Amherst WI | welfarehill - 6/27/2023 17:10
This may be biased as I've sat on both sides of the table. Retail manager/board advisor and producer/customer. #1 all day long. Efficiency and buying power drive the market in most areas in "normal" production ag. As a manager, I didn't have the personal responsibility but all agronomy products (Fert, seed, crop protection). I could go on and on about the inefficiencies and difficulties in true price discovery dealing with coop suppliers and very much biased local boards.
Here the coops were made on the backs of livestock producers. Dairy especially. As land consolidation occurs the livestock guys want there equity payed out how it was sold to them 40 years ago. But the rules have changed because if the terms were followed many of the local coops would be insolvent and without any equity to operate and expand.
As a customer I will buy from whomever has the best price for what I need. For me there is almost zero "value" in whatever commodity I need. If a coop has a better buy on "X" products, the patronage is just an extra. It's not something of value to me because I may not ever see the big dividend.
The only reason I've seen to do business with a coop #2 location is better application, especially row-crop spraying. I'll gladly pay for an applicator. There's alot of "drivers" for the big coops. Many times its a revolving door for employees in coop #1 operations.
That buying power seems to be gone now with the internet. I can get Glufosinate shipped in here for 1/3 or what the local retailer wants for it yet and I can sit in my underpants and order fertilizer off an app the often beats local bids as well, if I want to ship direct to the ethanol plant for $.50 more than the local elevator, I can do that too. Maybe they bought it as cheap as I am but all those people, equipment and facilities need to be paid for by people who don't even use them apparently.
Going forward I see two types of customers in Ag retail
#1 the busy guy. He's too busy do his own application so he hires it done. Might work in town, might have livestock and not enough time, might farm too many acres to do it all in house, might sit on Agtalk all day but whatever it is can't find the time to do it themselves.
#2 The small operator. Doesn't want to own a sprayer/spreader for a few acres and it's just easier to pick up the phone and have it done
I've been on both sides of the table too, but these margins I have seen to have it custom applied are what the farmer could expect to make a few years ago, it's just nuts.
Also, I want to add what I see with COOP boards. If the board looks like they could all be actors of a Viagra commercial the board will most likely not have the best foreword looking vision. Not saying some age is bad because it isn't but if the whole board is that way, it's not good. Have the board have people in their late 20's to 65 and you'll see better long-term decisions.
Edited by hinfarm 6/28/2023 09:01
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Just some thoughs on COOP's
