, 2016
BRANDT, a leading agriculture retailer and manufacturer of specialty agriculture products, has pledged a sizable donation to the Mayo Clinic Read More
ManagementReport: U.S. Farmland Values On Average Continue Gradua…
June 27, 2016
Land price movement has been in the forefront for farmers, landowners, lenders and land brokers for a decade now during Read More
AdjuvantsPrecision Laboratories Introduces Intact Xtra For Use W…
June 27, 2016
Precision Laboratories announces the launch of Intact Xtra, an adjuvant designed for applicators who want to maximize spray applications and Read More
Key Cooperative’s new liquid fertilizer, crop chemical, and seed facility in Grinnell, IA stores 1.5 million gallons of liquid fertilizer and 120,000 gallons of crop chemicals.
Retail FacilitiesKey Cooperative Facility Features The Latest In Murray …
June 27, 2016
When Key Cooperative wanted to improve the overall efficiency at its new state-of-the-art facility in Grinnell, IA, it turned to Read More
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