With two ongoing studies, Stratus Ag Research has studied retailer and grower perceptions of grower programs since 2020.
Mike Weddel, president and founder of Stratus Ag Research joined The Scoop podcast to discuss the latest findings by his firm on these programs.
As Weddel explains, after the introduction of the Bayer and Corteva programs there was a lot of chatter of how the loyalty/bundling programs would influence purchase behavior.
“Every year since 2020 we have done projects that include questions about grower programs—both ag retail facing and grower facing,” he says.
Overall, both groups are more positive than they once were, and Weddel explains why.
“What we’ve seen over the last four years is that retailers are becoming more positive about grower programs. We look back to 2020 when we first started to measure their attitudes about programs, and 50% of retail respondents were very negative about the effect the programs might have on their business, and only about a quarter saw this as a positive thing four years ago,” Weddel says. “Today, that’s completely flipped around. So now 50% of retailers are positive about grower programs and the impact on their business. Less than 20% see them as a negative.”
Weddel looks back at three early concerns around the programs from the retail perspective.
1. The first is if they would erode the relationship with farmer customers.
“That concern now is way down,” he says “That concern is almost gone away.”
But he adds it’s important to continue to improve the overall process and administration work.
“One of the things I think that is essential for manufacturers to do is find ways to reward retailers for their support of the programs that they’re implementing,” he says. “It’s a key thing for success, because they rely to a large extent on retailers to carry that message for them to the final customer.”
2. The second concern was if the programs would influence a program decision not agronomically advisable.
“Retailers were concerned customers would make bad decisions with products because they qualified for some attractive rebate,” he says. “What we’ve actually seen is that concern has gone away as well.”
3. The third concern voiced strongest by retailers early on was the time and resources needed to dedicate toward administering these programs.
“This is still a concern—it has not gone away,” he says. “It has declined slightly. I don’t know exactly what they did, but the manufacturers worked hard to streamline processes and make it easier for retailers to administer. Secondly, over the last few years the retailers have learned about the program—they know how they work, and they are more familiar with them.”
He adds some retailers report anecdotally how they’d been able to take the programs into their approach to selling.
The programs have incentivized more products to be bought from the manufacturer portfolio. For farmers who participate in the grower program, on average they buy 3.2 products, whereas nonparticipants buy 2.2 on average.
“It may not seem like a lot–one extra product–but it adds up to a lot of extra business,” he says. “If they can get even their own customers to participate, it makes this a big difference.”
With 1,100 ag retail professionals responding, and when results are sorted by type of business, co-ops are the most positive on attitudes toward grower programs. When sorted by service level, “high service” retailers are most positive. Younger respondents and people with sales positions are also the most positive toward grower programs.
Focusing on farmer adoption of the grower programs, Weddel says their research shows larger-scale farms and early adopter profiles are more likely to use grower programs.
And from the supplier side, he thinks with more active ingredients coming off patent, these programs will continue to be invested in.
“There are lots of generic products are out there today, and I understand that in the next three or four years, there’s going to be many active ingredients that are going to be off patent. What we’ll see is the original brand manufacturers are going to use grower programs in an effort to try to retain customers for their original brands,” he says. “So I think grower programs are going to be here to stay.”
The goal of Stratus Ag Research is two-fold: to give farmers and ag retailers a voice to be heard and deliver clients the real story so they can make informed decisions.
You can download the full “The Evoluation of Grower Programs In the U.S.A” report here.
