Finding value in bulk buys is what drove Jim Hedrick to start a buying group called Sagamore Ag Source. He describes it as an ag supply consortium, or group of farmers, looking for alternative options when purchasing inputs like fertilizer, chemicals, seed, equipment, tires and crop protection.
“Traditionally buying groups were assembled purchasing power and people had to commit their buying needs to the group,” Hedrick says. “In our group, they pay an annual fee, but they don’t have to buy anything.”
Hedrick says in his experience it’s not uncommon to see $30 to $40 per acre savings on chemicals, including herbicides, insecticides and fungicides. This year, fertilizer savings often average $100 to $200 per acre while seed savings fall between $50 and $75 per acre.
“In today’s world, literally, everything is negotiable,” says Hedrick. “A lot of farmers, surprisingly, still don’t realize or they just don’t feel comfortable doing it.”
A buying group provides preferential access to a collection of farmers or acres. Simplifying a big sale is often incentive enough for large companies to make some price concessions. Hedrick admits, some companies won’t deal.
“Recently a major seed company said we don’t deal with buying groups,” laughs Hedrick. “But they wanted us to let our members know they would give them a deal.”
Hedrick says anyone can set up a buying group.
Consider these questions first:
- What value will it deliver?
- Will it require buyer/acre commitments?
- What Products or Services are provided?
- How will it determine true price discovery?
