Akridge

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Published on December 28, 2007

Author: demirel

Source: authorstream.com

CPDA Adjuvants and Inerts Committee Annual Conference May 12, 2005 Memphis, TN:  CPDA Adjuvants and Inerts Committee Annual Conference May 12, 2005 Memphis, TN Redefining Value for a Changing Commercial Producer Dr. Jay Akridge Center for Food and Agricultural Business Purdue University 765-494-4327 akridge@purdue.edu Today….:  Today…. Look at OPPORTUNITIES a changing customer base offers What do commercial producers want and need from their input suppliers? How is their definition of value evolving? What are the implications for input supplier strategy? A Closer Look… :  A Closer Look… The 2003 Commercial Producer Project Study Design:  14,301 Questionnaires mailed January 2003 2,424 Questionnaires returned (17%) Names from Farm Journal database Producers in states accounting for 75% of production (by enterprise) Corn/Soybeans, Wheat/Barley/Canola, and Cotton Dairy, Swine, Beef Fruits/Nuts/Vegetables/Vines Study Design Average Size of Commodity Crop Operations:  Average Size of Commodity Crop Operations Commercial Corn/Soybean Producers:  Commercial Corn/Soybean Producers 6% 11% 13% 8% 5% 12% 13% Total: 356 Other States: 11% 9% 5% 4% 4% Commercial Wheat/Barley/Canola Producers:  Commercial Wheat/Barley/Canola Producers 7% 18% 7% 7% 32% 23% Total: 41 Other States: 2% 2% 0% 2% 0% Commercial Cotton Producers:  Commercial Cotton Producers 63% 3% 14% 6% 6% 6% Total: 129 Other States: 2% Fruit, Nut, Vine, and Vegetable Producers:  Fruit, Nut, Vine, and Vegetable Producers Fruit, Nut, Vine and Vegetable Growers:  Fruit, Nut, Vine and Vegetable Growers 15% 5% 37% 5% 8% Total: 170 Other States: 8% 8% 5% 4% 1% 1% 2% 1% Slide11:  Growth Plans Expected Growth in Next 5 Years for Crop Producers** :  Expected Growth in Next 5 Years for Crop Producers** ** Does not include those exiting farming Growth Predictions Across Time:  Growth Predictions Across Time NOTE: These do not include anyone who indicated they would not be farming in 5 years AND takes out all outliers with >300% growth predicted High Growth Producers: Top 20% Growth:  High Growth Producers: Top 20% Growth Most 44 and under Most concerned about expansion and management challenges Most confident and optimistic Higher reliance on local sources for information Seeking more direct relationship with both Capital and Expendable suppliers More reliance on sales/tech reps for information than before Slide15:  General Attitudes I am very confident in my own ability by Age:  I am very confident in my own ability by Age I am very optimistic about the future of farming by Age:  I am very optimistic about the future of farming by Age Management Techniques Used by Size (Part I):  Management Techniques Used by Size (Part I) Management Techniques Used by Size (Part II):  Management Techniques Used by Size (Part II) Use of the Internet for Farm-Related Business by Size:  Use of the Internet for Farm-Related Business by Size Summary General Attitudes:  Summary General Attitudes Producers tend to be confident and feel that they are successful High growth and Under 35 producers are more confident, feel that they are more successful, and see themselves as opinion leaders Compared to 1993 and 1998, participants were more confident, but less optimistic about the overall future of farming The larger the operator, the more intense the use of management tools Slide22:  Decision-making Process Decision Process:  Decision Process Input purchasing decisions are influenced by a variety of sources, these sources include: Inside the farm influence Outside the farm influence External media and communication How Purchase Decisions Are Made for Expendable Items for Commercial Crop Operations:  How Purchase Decisions Are Made for Expendable Items for Commercial Crop Operations Decision Makers and Influencers:  Decision Makers and Influencers Commercial producers tend to make expendable decisions after extensive discussion or on their own High growth are the most independent Smaller operations more independent Crop expendable input decision-making process complex: homework required! Slide26:  Off-Farm Influencers Influence Outside the Farm on Purchases of Expendable Items by Primary Operation:  Influence Outside the Farm on Purchases of Expendable Items by Primary Operation Use of Independent, Paid Consultants by Commercial Crop Producers in 5 years:  Use of Independent, Paid Consultants by Commercial Crop Producers in 5 years Influence Outside the Farm on Purchases of Expendable Items (by use of consultants):  Influence Outside the Farm on Purchases of Expendable Items (by use of consultants) Outside Expendable Influencers:  Outside Expendable Influencers Local dealers most important off-farm influencer Large producers place relatively more influence on independent consultants for expendables Under 35 producers place more influence on the lender for expendables 65+ producers place less influence on other farmers Producers who use consultants place less importance on the local dealer Slide31:  The Value-Bundle and Market Segments Buying Process:  Buying Process When you choose a supplier for expendable items like pesticides or feed, how is your decision influenced by the following factors? Assign a percentage value to each factor based on its importance in the decision. The percentages should add to 100. Factors Influencing Purchases of Expendable Items for Commercial Producers for Commercial Crop Producers:  Factors Influencing Purchases of Expendable Items for Commercial Producers for Commercial Crop Producers Size of Crop Operations by Segment*:  Size of Crop Operations by Segment* Mid-size Large *Does not include FNVV Value Bundle and Market Segments:  Value Bundle and Market Segments Commercial producers are diverse in their buying preferences As size increases, price segment becomes larger, service segment smaller Price focused buyers have the highest projected growth rates for corn/soybeans, different for cotton Slide36:  A Focus on Private Label/Generic Products Private Label/Generic Purchasing Plans:  Private Label/Generic Purchasing Plans Took sample and separated those who agreed with the following question: Relative to branded products, my farm will increase its use of generic (unbranded or private label) expendable items over the next five years 40% commercial crop producers agreed Relative to branded products, my farm will increase its use of generic expendable items over the next five years:  Relative to branded products, my farm will increase its use of generic expendable items over the next five years When buying expendable items, I usually purchase the lowest price products:  When buying expendable items, I usually purchase the lowest price products I am spending more time evaluating new technology for use in my farming operation than I did five years ago:  I am spending more time evaluating new technology for use in my farming operation than I did five years ago Relative to 5 years ago, I have a much more business-like relationship with suppliers:  Relative to 5 years ago, I have a much more business-like relationship with suppliers Private Label/Generic Attitudes:  Private Label/Generic Attitudes 40% anticipate more private label/generic purchases Price a bigger issue for this group Believe they are spending more time evaluating technology Have a more business-like relationship with suppliers Slide43:  Sales Issues Top 3 Characteristics of the Best Ag Salesperson for Commercial Crop Producers by Year :  Top 3 Characteristics of the Best Ag Salesperson for Commercial Crop Producers by Year Sales Issues:  Sales Issues Significant changes in characteristics participants were looking for from their sales reps from 1998 to 2003: Big increases in demand for honesty and technical knowledge Slide46:  Closing Comments Some Closing Comments…:  Some Closing Comments… Don’t forget about mid-size growers! Commercial producers do not comprise a single segment Growth in private label/generics is more than ‘price shopping’ Dealers and sales force have a major role in creating value Trust is an overriding relationship issue

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