Is ag retail the enemy?

Making sure the farmer gets the best value

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 It really depends on a few things.
 I had the pleasure of recently interviewing Andy Wuebben, partner at Vertical Exchange, on the Cash Cow Farmer podcast. The Vertical Exchange team are basically middlemen between several verticals, including farming, connecting buyers with suppliers.
 By ag retail, we’re referring to the CHS’s, the wheat growers, the giant co-ops of the world: the people who tend to cover a certain region. For instance, if you take South Dakota ag retailers, they have a home base in one town and will cover several around that with distribution, but their goal is to provide the grower with the inputs necessary to run their operation. And they usually do a great job.
 There’s my answer to our question overall: they are not the enemy. They provide a value add to the grower.
 Sometimes, though, they can be enemies to farmers. Or at least hindrances.

 In what situation would the ag retailer be the enemy?
 Innovation does not happen on a regional basis. It happens in a lab environment or with engineers at a company’s headquarters.
 So if you’re a grower buying your inputs, you’re not relying on your retailer to tell you about innovation. You have to find sources where you go out and do that yourself. That may be trade shows, conferences, etc.
 Vertical Exchange is saying, “We’ll take the top growers and connect them with the people who are innovating.”
 The ag retailer can disrupt that communication. They’re not necessarily going out there to find what the next best product for the grower is. They’re looking at their portfolio today and are not as worried about the portfolio of the future.

 The way that farmers are getting information on innovation today is at farm shows. What’s your opinion on that, since it’s all salespeople at farm shows?
 You can break farm shows into two categories:
 1) Large national shows
 2) Regional shows
 It can be difficult to get a good perspective in regional shows because you don’t typically have corporate representation. But at large national shows, you have a phenomenal representation of senior leadership.
 That is, if you can get to the shows. Some of them are in very remote locations.
 Vertical Exchange is trying to carve out a unique value proposition: those shows have to present to the larger groups, whereas Vertical Exchange tries to customize to each individual operation. That’s why they only select 25 growers from across the Upper Midwest: so the grower can get a presentation specifically tailored to his/her agricultural region.

 What’s been the feedback?
 There is a 50-75% plus success rate when it comes to a grower identifying a supplier. When it comes to the equipment category, you’ll see a 15-20% plus success rate on identifying something that can uniquely bring success to your operation.2-1_3
 It’s easy to understand why their business model works. For product engineers, it’s great to sit across the table from a business owner (which is what you are).
Growers who know how to efficiently run an operation can and should impact the development of their product solution, if that solution is going to be used by a grower. They should be doing everything they can to sit down one-on-one with business owners who can provide feedback for them about a successful platform for their product.

 I deal with this a lot with the Cash Cow’s farm management software. A lot of our competition is venture capital firms that funded a bunch of engineers in Silicon Valley to develop software for farmers. When you look at the software, you can tell these guys have never run a farm before.
 The data entry model and the way that stuff is gathered doesn’t make sense from a farmer level. So they could use a service like Vertical Exchange.
 I get it, though. It’s tough to be both efficient and personal at the same time, for a software to automatically know what’s best for a person.
 You’ve got to have a personal dialogue with people, which is why we offer personal grain marketing plans as well as software. We know that people need to trust us to believe we can improve their operation.

 For more on Vertical Exchange, you can visit their website.


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Scott Anderson

Cash Cow Farmer Founder/CEO, Scott Anderson, grew up on the family farm in Andover, South Dakota. He is a second generation farmer with a passion for farming, marketing, analytics, and software development.