Monsanto has scrapped its network of
direct-to-farmer representatives.
The move allows the company to cut costs, provide a more consistent
message through fewer voices, and make more use of prairie farm supply
retailers, says Monsanto’s Canadian sales manager.
“The whole thing is part of a planned evolution of our business from a
traditional ag chemical company to a seed and biotechnology trait
company,” said Calvin Sonntag.
About 10 percent of Monsanto’s workforce was cut by this move.
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Sonntag said the change to its sales structure was inspired by the
rapidly changing farm and retailer populations.
“There has been consolidation at the farmgate and tremendous
consolidation at the retail level,” said Sonntag.
“Over 40 percent of the retail locations that were there in 1999 …
aren’t there anymore.”
That year was when Monsanto introduced its network of representatives
who directly approached large farmers to promote Monsanto products.
An industry source, who asked not to be named, said Monsanto’s approach
of going directly to the biggest farmers to convince them to stick with
Monsanto glyphosate products did not necessarily work, and the company
has seen its market share of glyphosate sales erode to competitors.
With the acceptance of Roundup Ready wheat looking questionable, future
large glyphosate sales growth also looks less likely, the source said.
Sonntag acknowledged that going directly to farmers, rather than simply
selling to dealers, didn’t please all the retailers.
“We went out and talked to a lot of farmers, and we tried to get
retailers engaged, but we probably didn’t do that as early as we should
have.”
After getting some negative feedback from the 2000 growing season, the
company got retailers to relax about Monsanto’s farm business
representatives, Sonntag said. But the new structure quickly became
outdated as retailers became bigger and more capable of working with
farmers to support Monsanto’s products.
Now, instead of having local reps who talk directly to users, the
company will centralize its work and people, offering a more consistent
message and program across the country, Sonntag said.
“What’s left behind are retailers who are better positioned and better
resourced and better skilled than they ever have been to meet the needs
of their farm customers.”
Sonntag acknowledged his company’s margins have been squeezed as
competition has increased.
“We’re not the first in the industry to take steps to restructure, and
I can predict we won’t be the last.
“What we feel good about is that we’ve done that restructuring in the
context of a business model we’re pretty excited about when we look at
what’s coming in the future for Monsanto and the things we think we’re
going to be able to bear on agriculture and our ability to create value
for producers and retailers in Western Canada.”
