Purchasing Power

As seed and chemical companies jockey for the farmer’s dollar, tight margins have left some price shopping for better deals.

“I buy more than half of my herbicides and fungicides online,” says Greg Close, a corn and soybean farmer near Reynolds, Ill. He started shopping online 18 years ago because it offers advantages retailers couldn’t.

As farms change hands, rural internet access improves and reliable online options increase, virtual shopping for inputs is expected to continue to grow.
FarmTrade, Farmer’s Business Network (FBN), Agroy Farmers Buying Group Inc., CommoditAg and AgVend sell inputs online. Before changing your shopping habits know what to expect and any limitations.

Founded in 1998, FarmTrade is one of the oldest e-commerce options on the market. It was founded as XSAg but changed its name in 2012 when it came under new ownership. The company only deals in ag chemicals.

“We’re a trading floor for chemicals,” says Jeff Stow, president of FarmTrade. “Most of our buyers are farmers, about 70%, and the other buying is from retail or distributors.”

Farmers who join the site go to the online trading floor and place a bid for whatever chemical they’re looking for, and the member retailer or distributor then responds by accepting or countering the offer. The buyer’s payment is sent via wire service, Automated Clearing House (ACH) or credit card. The delivery fee is included in the bid price.

There are hundreds of sellers registered on the website; about 40 sell often and 10 complete the majority of the sales. There are more than 100,000 farmers and other buyers registered on the site, with approximately 20,000 active users.

Three-year-old FBN provides a variety of inputs and services. Its e-commerce platform, FBN Direct, allows its members to shop for the best price for inputs such as chemicals, fertilizers and seed and in some areas, services such as spraying.

“There is a lot of value in not feeling pressured by a salesperson and not being forced to purchase certain brands or bundles,” says Charles Baron, co-founder of FBN.

To use FBN Direct, farmers pay $600 for an annual membership, which gives them access to local pricing comparisons, benchmarking and input services. FBN offers financing options, or farmers can pay with cash or ACH.  

Farmers can pick up product if they need it sooner than the one- to four-day delivery window FBN provides.

“Last year, we did over 2,300 deliveries,” Baron says. “I had one farmer tell me, if I can save $20,000 while sitting on the couch, why wouldn’t I?”

Agroy Inc. provides wholesale agriculture products with no online membership fee. The company started two years ago and now hosts about 1,000 farmers.

“This past fall, we represented 250,000 acres and in just three months we’re up to 8 million,” says Brad McDonald, Agroy Inc., co-founder.

Retailers and other suppliers market products for free on the website, featuring pricing options with and without shipping. Farmers won’t find every ag product online yet, but the company sells an assortment of chemicals, fertilizers, animal feed products and even machinery.

“We almost act as a third-party seller like Amazon and try to work within the current retail system,” McDonald says.

Farmers join the site by creating a free account. From there, they can view products available in their area. As more products become available, farmers receive email updates and alerts for deals and flash sales.

CommoditAg sells chemicals, adjuvants and fertilizers. The company is backed by Illinois-based The Equity with key partners in Sunrise Cooperative and Landmark Services Cooperative. CommoditAg is adding other ag retailers to their network.

“CommoditAg has been around for about 14 months and online for three months,” says Ryan Wermert, chief strategy officer for CommoditAg. “Most retail partners have been in business for more than 50 years and some over 100 years.”

Retail partners list products for sale, including prices, but exclude services such as returns, resprays, etc. Farmers peruse the site, and find and compare products available in their area. The company allows e-check or credit cards for payment.

“We give growers choices for what product and services they want and deliver the products to them,” Wermert says.

AgVend partners with retailers to offers products online. The company currently operates in the Pacific Northwest and is expanding to the Midwest in March and plans to be nationwide by harvest 2018.

AgVend offers crop protection and fertilizer products. Retailer partners remain anonymous while farmers compare prices and shop. Product can be delivered or picked up.

“Buying through us you strip off the service fees, and if there are listings that include service fees they’re stated,” Reichert says. “For the customer, farmers, it makes sense to have the convenience of online shopping and allow them to complete their transactions wherever they want.”

AgVend accepts ACH or credit cards for purchases, but is actively looking to add financing partners in the next few months.

Do your research on online suppliers before buying. While convenience is a big factor, make sure your farm is equipped for this method of buying and the possibility of services being impacted.

“I don’t require many services, agronomic or otherwise,” Close says of his 3,000-acre Illinois farm. “That’s what makes this program work. If you need service or credit this probably won’t work for you.”

Is Online Shopping a Good Fit For You?

On his Illinois farm, e-commerce veteran Greg Close is careful to make sure he gets what his crops need, which means he’s not a 100% online or 100% retail shopper. Consider the following points about online input shopping according to Close and other experts:

• Do your research on the company. “You want to make sure it’s someone you can trust. Sometimes you’re sending a lot of money to people you’ve never met,” Close says.
• Understand what services you might be giving up. Close doesn’t have an option to return excess product and has limitations on how quickly he gets products in season.
• Plan ahead. Because you’re relying on delivery that can take days, make sure you order far enough in advance. Close recommends buying a week before the product is needed, but he has received an order in under two days.
• You’ll likely need to have a sprayer. Many online options don’t offer services.
• Research the products. Because you don’t have a retailer to help you, it’s important to thoroughly understand product restrictions before buying.
• If buying a restricted-use product, you’ll have to prove certification before completing transaction.
• Many online suppliers require a bank transfer or credit card payment at the time of purchase instead of providing financing options.
• Don’t be afraid to ask your retailer to price match. In some cases, you might find their prices are better or they provide additional services that make up the difference in price.