New "agri-centers" will provide products and services by the bundle.
Every farmer knows the routine well: a trip into town means at least a half-dozen stops to sufficiently make a dent in his to-do list.
On the way, he'll stop at his neighbor's home to pick up some bags of seed, then it's on to the chemical dealer for some preemergent.
He'll stop by the elevator to pick up some information about a new high-amylose corn that should command a hefty premium, then pass by the implement dealer to look at a yield monitor that his neighbor just bought. He'll go by the local county office to put in a request for some soil testing, and while he's there, he'll strike up a conversation with an agronomist about a new type of root rot that seems to be prevalent.
He has heard about GPS mapping, so if he has time, he'll stop by the local fertilizer dealer, who just started offering the service, and find out how it works. He has also been thinking about contracting with someone for crop scouting, and he could sure use some return-on-investment advice from someone other than his "somewhat tight" banker.
Yes, today farmers and their pickups rack up a lot of miles.
But in a few years, a farmer will be able to do all that, and much more, with one stop. What Sam Walton did for the American consumer, agri-centers will soon be doing for the farming community, according to several experts attending a dealer conference in Kansas City, MO, sponsored by Novartis Seeds.
"The line between crop production and crop protection is starting to disappear," says Kevin Steffey, University of Illinois entomologist. "The blending is becoming more obvious."
Solution providers. Bundling of services starts with putting chemicals and seeds under the same roof, which many dealers have already done. But it doesn't end there. Add to the formula value-added services, such as input advice, product knowledge and historical data collection. In fact, Rob Stouffer, a GPS consultant in Lee's Summit, MO, told dealers that they must "become a solution provider, not just service providers."
Solutions from the agri-center certainly will include GPS. Satellite maps will be overlaid, producing valuable tools that can be used for decisions about nutrient inputs, variable seeding rates or crop selection, Stouffer says. Year-to-year yield comparisons will be available at the push of a button, because the company will store critical historical data.
Chad Hertz, owner of Hertz Farm Management, Waterloo, IA, says some of the local co-ops in his area are beginning to follow portions of this business model. "They sell chemical, seed and fertilizer and have an agronomist that can do scouting. You can knock out three or four things with one visit," he says. "A lot more companies are saying, We'll be part of your management team.'"
With these services comes assistance in decision-making, not just promotion of a particular brand. "Today, dealers will sell you what's in their program. In the future, I think we'll see a stepped-up level of professionalism, where they don't just sell product, but they sell knowledge and product," Hertz says.Another part of the bundling formula in the future may be money. "They'll sell you the products, the chemicals, then they'll sell you the money," Hertz says. And to get a loan, a farmer must have crop insurance. Guess where that may come from? "With this type of arrangement," Hertz says, "they're controlling all the options outside the weather. And if they sell crop insurance, they can take care of that too."
Experts on board. Steven Heidrick, head of seed sales and seed treatment for Boettcher Enterprises, Beloit, KS, says he sees a day when dealers selling certain types of genetically enhanced products will have to be licensed by the government. "The USDA could in the future require licensed agronomists, or require some sort of agronomy training, due to biotech seeds and herbicides," Heidrick says. This will put more agronomists or certified crop advisors on staff at agri-centers, a move Boettcher Enterprises is already implementing at its three dozen outlets in Kansas and Nebraska. "Most of our managers are agronomists or have agronomy training," Heidrick says. This will allow such agri-centers to offer crop input advice, return-on-investment calculations and educational seminars.
Heidrick also thinks that agri-centers will be involved with direct contracting of specialty crops. "Say a company needs several hundred thousand bushels of white wheat for pasta. We could be the go-between. We'd get information out to the farmer and answer questions," Heidrick says. Such a crop, which would draw a premium, would require a specific type of ground, thereby requiring analysis provided by GPS. Seed, chemicals, service and marketing help would come from one source ~ the agri-center.
Heidrick predicts that in the future, soil testing, grid sampling, seed cleaning, herbicide screening and seed treatment will be offered in one location. And don't be surprised, he says, if certain types of equipment, such as yield monitors, show up on the product shelves.
For the farmer, one-stop shopping can also lead to some enticing incentives. If he purchases seed, chemicals and various types of services from one supplier, that company could offer him sizable discounts. "I see program package deals coming down the road," says Hertz. "We already see that happening in some cases - they call them `systems.'"
Bundling may not necessarily mean dealing with just one business. Hertz says that noncompeting companies may form strategic alliances in order to produce one-stop shopping. A seed dealer, for instance, could partner with a custom applicator and a certified crop advisor to get the necessary parts of the formula.
Bundling will offer the advantages of convenience, time savings, improved advice and services, and dollar savings, but Hertz also sees the other side of the coin. "In order to be this one-stop shop, your dealer probably rolled in a few of his competitors," he says. "Now who's the only game in town?"
He says farmers who rely on agri-centers to store their historical crop data are entering a valuable relationship, but what happens if they want to switch services? It would be difficult to make a change. "It takes away some of the farmer's flexibility and independence," Hertz notes.
Risky business. A movement toward one-stop shopping, of course, puts the independent seed dealer and the independent chemical dealer at risk. Many are farmer/dealers, such as Dwayne DeTar, owner of Triple D Seeds, Coffeyville, KS. DeTar sells Novartis seeds, plus he raises and markets his own certified wheat seed. He is keenly aware that one-stop shopping may someday threaten his business. "I've asked myself if I need to be looking at that (bundling). If that's necessary for my business to survive, then I guess I'll have to."
He's banking on personalized service, hands-on experience with the seeds he sells and repeat business to keep him around. "Farmers buy seeds a little more personal than other inputs," he says. "There's lots of brand loyalty, lots of dealer loyalty."
Yet he concedes that the mega-mergers among agri-business giants could be a force to be reckoned with. "It depends on if we get down to only three or four seed companies in the future," he says. That would put pressure on seed dealers to add chemicals to their product line.
In today's competitive environment, customer service is often the key distinguishing factor. As long as bundling provides options, rather than backing a farmer into a corner, its reach could become widespread - or at least as far as one roof can cover.