Jim Mann is counting on the current farm cash crunch to entice farmers into joining his new purchasing agency.
The buying agency, Farmers of North America Inc., plans to use its volume buying power to reduce the cost of farm inputs for members. It runs similar to a buying co-op. The more members the company can amass, the lower the cost to the individual farmer. The private company will generate its revenue solely by charging membership dues.
Twice a year FNA purchasing managers will receive price quotes from manufacturers and suppliers of products and services such as fuel, fertilizer, seed, pesticides, machinery, parts and insurance. The quotes will be based on projected volumes determined by requests from the FNA’s members.
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“The price will be the same for all farmers,” said Mann.
But at least one farmer believes the income crisis will prompt most farmers to pass on Mann’s new bulk buying cor-poration.
Transportation costs will differ among farmers depending on where they live and on the method of delivery they choose. There are two ways for farmers to receive inputs: through a local dealer facility or by semi-trailer load delivered to the farm.
Members do not have to buy from the agency, but once they commit to a purchase, their money will be placed in trust until the products are delivered and then it is released to the supplier.
Membership fees are assessed semi-annually at the rate of one quarter of one percent of the producer’s previous year’s gross sales, with a minimum of $50 and a maximum of $350 every six months. The FNA will rely on the honor system when it comes to determining gross sales.
Something missing
Alec Dyok attended the FNA’s Jan. 28 launch at Saskatoon’s Western Development Museum. The farmer from Quill Lake, Sask., said the FNA lacks a deferred payment feature. In the middle of a cash crunch, putting off payments is an attractive option.
Dyok said most grain companies offer some kind of deferred payment program, which saves farmers from going to the banks at a time when credit is tight.
Norm Bronseh, a farmer from Radisson, Sask., also attended the launch. He is concerned that established grain companies, which now handle farm inputs, would be reluctant to act as a delivery agents for the FNA, so many producers will be forced to have entire semi-loads of inputs delivered to their farms.
“I can’t see it’s going to help a small farmer too much unless you have enough of them together.”
Bronseh doesn’t believe the FNA is for him, but Dyok said he’ll probably take out a $100 foundation membership to see what kind of price quotes the group can offer.
For farmers skeptical about coughing up $100 to a new company they know little about, marketing manager Bryan Gibb offers this assurance:
“We’re not just going to simply grab the $100 and run.”
By taking out a membership, farmers can participate in group purchasing up to March 15, and save $150 on the March 15, semi-annual membership. The company hopes to amass 500 members during this initial membership drive.
The FNA will be selling memberships through its Saskatoon head office and via a network of member service representatives. Right now that network consists of about 12 representatives in Saskatchewan, but there are plans to hire reps in Manitoba and Alberta.
