There is no doubt that the past year has been one of challenging times for all businesses and your feed and grain business is no exception. You may be tempted to move into “survival mode” in times like this, but now is the very time to be proactive, adapt your business to the needs of your customers before your competitors do, and ultimately you will be more profitable. Your customers’ needs and desires are changing and an excellent strategy is to actively explore these. In this column, we will provide you with some key results from the 2008 Large Commercial Producer survey that was conducted by the Center for Food and Agricultural Business at Purdue University. This survey, originally undertaken in 1993, has been completed every five years to gain insight about the attitudes and buying behaviors of large producers. A unique aspect of the 2008 survey is that specific information on feed, seed and crop protection was collected and is reported in this article, compared to previous services where expendables were considered as one group.
The information that we report here is targeted to the feed and grain sector, but is really just the “tip of the iceberg.” More than 2,300 producers in the corn/soybean, wheat/barley/canola, cotton, swine, dairy, beef and fruit/nut/vine/vegetable segments were surveyed in early 2008. These respondents were further categorized with more than 1,400 producers with annual sales greater than $500,000 and more than 900 producers with annual sales between $100,000 and $499,999. These producers were selected from key states accounting for 75% of total U.S. production for each of the seven enterprises represented. A full report of this survey can be found at https://www.agecon.purdue.edu/cab/programs/lcp/National_Conference_Themes_2008lowres.pdf
In the following sections, we present key results from questions that we asked the commercial producers regarding the factors they consider when making purchase decisions, how they perceive differences across suppliers and brands, their important sources of information, and their risk management strategies. We conclude with some discussion of implications for management.
In the survey we asked producers to respond to the question: “When you choose a supplier for the product categories of seed, crop protection and feed, how is your decision influenced by the following factors?” Each respondent was asked to assign a percentage to the five factors of Convenience/Location, Customer Service/Information, Price, Product Performance, and Support Service, so that the total added to 100%. The average percentage for each group is reported in Table 1.
|Table 1: Factors influencing the purchase decision for expendables of seed, crop protection and feed||Seed||Crop protection||Feed|
|Customer Service/Information (responsiveness, follow-up, advice, etc.)||18.75%||18.84%||19.89%|
|Product Performance (yield, durability, rate of gain, etc.)||26.79%||26.4%||15.92%|
|Support Service (delivery, repair, application, etc.)||11.67%||11.95%||12.91%|
The results suggest that commercial producers have different preferences depending on the product category in question. When purchasing seed and crop protection supplies, commercial producers place the greatest weight on product performance (almost 27%) and the least weight on support service (almost 12%). For feed purchases, convenience/location is the most important factor with an average weighting of almost 30%. This suggests that producers — when purchasing feed — are looking to buy local for the convenience, and perhaps also due to the bulky nature of feed. Respondents also rated price as very important, with price being the second most important factor for feed and crop protection purchases and a close third most important factor for seed purchases.