Farmers Seek Greater Purchasing Power for Costly Inputs

April 7, 2016 05:00 AM

No shiny pennies, saccharine promises, or gimmicks. U.S. farmers are searching for genuine input cost relief.

Against a backdrop of anemic commodity prices, producers are looking to cut the pain of high input costs, and the best medicine is not always local. Farmers Business Network (FBN) is allowing growers to go further up river to source ag chemicals, and the savings potential is drawing long looks.

Purchasing Power

In December 2015, FBN punched the green light on Input Procurement, enabling producers to buy certain inputs from a national supplier market, including directly from manufacturers. FBN members get access to input price transparency, an online national price sheet to check prices on a daily basis. The price sheet details the lowest prices on more than 150 different ag chemicals across the U.S. A grower points and picks from the FBN list, and goods arrive at the farm. Pared down, the system carves out substantial space for savings.

FBN also creates input analysis estimate reports. A producer lists chemicals needed and prices quoted or paid in the past; FBN crunches the numbers and finds out if the prices are market-competitive.

“It’s very easy,” says Charles Baron, vice president of product at FBN. “A grower calls or emails and tells us what they want. We’ll run a pricing analysis to identify market prices and potential savings. They can use it to work with their existing suppliers to get better prices. If they can’t get the prices they want, we can go get it and ship it to their farm or offer pick-up at the lowest price available. It’s quite a weapon for members to better manage costs.”

And what if prices go down in the interim between purchase and delivery? Members are guaranteed the lowest price available at initial purchase, but if prices drop prior to delivery, FBN honors the new low. Simply, there is a price ceiling, but no floor.

Producers are often in the dark on actual input market prices, and Input Procurement supplies traction for negotiations with dealers and retailers. A small farm in Illinois, Mississippi, or North Dakota gains instant access to national price competition.

Farmer Savings

Pat Duncanson grows corn and soybeans in Blue Earth County, Minn., and has already seen benefits from using Input Procurement. “I have used their price platform as another tool to make sure I’m an informed buyer,” he explains. FBN input price differences vary by item, says Duncanson, and the variance can be as high as several thousand dollars. The Minnesota producer needed a large quantity of a soybean premix for the 2016 season, but instead bought two generics through Input Procurement as separate products. The savings totaled $6,000, according to Duncanson, who’s also an advisor to FBN. “I want to stay local with some products for convenience and consultation, because my local retailer provides a valuable service,” he explains. “However, other chemicals are cash and carry, and I don’t need advice or fine-tuning. FBN has some really competitive pricing on those.”

Consolidation concerns weigh heavy for Ross Kuper, a corn and soybean producer in Mitchell County, Iowa. Consolidation of input manufacturers and ag retailers inevitably translates to diminished crop input sources, Kuper notes. “As an independent farmer, I lack the leverage needed to negotiate prices, especially since there are larger, but less input suppliers,” he says. “FBN pricing gains me leverage.”

Paper-thin margins are also a glaring issue for Kuper and he admits profits will be scarce in 2016. “Input Procurement can save me $24,000 in 2016, and that’s so important for my operation this year. FBN educated me on inputs that are the same chemistry as market products, but from a different company or generic source.”

Alongside Input Procurement, FBN recently expanded its Seed Finder platform with the addition of nitrogen efficiency. 

Seed Strategies

Seed Finder is loaded with seed performance profiles aggregated anonymously from member farms based on population, precipitation, planting date and many other response facets. With nitrogen efficiency, members view nitrogen analysis for every seed variety, and see how each seed responds to rotation or soil type. On a hybrid by hybrid basis, FBN shows yield by application rate of nitrogen. A member picks a particular seed and looks at nitrogen response for corn on corn; corn on soybeans; silty loam soil; fields with drainage; and a host of other variations. “Soon, FBN will be adding Seed Profitability analysis that instantly identifies each of your seeds actual price-to-yield for each field,” Baron adds.

FBN has analyzed more than 40 million acres of precision data and generated performance profiles on over 1,500 seeds. “Farmers create this data set and they can access it all – that’s the power of democratizing information. It’s all there for members at a yearly fee of $500. No acreage fees. If you share, you can access the analytics,” Baron says. “Input Procurement helps a grower out of the dark and provides a real source of savings and leverage.”

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Spell Check

Kearney, NE
4/7/2016 08:25 AM

  Machinery is an "input" too, and is an item that is vastly over priced. We have an opportunity to force the price of machinery down(despite "machinery Pete's pimping for the manufacturers). We need to simply stop buying any piece of machinery that isn't an absolute necessity-and most of them are not a necessity. We can break the manufacturers-if we try. Will we? Time will tell.


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