A month has passed since Nufarm announced it was eliminating all grower rebate programs on its herbicide products, effective this spring.
The move is in response to producer complaints over the years that the chemical industry has too many programs that are complicated and time-consuming and compel farmers to make wrong agronomic decisions in order to take advantage of the programs.
Under Nufarm’s simplified marketing system, there is no longer a minimum purchase or bundling based on package discounts. Paperwork and rebates are a thing of the past and prices have been lowered to reflect the changes.
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The company says it surveyed 400 prairie farmers before making the decision. The sampling included its own clients as well as producers that didn’t buy Nufarm products.
“Farmers are overwhelmingly opposed to rebates, bundling and all the associated programs,” said Nufarm commercial manager Darryl Matthews in Calgary.
“They just want the best possible price right off the bat without all the complexities. Especially going into this crop year, they are frustrated with the grower programs. With commodity prices such a challenge, they want the freedom and the ability to save a few dollars on chemicals by selecting only what they need, without being tied to a package or a rebate program.”
Will farmers see a price difference?
“Our price at this point is very competitive versus every other product out there that has a grower rebate program,” Matthews said.
“Take the grower rebate of any competing product and factor it into the net price. Our net price on the Nufarm product will be equivalent or lower. The producer gets the discount on the price immediately when he buys the chemical. No paperwork. No waiting. Our prices overall are now lower.”
The NuFarm announcement is good news to Ray Lawson. The producer from Miami, Man., farms 1,800 acres with a wide variety of crops in his rotation.
He said rebate programs are designed to give a break to large acre farms that have fewer crops in their rotation.
Smaller farms and those that have a longer rotation end up paying full price for chemicals so the other farms get the financial benefit, he added.
In effect, small farms subsidize large farms.
“I have never liked rebates,” Lawson said.
“We’re in an area where we’re fairly diversified, so we barely meet the requirements to get a rebate. In any given year, we don’t have a large number of acres in one single crop. We almost always end up paying the full price for chemicals.”
He also said rebate programs negatively influence agronomic decisions.
“We’ve occasionally been in situations where we’ve needed enough product to qualify for a program, so we actually bought from one company rather than the other because of the rebate. It maybe wasn’t a wrong decision, but at the same time it maybe wasn’t the best decision from an agronomic point of view.
“When you’re looking at two different products and you know one of them has a financial incentive, it taints your decision. You try not to let it influence you, and you know it shouldn’t make a difference, but money talks.”
Lawson said he has learned to ignore rebate programs on most crop protection products. Instead, he buys on the basis of the lowest shelf price and what product is best suited for the situation. The move toward eliminating these programs is a step in the right direction, he added.
Ron Hunter of Vulcan, Alta., doesn’t mince words when explaining why the elimination of grower rebates is long overdue.
“I’ve always said just give us the discount in the purchase price and to hell with all the forms and hoops they make us jump through. Compete on the basis of the best price up front.”
Jeff Darach of Claresholm, Alta., agreed.
“Chemicals are a huge expense for farmers these days so I have to buy the chemical that is best suited for each field; otherwise it’s a waste of my money. I have to buy products to fit the needs on my farm.”
Dale Bindig said he and brother Shayne use the programs, but they don’t like them.
“The chemical companies give you no choice, really,” said the farmer from Kuroki, Sask.
“They have incentives like buying two or three of their products gives you four percent off or buying seven products gives you eight percent off.
“It’s good for the chemical company, but it’s not always good for the farm. You have to look at the programs because it can amount to a lot of money in a year. We sometimes get in the area of 50 cents an acre across the whole farm.”
He said an immediate reduction in price at the time of purchase is always better than a rebate cheque.
“Some of our rebates from last year still haven’t come through yet. We still haven’t been paid.”
Bindig said that while they use rebate programs where they fit, he and his brother do not tie themselves to one program or one company. In any given year they deal with three or four companies and over a period of time they deal with all the herbicide companies.
“I really can’t stand those stupid rebates. For years now, I’ve been telling every chemical rep I meet from every company that farmers do not want rebate programs. Just the lowest price when we buy,” Bindig said.
The cash strapped farm economy is the most important consideration right now, said Rene Jalbert of Perdue, Sask.
He sprays his 2,500 acre farm two or three times a year, as well as another 10,000 to 15,000 acres of custom spraying.
“Everybody’s short of cash nowadays,” Jalbert said. “We need the discount up front. We don’t need rebate cheques coming in the mail later.
“Most of my customers are smaller farmers. The biggest complaint I hear all the time is about the rebate programs. These guys spray 100 percent of the product they need on their farm, but they still haven’t bought enough to qualify for a rebate. It’s not a fair system.
“If Nufarm or any other company is going to do away with rebates, that’s good, as long as there’s an upfront discount and there’s no volume involved. They’ve got to be price competitive up front.”
