Retailers need to provide insight and implications

decrease font size  Resize text   increase font size       Printer-friendly version of this article Printer-friendly version of this article

More than 90 minutes listening to one speaker usually is quite boring in my opinion, but Allan Gray, the Land O’Lakes chair of agribusiness at Purdue University, kept my attention for his oneman presentation at the Agricultural Retailers Association annual conference. His opinions seemed right on target from my look at the U.S. ag retailer business.

For the program, his presentation was listed as “Future of the Industry” but he put a timeframe with his presentation title: “Retail Outlook to 2025.” Putting himself into the shoes of ag retailers, he said, “I say consolidation is coming to our industry. I say partnerships are going to mean a lot more to us moving forward, and it is going to be human talent that is the key for what we have to do to be relevant over the next decade.”

He went on to say, “I think the economic reset we are headed toward will drive efficiencies, and efficiencies are scale driven … Consolidation creates winners and losers, but the non-emotional side of me says that scale matters. You spread fixed costs over a larger number of assets and acres and that improves your efficiency.”

That reset of the economics for farmers is quite obvious because Gray noted that Midwest farmers

have been profitable at a level that cannot be sustained forever, and commodity prices had to drop back to a different plateau. “There have been profit margins six out of the last seven years in the Midwest of $150 to $200 per acre on average. That is profit above all costs. That is not sustainable; $200 per acre pure profit is not sustainable.”

Large-scale producers/farmers will increase their acreage, and ag retailers will be fighting for the business of the big producers to establish a foundation for their retail operations. The smaller farmers will be the profit gravy, at least that is the way I see it based on what Gray said.

Gray sees the success of one ag retailer in competition with another one based on moving data and information into insights that are then presented to the producer as implications for his farming operation. People within an ag retailer organization have to work with farmers on what the implications are to change the way things are done. A retailer’s staff has to explain what all this data means and how it can be used to improve an operation.

I agree with Gray in that an individual retail operation won’t likely be able to provide all the insights by itself that a producer needs. Partnerships, strategic alliances and joint ventures are probably necessary because not all the new services, information and resulting insights are likely to be affordable by some or even many retail companies. Insights to provide implications from data aren’t cheap to be developed.

Ag retailers have been competing on the quality of service provided to customers, and Gray showed results of the most recent Midwest ag survey showing that the biggest farmers do recognize differences in service, but they also don’t see much difference in the information provided by one retailer to the next. Therefore, providing insights and implications to earn the confidence of customers has to be a new mindset, not only technology investments.

And finally, I agree with Gray about partnerships with customers being necessary for the future.

Concerns of who owns the data will go away if a retailer does right by a customer. “Data sharing is less of a concern if they trust that I can use their data to help them be better and that I won’t be selling that data to anybody.”

Buyers Guide

Doyle Equipment Manufacturing Co.
Doyle Equipment Manufacturing prides themselves as being “The King of the Rotary’s” with their Direct Drive Rotary Blend Systems. With numerous setup possibilities and sizes, ranging from a  more...
A.J. Sackett Sons & Company
Sackett Blend Towers feature the H.I.M, High Intensity Mixer, the next generation of blending and coating technology which supports Precision Fertilizer Blending®. Its unique design allows  more...
R&R Manufacturing Inc.
The R&R Minuteman Blend System is the original proven performer. Fast, precise blending with a compact foot print. Significantly lower horsepower requirement. Low inload height with large  more...
Junge Control Inc.
Junge Control Inc. creates state-of-the-art product blending and measuring solutions that allow you to totally maximize operating efficiency with amazing accuracy and repeatability, superior  more...
Yargus Manufacturing
The flagship blending system for the Layco product line is the fully automated Layco DW System™. The advanced technology of the Layco DW (Declining Weight) system results in a blending  more...
Yargus Manufacturing
The LAYCOTE™ Automated Coating System provides a new level of coating accuracy for a stand-alone coating system or for coating (impregnating) in an automated blending system. The unique  more...
John Deere
The DN345 Drawn Dry Spreader can carry more than 12 tons of fertilizer and 17.5 tons of lime. Designed to operate at field speeds up to 20 MPH with full loads and the G4 spreader uniformly  more...
Force Unlimited
The Pro-Force is a multi-purpose spreader with a wider apron and steeper sides. Our Pro-Force has the most aggressive 30” spinner on the market, and is capable of spreading higher rates of  more...
BBI Spreaders
MagnaSpread 2 & MagnaSpread 3 — With BBI’s patented multi-bin technology, these spreaders operate multiple hoppers guided by independent, variable-rate technology. These models are built on  more...

Comments (0) Leave a comment 

e-Mail (required)


characters left

Portable Conveyors

Convey-all portable conveyors are designed to handle your crops gently and efficiently. We offer an extensive line of high capacity ... Read More

View all Products in this segment

View All Buyers Guides

Feedback Form
Feedback Form