Internet upstarts pressure co-op prices on ag chemicals, specialty nutrients
The cost-price squeeze in commodities plus wider rural internet access have generated new competition in generic ag chemicals. No longer can a major regional co-op count on its domination of each local market with a ready stock of crop protection chemicals and specialty fertilizers.
Feb. 16, 2017 by Jerry Carlson — New on-line marketers are offering farmers a wider alternative for comparison shopping for crop protection products. Farmers Business Network got a boost today with a feature in the Wall Street Journal. We visited with an FBN staff member, Matt Dahle, who's based in Sioux Falls, South Dakota. Matt says the firm is gradually expanding its sourcing beyond herbicides, insecticides and fungicides into trace elements and some other specialty items.
"Even if a farmer doesn't order from us, the grower can use our prices to comparison shop and negotiate," Matt says.
Because Farmers Business Network relies on direct shipping of products to farmers, it isn't practical for them to inventory bulk dry fertilizers or other volume items like anhydrous or 28% liquid nitrogen. That's still the domain of co-ops and independents who can stock those commodities and provide application services. Many co-ops also guard their turf by applying only the products they sell — so if a farmer buys herbicides independently and calls the co-op for spraying, he may have to find a private custom applicator instead.
When I joined Merrill Oster to launch Professional Farmers of America in 1972, Merrill saw a similar opportunity in pooling farmers' buying power for high-value, low-volume chemicals. We saved farmers thousands of dollars the first couple of seasons, and then found that the major regional distributors could brutally fight back. Eventually, tightening margins and primitive communications of the early 1970s led Pro Farmer to stick to its knitting: Market advisory services.
Today, Farm Journal offers price-tracking of fertilizers with its "Inputs Monitor" service. Its editor is Davis Michaelsen. Davis is the son of Ron Michaelsen, who's a now-retired Pro Farmer editor and broadcaster colleague of mine. So... many of these new marketing ventures have histories of early attempts. They sometimes have to wait for the right germinating conditions.
Certainly the conditions are favorable now for farm-supply startups in the specialty nutrient and "biologicals" arena. And farmers are price-competing intently now. A savings of $5 an acre is important, compared to 2013 when net farm income was twice as high as this year's projection of $63 billion.
Also, the slowing rollout of new farm chemicals means that most of the common herbicides, fungicides and insecticides are generic commodities which farmers are already familiar with. Further, farmers have rapidly adopted their own computer-based information systems based on GPS maps and don't need to just "put on what the co-op fertilizer man says."
The really innovative products, the biologicals and enzymes and organic items, are typically sold by regional specialists. We're dazzled by the number of "Bio" firms offering yield boosters. The proliferation of these products has exceeded our ability to field-test all of them using WakeUP as a companion surfactant, penetrant and systemic carrier. (But we keep trying!).
Earlier we mentioned the Chinese-owned wholesale marketing network, Alibaba.com, as offering farmers not only a sourcing tool, but a marketing tool for their own specialty crops like popcorn or food-quality grains or non-GMO seed. Here's a link to Alibaba's "Agrochemicals" page, where you can comparison shop for an array of nutrients and other products which ranges well beyond a local co-op's inventory.