Before the annual Agricultural Retailers Association (ARA) meeting, CropLife magazine gathered seven key ag retail representatives for its first ever State of the Industry Roundtable discussion. The discussion was inspired by the inaugural State of the Industry Report that was included in the CropLife’s December 2009 edition. The meeting participants sought to expand upon the findings of the magazine’s survey efforts looking at what issues are key to today’s retailers.
The CropLife State of the Industry initiative is sponsored by Agrotain, Nufarm, PotashCorp, Raven Industries, and SST Software.
Among the major trends identified by the Roundtable participants were the following:
- As grower-customers become larger through consolidation, and change in character with the coming of a new generation of farmers, many retailers are finding it challenging to keep pace. In particular, developing and maintaining business relationships and meeting the input and service needs of these complex and unique customers has proven difficult, requiring more internal training and new relationship approaches.
- Advances in the technology available to grower-customers is changing rapidly. Retailers need to sort through all these new options and deliver the technologies that will best serve their grower-customers and help them maintain their competitive and yield increase edges. Retailers that are unable to do this successfully “will not be in this business for very much longer.”
- Turning seed into a profitable input has grown more difficult in the past few years for many retailers. Members of the Roundtable agreed that it is a constant struggle for them to find the value in selling seed to their grower-customers compared with the investments they have to make in this area of their business. Given the fact that some key seed suppliers seem content to “go around” the ag retail channel to get their products to growers, the feeling is that they will continue to struggle with making seed a profitable part of their operations using their current business models.
- As an alternative to seed, some retailers are shifting their focus to other specialty input offerings such as plant growth hormones and fertilizers. One retailer reported that profit margins in this part of their business are in the 20% to 30% range compared with 4% to 5% for seed.
- Some retailers are placing more emphasis on proprietary crop protection products as a way to give their grower-customers added value in their input purchases.