Jeff Hinen of Ft. Wayne, IN, knows how to evaluate farm inputs before buying. For instance, when shopping for a corn herbicide, this corn and soybean farmer with a college degree in agronomy looks for performance first, followed by warranty and dealer service.

“I know what my weed spectrum is,” he explains. “So I narrow down a list of products based on whether they control that weed spectrum, and I evaluate those products. Then I try to narrow it down depending on the company, the local service I get provided, and whether my local retailer handles that brand.”

Hinen tries to do as much research as he can before he gets down to making his purchase decision. And he says his evaluation process is the same whether he is buying a computer, a $150,000 combine or a bag of seed corn.

Knowing what factors are important to him before buying a product is a form of buying intelligence. And Hinen is not the only one who has it, according to an exclusive Farm Industry News survey that looked at how farmers buy.

We asked our readers to rank several attributes according to their importance to them when buying farm inputs. We then enlisted Dr. Craig Dobbins, professor of agricultural economics at Purdue University, to help analyze the results.

More than 800 of you responded and were able to rank all nine attributes. And according to the respondents we talked with after they had completed the survey, it wasn't difficult. It was a process they were used to doing many times on their own when buying farm inputs, if only in their heads. “I think most farmers do this nowadays, if they are farmers who want to stick around for years,” says Jerome Jerzak, a corn and soybean farmer from Ivanhoe, MN. “Farming is a hell of a game, nowadays.”

The test scores revealed some interesting findings. First, we learned farmers are indeed astute buyers. And they are very much aware of the factors important to them when buying farm inputs. What's more, one dominate factor drives all of their input purchases. And contrary to popular belief, that factor isn't price.

Performance first

Respondents were asked to rank nine attributes according to their importance to them when buying three common farm inputs: a 100-hp tractor, seed corn and preplant corn herbicide. As the table at the end of this story shows, the factor ranked number one by more respondents than any other was product performance, regardless of the farm input evaluated.

“It has to perform,” sums up Dale Schut of Chester, SD, who ranked the importance of product performance high when buying a tractor. “Fuel economy and pulling power. It has to do what it is supposed to do,” Schut says. “I mean, if they tell me it will pull a 40-ft. field finisher, I need it to be able to pull that and not have any problem.”

“If I don't have product performance, I have a weedy field and I lose yield,” says Ron Myers of Illinois, who ranked product performance number one when buying herbicides.

Of the three inputs evaluated, significantly more readers ranked product performance number one when buying seed corn and corn herbicides than when buying a tractor. Specifically, 86% ranked it first when buying seed corn and corn herbicides, whereas 50% ranked it number one when buying a tractor.

This finding suggests that farmers think product performance is significantly more important for seed and herbicides than it is for machinery. However, Purdue's Dobbins suggests there may be a link in farmers' minds between product performance and brand of tractor they are buying. “And so, while in your tractor question, 50% ranked performance as the very first thing, there were another 17% that ranked brand as the most important thing,” Dobbins explains. “If you believe the hypothesis and think of product performance and brand together, then again, it ranks really quite high as the most important thing.”

Donald Bradow of Fergus Falls, MN, supports Dobbin's assertion. “John Deere is a name I look for when buying a new tractor,” Bradow says. “I can't get the performance out of another brand tractor. So I have to start with John Deere. Performance is very important. But I don't feel I could get it unless I get a John Deere.”

Just what product performance means varies by respondent and input evaluated. For example, to Bradow, performance in a herbicide means targeted weed control. “If I am after a specific weed to kill in my corn and I go buy that chemical, it doesn't matter what brand it is as long as that chemical will kill the weed I am after. Or that it will perform the duty it is supposed to do,” Bradow says.

In tractors, examples of performance include “hydraulics,” “user friendly,” “fuel economy” and “pulling power.” Performance in seed was cited as “drydown,” “high-protein,” “emergence” and “yield.” “If you don't have bushels, you don't have dollars,” explains Illinois' Myers.

Price isn't everything

Despite all the talk about price, this attribute comes in second to product performance across the three farm inputs evaluated. This is the one finding Dobbins says is contrary to conventional wisdom.

“There are always discussions about price,” Dobbins says. “But when you asked what is the most important, it was certainly a distant second in all cases. Performance was much more important than price.”

Indiana's Hinen explains why he put price second to performance: “I think some farmers look strictly at price, and price is not always value. So I may be able to get a lower price on a particular herbicide. But if it doesn't work on the weed spectrum I have on my particular farm, then it does not have the value for me. Or if I cannot get service with that particular product, then it doesn't hold that value.”

Even though price ranks second, it is still a huge issue for many farmers right now, according to one corn and soybean farmer from northern Iowa, who ranked price second to performance when buying seed and herbicides.

“I am a seed dealer, so I know a lot about this,” he says. “The product has to perform, and everybody has products that will perform for somebody. You just have to pick out which products. But it also has to be affordable. There is a wide variation on price right now, and it just has to be priced accordingly.” For him, “priced accordingly” means less than $35/acre for seed. For corn herbicides, he tries to stay below $20/acre.

Price is significantly more important to farmers when buying a tractor than when buying seed corn or corn herbicides. That is, 25% ranked it number one for the tractor purchase as opposed to only 8% and 12% who ranked it first for seed corn and corn herbicide purchases, respectively.

Dobbins suspects the difference is due to the fact that a tractor is a big-ticket item that is purchased less frequently than annual purchases such as seed and herbicides. “So price is a bit more important in that environment,” he says.

Timm Sheline, Bowling Green, OH, explains why. “Because I'm trying to make a profit here,” Sheline says. “We have both John Deere and International tractors, and I feel the John Deere does a lot of things better. But when I bought a used tractor last year, I bought an International. The same-horsepower John Deere would have cost me $4,000 more. The way I use that tractor, I can live with a little slower hydraulics for that $4,000 difference.”

Dealer service ranks high

The attribute ranking third in importance on average is dealer service. Although percentages vary, this ranking holds true for all three inputs evaluated.

“If you look at everything I ranked, service was very big,” explains Illinois' Myers. “And I am expecting the guy who sells me the tractor, the corn herbicide or seed corn to do a lot of the eliminating. You look at an implement store, there are several different types of implements. You look in a seed corn book, there are lists and lists of different seed corn hybrids or soybean varieties. I expect that dealer to narrow that focus down for me and know about how my operation works. That is why service was very high in all my rankings.”

Carl Higbea from Defiance, OH, ranks service high when buying corn herbicides. “I farm a medium-size operation, and I ask for a lot of custom application on my crop inputs, particularly spraying,” he says. “I deal with my local elevator. And I consider myself a good customer of theirs. When we order spraying done on some fields, we expect them to be timely. So I think that is very important. If we kind of hit and skip and go to this guy or that guy for a couple cents difference, they may turn their back a little more instead of biting the bullet and saying, ‘Hey, we're here.’ That's service.”

When you look at the percentages for each input, dealer service is relatively more important to respondents when buying a tractor than when buying seed corn or corn herbicides. Dobbins sees this finding as logical. “When this tractor breaks, where you have problems with it, you need to be able to get it fixed,” he says.

Bruce Fagerholt from Hoople, ND, echoes Dobbins' logic: “If something goes wrong, I live a mile from an AGCO dealer, and the guys are absolutely excellent,” he says. “I probably wouldn't drive 100 miles to buy an AGCO tractor, but when they are a mile away…. And besides, they are just plain good businessmen with excellent service. That is one of the main reasons I would buy orange. The service is too good for me to go somewhere else, regardless of the color.”

Adds Minnesota's Jerzak, “The way these tractors are built nowadays, if something goes wrong with them, you need their service right away. And if you are out there and have umpteen number of acres of corn to plant or harvest, you want it done right away. I pick a dealer who is out there in half an hour.”

BuyQ scores high

Dobbins says results of the study show that farmers have a high awareness of the factors that are most important to them in an input purchase and that there is more to each of these purchases than just price.

“I think they are aware,” Dobbins says. “And I think your survey indicates that an input purchase isn't one dimensional. There are trade-offs. Performance is important. Price is important. And so you have to consider these things together. It is not strictly one thing. And I think farmers give consideration to what it is they need and try to find the product that best matches their needs.”

Having this type of buying intelligence is critical to running a business, he says. And it is especially critical now, when margins are tight and you need to make sure that every dollar you spend is invested wisely.

By clarifying the factors up front, you will know where to negotiate most strenuously at the time of purchase. And, at the same time, you will know where you will need to make the required trade-offs.

“If you are going to be an intelligent buyer, you need to give some consideration to each of these attributes,” Dobbins says. “And then you as a buyer will have to consider the trade-offs between those attributes. Because frequently, if you want high service and a really strong warranty, you are going to have to pay a higher price.”

Average importance of 9 product attributes to buyers of farm inputs (based on %)

Farm input evaluated

Tractors

Seed corn

Corn herbicide

Attribute
ranking

% ranking each
attribute #1

Attribute
ranking

% ranking
attribute #1

Attribute
ranking

% ranking
attribute #1

Attributes

Product performance

1

50

1

86

1

86

Price

2

25

2

8

2

12

Brand

3

17

3

6

9

1

Dealer service

4

15

5

3

3

6

Warranty

5

3

7

2

5

3

Availability of product

6

3

4

4

4

3

Financing terms

7

2

9

1

8

1

Volume discounts

8

2

6

3

6

3

Recommendation of others

9

1

8

1

7

2