Prairie farmers prefer to buy their inputs from co-operatives and independent retailers rather than large grain companies, according to a new survey.
Winnipeg marketing consulting firm Blacksheep Strategy Inc. polled more than 1,000 farmers and found an affinity for supporting locally owned and operated retailers when buying seed, fertilizer and pesticides.
Three-quarters of those surveyed said that was a factor that made them much more or somewhat more likely to do business with a company.
“The study suggests there might be an increase in market share amongst the co-ops, independents and inland terminals this coming year and a decrease in market share amongst the large line companies,” said Blacksheep business strategy manager Russell Jeffrey.
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He said it’s no fluke that a company like Federated Co-operatives Ltd. recently posted its 12th consecutive year of record earnings, which was attributed in part to rising input sales.
Performances like that have large grain companies looking in the rearview mirror, he added.
“The co-ops and independents are causing them a lot of grief,” said Jeffrey, who worked for United Grain Growers and Agricore United for 17 years.
“They’re feeling that right now. This research really corroborates that.”
AU spokesperson Radean Carter denied grain companies are losing ground to other input suppliers.
She said company officials expected such a loss when Agricore and UGG merged in 2001, but it hasn’t happened.
“Our market share has been consistent.”
She said the company’s own market research shows farmers are content to deal with grain companies like AU.
“The number one concern that we have found among farmers is what kind of service they get, what kind of knowledge they can rely on. And that’s what we provide,” Carter said.
Jeffrey agreed that large companies excel at offering crop input advice and that 60 percent of farmers say product knowledge makes them more likely to do business with a retailer.
Farmer control is the next strongest motivator, which may be why producers are “feeling less positive” toward traditional input providers.
Jeffrey said that in the open-ended part of the survey, growers used phrases such as, “Having my interest at heart,” and “Part of my community,” and “I know the guy who runs the thing,” to describe their allegiance to co-ops and independent retailers.
Carter said the same phrases can be used to describe grain company outlets because the people who staff and manage the stores and elevators also live in those communities.
“Our front-line staff in many ways have the same characteristics as an independent,” she said, adding that AU is member based and gives farmers the opportunity to be involved in company governance.
“Agricore United isn’t just a big monolithic company. We’re a company of people and our people are focused on their customers.”
The survey also found that despite the trend toward consolidation, farmers still have multiple options when buying crop inputs.
Less than 20 percent have to rely on one retailer, while almost half of those surveyed could shop among three or more suppliers.
“I think maybe the options are as good or better than they were,” Jeffrey said.
