The 2003 National Conference for Agribusiness Serving Commercial Producers: Meeting Needs, Adding Value Center for Food and Agricultural Business Source:

The 2003 National Conference for Agribusiness

Serving Commercial Producers: Meeting Needs, Adding Value

Center for Food and Agricultural Business

Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

Successful agribusinesses recognize the importance of thoroughly understanding

their customer’s business

Staying ahead of an industry that is evolving at a breakneck pace

is no easy task


As the agricultural production landscape changes, so do the needs of the commercial producers

in that landscape.

Anticipating the needs of today’s and tomorrow’s producer

can position your firm to be thethe producer’s partners of choice.


The Commercial Producer SurveyIn January, Purdue University and its partners

began a project to:• Provide a comprehensive profile

of commercial farming operations • To better understand

the decision-making processes of commercial producers

• To assess what the findings imply for the marketing strategies

of input suppliers• Compare the results to the ’93 and ’98

Commercial Producer Survey


The Conference

Results from the 2003 Commercial Producer Survey

are the driver of this conference’s themes:


Conference Themes

Reconfiguring the Value BundleChristine Wilson and Corinne Alexander

with…• Doug Bowman- Emory University, GA• Chip Donahue – Brandt Consolidated, IL

Focus …Product, service, and information

in the value bundle and the implications for market segmentation, targeted

marketing and branding


Serving the Next LevelMichael Boehlje with…

• Ken Doyle, Farmer, IL• Scott Fullen, Farmer, TN• Ben Riensche, Farmer, IA

FocusMeeting the needs of the large producer

Conference Themes


Serving Multiple Market SegmentsJoan Fulton and Scott Downey

with …• Andrew Miller, Weaver Popcorn, IN• Jeff Simmons, Elanco, IN• Tim Kavanaugh, Federated Coops, MN

Focus …Serving the midsize, commercial, and large

producer at the same time

Conference Themes


Selling Key AccountsDave Downey with …

• Rodney Green, Ravensdown Fertiliser, Christchurch, NZ

Focus …Positioning our sales force to deliver value and create a relationship

with key commercial producers

Conference Themes


Keynote Speakers

– Steve Bishop, Procter and Gamble

Growing Profits in “Mature” Markets: Lessons from Procter and Gamble

– Doug Devries, John Deere

Adding Value for Commercial Producers: A Vision for the Future

Conference Themes


The 2003 Commercial Producer Survey

The Changing Characteristics of Commercial Producers


• Agrium Incorporated

• Dow AgroSciences

• Farm Journal

• Monsanto Company

• Pioneer Hi-Bred

Consortium Members


• 14,301 Questionnaires ……mailed January 2003

• Names from Farm Journal• Producers in states accounting for 75%

of production (by enterprise)– Corn/Soybeans, Wheat/Barley/Canola, and Cotton– Dairy, Swine, Beef– Fruits/Nuts/Vegetables/Vines

Study Design


Study Design• Targeted producers

with greater than $100,000 in sales in at least one enterprise

• Special focus on producers with greater than $500,000 in sales

in at least one enterprise


Number of Respondents by Primary Operation

Primary Operation Mid-Size Commercial

Corn/soybeans 443 356

Wheat/barley/canola 113 41

Cotton 133 129

Dairy 106 266

Swine 76 191

Beef 192 150

TOTAL 1063 1133


Commercial Corn/Soybean Producers

6%

11%

13%8%

5%12%13%

Total: 356Other States: 11%

9%

5%

4%

4%


Commercial Wheat/Barley/Canola Producers

7%

18%

7%

7%

32% 23%


2%

2%


Commercial Cotton Producers

63% 3%14%

6%6%

6%



Commercial Dairy Producers

8%

21%

8%4%

4%

4%

11%


20%

3%

2%

2%

4%


Commercial Pork Producers

6%15%

23%5%

6%6%

17%


5%

4%

4%


Commercial Beef Producers

19%

4%

7%7%

19%

10%

7%


7%

2%

4%

1%

2%

2%

4%

1%


Fruit, Nut, Vine and Vegetable Growers

15%

5%

37% 5%

8%


8%

5%4%

1% 1%

2%

1%


The Commercial Producer StudyAllan Gray

Focus …Who are the producers

and what are their plans?


Defining Enterprise Sizes

• Respondents defined as “Mid-Size” or “Commercial” based on calculated revenues– Mid-Size

• Sales in one enterprise of $100K-$499K– Commercial

• Sales in one enterprise of $500K plus 1. Commercial-T (“Typical” commercial producer)

– Majority of the Commercial segment2. Large

– Top 15% of respondents in Commercial enterprise segment


Physical Units Defining Mid-Size, Commercial, and Large Crop Enterprises

Farm Type Mid-Size Commercial Large

Corn/soybeans (acres)

300-1499 1500+ 4600+

Wheat/barley/canola(acres)

700-3499 3500+ 9000+

Cotton (acres)

200-1099 1100+ 3000+


Physical Units Defining Mid-Size, Commercial, and Large Livestock Enterprises

Farm Type Mid-Size Commercial Large

Dairy (cows milked/day)

40-199 200+ 1600+

Finished Hogs(head marketed/year)

800-3999 4000+ 25000+

Feeder Pigs (head marketed/year)

3300-16499 16500+ 100000+

Finished Cattle(head marketed/year)

150-799 800+ 3000+

Feeder/Stocker Cattle(head marketed/year)

250-1249 1250+ 20000+


Average Size of Crop Operations

Mid-Size Commercial-T Large

Corn/soybeans (acres) 771 2,378 8,270

Wheat/barley (acres) 1,624 5,535 12,250

Cotton (acres) 606 1,641 4,650


Average Size of Livestock Operations

Mid-Size Commercial-T Large

Dairy (head) 94 721 3,007

Hogs (head) 3,206 13,734 55,940

Cattle (head) 594 2,583 31,174


Characteristics


Participant Demographics I

• 97% of Commercial respondents are male

• 90% of Commercial respondents are the primary decision-maker

• 32% of Commercial respondents are college graduates

– 29% of Commercial respondents are high school graduatesSource: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

Participant Demographics II

• 33% of Commercial respondents are in 45-54 year age group

– 33% under 44 years of age– 14% under 35 years of age

• Cotton and wheat/barley producers fewer Under 35

• Swine and corn/soybean producers younger, more in Under 35


15%

37%

27%

10%

15%

20%19%

12%

32%

14%

22%

14%

21%

29%

14%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Under 35 35-44 45-54 55-64 65 plus

% o

f re

spon

den

ts

LargeCommercial-TMidsize

Respondent’s Age by Size

Significantly different at p<.05


Farm Operation

General Attitudes


General Attitude Questions

• I consider myself successful• I am very confident in my own ability• Farming is one of the best jobs on

earth• Other producers often ask my opinion

about new products• I am achieving most of my goals• I am very optimistic about the future

of farmingSource: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

1% 2%

44%

1%

11%

1% 2%

15%

41%

12%

49%

39%

1%

46%

36%

1%5%

19%

49%

27%

0%

10%

20%

30%

40%

50%

60%

70%

1: Stronglydisagree

2 3: Neither

agree nordisagree

4 5: Strongly

agree

% o

f re

spon

den

ts

Under 3535-4445.6465+

Average: (Under 35: 4.24); (35-44: 4.24); (45-64: 4.14); (65+: 3.97)

I am very confident in my own ability by Age

Significantly different at p<.05Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

17%

10%

38%

28%

14%

4%

12%

30%33%

20%

6%

10%

21%

31%

27%

10% 11%

32%

27%

19%

0%

10%

20%

30%

40%

50%

60%

70%

1: Stronglydisagree

2 3: Neither

agree nordisagree

4 5: Strongly

agree

% o

f re

spon

den

ts

Under 3535-4445-6465+

Average: (Under 35: 3.51); (35-44: 3.21); (45-64: 3.06); (65+: 3.34)

I am very optimistic about the future of farming by Age


General Attitudes

• Producers tend to be confident and feel that they are successful– High growth and Under 35 producers are more

confident, feel that they are successful, and see themselves as opinion leaders

• Commercial producers are somewhat optimistic about the future of farming

• Compared to 1993 and 1998, participants were more confident but less optimistic about the overall future of farming


Management Challenges by Primary Operation (Commercial Only)

• Profitability– 53% of cotton growers vs. only 32% of dairy

producers

• Environment– 35% of dairy producers vs. 6% of cotton

producers

• Marketing– 14% of cattle producers vs. 1% of dairy

producers

• Expansion– 15% of corn/bean growers


Growth


Growth Plans

• Understanding producers growth plans is critical in understanding the changing needs of producers

• The survey asks producers about the growth plans over the next 5

years• We compare this to 1998 and 1993 to

get a sense of how growth is changing in each enterpriseSource: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value”


Growth of Operation

• Commercial corn/soybean producers anticipate strong growth

• Commercial wheat/barley/canola producers anticipate the least growth

• Commercial dairy producers anticipate the highest growth


Expected Growth in Next 5 Years for Crop Producers**

28%

13%

17%

31%

6%

22%

35%

16%

15%

0% 20% 40% 60% 80%

Corn/ soybeans

Wheat/ barley/ canola

Cotton

Average % growth expected

LargeCommercial-T

Midsize** Does not include those exiting farming

* Significantly different at p<.05 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value”


Expected Growth in Next 5 Years for Livestock Producers**

41%

19%

10%

36%

15%

45%

1%

34%

18%

0% 10% 20% 30% 40% 50%

Dairy *

FN Hogs

FN Cattle

Average % growth expected

LargeCommercial-T

Midsize** Does not include those exiting farming

* Significantly different at p<.05 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value”


Growth Predictions by Year

19%

15%

19%

19%

27%

15%

13%

22%

30%

7%

18%

25%

0% 10% 20% 30% 40%

Corn/ soybeans *


Cotton

CROPS OVERALL

Average % growth expected in next 5 years

1993

1998

2003

* Significantly different at p<.05

NOTE: These do not include anyone who indicated they would not be farming in 5 years AND takes out all outliers with >300% growth predicted


Growth Predictions by Year for Commercial Livestock Producers

31%

51%

41%

38%

49%

29%

27%

38%

36%

18%

31%

26%

0% 10% 20% 30% 40% 50% 60%

Dairy *

Hogs *

Cattle

LIVESTOCKOVERALL *

Average % growth expected in next 5 years

1993

1998

2003

* Significantly different at p<.05

NOTE: These do not include anyone who indicated they would not be farming in 5 years AND takes out all outliers with >300% growth predicted


High Growth Producers

We took a look at the top 20% of growth in each enterprise to provide a quick view of the characteristics of high growth operators and here are some of the highlights:


High Growth in Each Commercial Segment (Top 20%)

• Most 44 and under• Most concerned about expansion and

management challenges• Most confident and optimistic


High Growth in Each Commercial Segment (Top 20%)

• Higher reliance on local sources for information

• More direct relationship with both Capital and Expendable suppliers

• More reliance on sales/tech reps for information than before


Farm Operation

Value-Enhanced/Contract Production


Value-Enhanced Production

What percentage of your gross farm sales in 2002 (and 2008) to come from value-enhanced crops and/or livestock such as organic beef, tofu soybeans, etc.?


2% 4%4%

14%

76%

6%5%10%

33%

46%

0%

25%

50%

75%

100%

None 1-25% 26-50% 51-75% 75+%

Value-enhanced crops as % of sales

% o

f cro

p r

esp

on

den

ts

20032008

Gross Farm Sales from Value-Enhanced Crops for Commercial Producers

Significantly different between Commercial and Mid-Size in 2003 at p<.05


2% 2%3%5%

88%

4%3%5%

18%

71%

0%

25%

50%

75%

100%

None 1-25% 26-50% 51-75% 75+%

Value-enhanced livestock as % of sales

% o

f livesto

ck r

esp

on

den

ts

20032008

Gross Farm Sales from Value-Enhanced Livestock for Commercial Producers

Significantly different between Commercial and Mid-Size in 2008 at p<.05


Value-Enhanced Summary

• Increase in value-enhanced products by Commercial Crop producers

• Large producers have most value-enhanced crops now

• Corn/soybeans most value-enhanced now and in 5 years

• High growth producers expect the most value-enhanced in 5 years


Contracting

On average, what percentage of your total production is produced under contract in which the buyer/contractor sets guidelines for at least one input such as genetics, pesticides, feed, equipment, etc.?


58%

28%

0%2%

9%10%

2%4%

10%

61%

27%

0%

77%

1%

11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

None 1-25% 26-50% 51-75% 76+%

% o

f re

spon

den

ts

Corn/ soybeansWheat/ barleyCotton

Percent currently produced under contract by Primary Operation


81%

11%

1%

9%10%9%

3%2%5%

41%

9%

31%

75%

2%

11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

None 1-25% 26-50% 51-75% 76+%

% o

f re

spon

den

ts

DairyHogsCattle

Percent currently produced under contract by Primary Operation


8%

29%

64%

44%

63%

11%

25%21%

36%

0%

10%

20%

30%

40%

50%

60%

70%

80%

1: Stronglydisagree/ 2:

Disagree

3: Neither agreenor disagree

4: Agree/ 5: Strongly agree

% o

f re

spon

den

ts


Average: Corn/ beans: 3.67; Wheat: 3.55; Cotton: 3.22

In the future, more agricultural products will be produced to specification under contracts with buyers by Primary Operation


11%

31%

75%

52%

58%

7%

19%

8%

40%

0%

10%

20%

30%

40%

50%

60%

70%

80%


Disagree



% o

f re

spon

den

ts

DairyHogsCattle

Average: Dairy: 3.57; Hogs: 3.88; Cattle: 3.58

In the future, more agricultural products will be produced to specification under contracts with buyers by Primary Operation


34%31%

36%

25%27%

48%

41%

37%

22%

0%

10%

20%

30%

40%

50%

60%

70%


Disagree



% o

f re

sp

on

den

ts


Average: Corn/ soybeans: 2.99; Wheat/ barley: 3.32; Cotton: 2.60

In 5 years, I anticipate producing more products under contract by Primary Operation


24%

43%

33%

21%

34%

45%

27%

38%35%

0%

10%

20%

30%

40%

50%

60%

70%


Disagree



% o

f re

sp

on

den

ts

DairyHogsCattle

Average: Dairy: 2.63; Hogs: 3.22; Cattle: 2.77

In 5 years, I anticipate producing more products under contract by Primary Operation


Contract Summary

• Younger, Larger, and High Growth producers have the most product under contract and expect to produce more under contract in 5 years

• Cotton producers have the least under contract and do not to expect more to be under contract in 5 years

• Relative to 1998 and 1993 Commercial Crop producers are less enthusiastic about the future of contract production


7%

30%

63%

12%

31%

6%

31%

63%

57%

0%

10%

20%

30%

40%

50%

60%

70%


Disagree



% o

f re

sp

on

den

ts

199319982003

Average:1993: 3.68; 1998: 3.72; 2003: 3.53

In the future, more agricultural products will be produced to specification under contracts with buyers: Commercial Crop Producers by Year


Brand Issues


19%16%

38%

43%

50%

34% 33%

26%

41%

0%

10%

20%

30%

40%

50%

60%

70%


Disagree



% o

f re

spon

den

ts



I consider myself loyal to the brands of expendable items I buy by Primary Operation

Not significantly different at p<.05Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

13%

70%

23%

65%

12%

76%

12%10%

21%

0%

10%

20%

30%

40%

50%

60%

70%

80%


Disagree



% o

f re

spon

den

ts

Corn/ soybeans

Wheat/ barley

Cotton


I consider myself loyal to the brands of capital items I buy by Primary Operation

Not significantly different at p<.05Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

Expendable Brand Loyalty for Commercial Producers

43%

50%

33%

34%

42%

32%

57%

50%

67%

66%

58%

68%

0% 20% 40% 60% 80% 100%

Corn/ soybeans


Cotton

Dairy

Hogs

Cattle

# of respondents

Brand Loyal

Others

* Not significantly different at p<.05


Expendable Brand Loyalty Demographic Differences

• No significant differences between Brand Loyal Producers and Others on any

demographic factors:– No difference in age, education, gender, farm

size, farm demographics

• But there were attitudinal differences between brand loyal producers and others.


• Less likely to buy lowest price expendables• More likely to want to buy locally• More likely to want to deal with one dealer• More likely to buy from cooperatives• More likely to see significant differences

among suppliers• More likely to agree that they rely more on

sales reps than in the past

Expendable Brand Loyal Commercial Producers:


Generics


22%

38%

21%

33%

40%

47%

6%

60%

34%

0%

10%

20%

30%

40%

50%

60%

70%


Disagree



% o

f re

spon

den

ts

Corn/ Soybeans

Wheat/ Barley

Cotton

Average: Corn/ Soybeans: 3.28; Wheat: 3.10; Cotton: 3.79

Relative to branded products, my farm will increase its use of generic expendable items over the next five years by Primary Operation


Generic Products

• 31% Commercial producers will increase the use of generic expendables

– Cotton most agreement – Wheat/barley least agreement

• 34% Commercial producers believe that generics represent a good trade off

• Livestock and FNVV are less likely to increase their use of generics than other

crop producersSource: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

More to Come…

• More of the key results will be highlighted in each of the conference sessions

• Tomorrow we will explore some of the key attitudes of producers in terms of the Internet, media sources, and

consultants• In December we will release a report

covering the issues in this 2 day conference plus some more details on the survey we can’t cover here.


The 2003 National Conference for Agribusiness Serving Commercial Producers: Meeting Needs, Adding Value Center for Food and Agricultural Business Source:

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