Purdue University’s “Large Commercial Producer” Project

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Every two or three years, Purdue University’s Center for Food and Agricultural Business hosts a national conference for agribusiness executives focused on a particular theme or subject area. This year’s theme was dissecting results of a major survey of larger-scale farmers conducted in February, financed by Purdue and a consortium of commercial sponsors.

Goal of the LCP Project is “to understand the strategies of agricultural producers, key issues that producers face as an integral part of the food value chain, and how input suppliers can best serve agricultural producers.”

Demographics of respondents were sliced and diced by gross farm revenue, enterprises engaged in, size and scope of these enterprises, educational background of the operators and age of operators. The specific enterprise groupings were 1) corn & soybeans, 2) wheat & barley, 3) cotton, 4) fruits, nuts & vegetables, 5) dairy, 6) hogs, 7) beef cattle. Note: There were other enterprises among survey respondents, but not enough for Purdue economists to draw “statistically reliable” conclusions.

Farm-size category breakdowns are shown in the table below. Be aware that survey respondents below the low end of the range for “mid-sized” operations (i.e. “small operations” in that enterprise arena) were not counted because Purdue economists felt they would distort findings, being disproportionate in number to their actual contribution to national production.

Age breakouts show big generational turnover ahead: Among the overall group, the largest subset (45 percent) was 55 to 69 years old and another 20 percent were 70 or older. Those 40 to 54 years old made up 30 percent of LCP Project respondents and just 6 percent were in the 18 to 39 age bracket.

The survey reveals three “types” of buyers among farmers. First there’s the “value to business” buyer, who focuses on the balance between product performance and price. Next there’s the “price” buyer who wants the lowest possible price. Third, there’s the “relationship” buyer where the dominant influence is his/her loyalty to a specific brand or local dealer. Then there is the reality that most farmers are a combination of all three types, but in different order of influence on their purchase decision, depending on what type of product or service is being offered! This led to a “grid” of six different types of buyers incorporating all three motivations, but in a different pecking order.

The big challenge for ag input suppliers is how to determine what type of buyer they are dealing with in the first 2 to 3 minutes of a sales call by doing a little pre-call research and asking the farmer the right questions.

 


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