"Full service" or "by the balls"

[Wigeon]

I was chatting to an interested party yesterday, who enlightened a naive yours truly of the extent to which certain large distributors / intermediaries are involved in some arable operations:

A full service package to include supply of seed and all inputs, agronomy, marketing, purchase and movement, with the "farmer" being nothing more than an applicator, who gets given one balancing cheque at the end of the year.

Is this really happening?

If so, at any scale?

Great business model for the distributor...

 

[spin cycle]

I was chatting to an interested party yesterday, who enlightened a naive yours truly of the extent to which certain large distributors / intermediaries are involved in some arable operations:

A full service package to include supply of seed and all inputs, agronomy, marketing, purchase and movement, with the "farmer" being nothing more than an applicator, who gets given one balancing cheque at the end of the year.

Is this really happening?

If so, at any scale?

Great business model for the distributor...

i don't think it's quite as one sided as you allude....lotta pressure on the merchant or they're out next year...and yes i have heard rumours about such models at large scale

 

[Hampton]

That’s the dream for the firms.
When I did it, I tried to keep away from certain areas and specialise more. I preferred to do less on more farms, than everything on a few

 

[Chae1]

I was chatting to an interested party yesterday, who enlightened a naive yours truly of the extent to which certain large distributors / intermediaries are involved in some arable operations:

A full service package to include supply of seed and all inputs, agronomy, marketing, purchase and movement, with the "farmer" being nothing more than an applicator, who gets given one balancing cheque at the end of the year.

Is this really happening?

If so, at any scale?

Great business model for the distributor...

Simple for farmer too.

They just blame somebody else when it goes wrong.

Get contractors to do rest. Happy days.

 

[farenheit]

Seems fair to me if farmers are fully aware of what they are putting themselves up for. Good for cash flow. Still an incentive to farm well. A lot of farmers who just get contract farmers in are absolving themselves of even more of actual "farming" and again , that's completely fair enough. There's still loads of things farmer able to effect including fixed costs. I'd want to be able to pick and choose what products I used but if it's simply an agreement to supply then why not.

 

[Wigeon]

Indeed, it is not without attractions from both sides.

I know little about farming over there, but my guess that market penetration to that extent has its origins in the USA.

 

[Steevo]

Don’t forget providing finance for the inputs too!

A certain large Agrii firm were keen to offer finance on inputs a while back, with input costs set against grain marketed.

 

[David.]

Is that the agricultural equivalent of spit roasting?

 

[Renaultman]

But if you buy your inputs from said big company but quietly sell or hide your grain, then disappear? It has happened.

 

[farenheit]

But if you buy your inputs from said big company but quietly sell or hide your grain, then disappear? It has happened.

You would be invoiced and then sued, just liked any other unpaid bill?

Don't over complicate things, this is just a contra.

 

[Gong Farmer]

I suppose what is described is a halfway house between a traditional distributor and the management model of Sentry, Velcourt etc, so quite feasible.

 

[Breckland Boy]

I was chatting to an interested party yesterday, who enlightened a naive yours truly of the extent to which certain large distributors / intermediaries are involved in some arable operations:

A full service package to include supply of seed and all inputs, agronomy, marketing, purchase and movement, with the "farmer" being nothing more than an applicator, who gets given one balancing cheque at the end of the year.

Is this really happening?

If so, at any scale?

Great business model for the distributor...

If a large agchem distributor/grain firm wants to put in all my seed, fert chemicals, agronomy and handle grain marketing etc and pay me a contractor rate for drilling, spraying, harvesting and hire of the land they will soon realise why I continually moan at them that the seed, fert and chemicals are too expensive and they don't pay enough for my grain.
They would become the producer (risk taker) and I, merely a middle man who gets a margin regardless of the weather or fluctuations of the grain trade.
Sounds ideal.

 

[e3120]

It may be "just a contra", but one where the other party can load up the input side to their benefit - no thanks.

The only way to restore the balance/incentive is a profit split arrangement, with inputs at cost or below. Then the farmer becomes a land/service provider, which might suit some.

 

[yellow belly]

of course the land owner could let the land and just collect the rent

or just abandon the land to nature

there are many different land management models

 

[Renaultman]

You would be invoiced and then sued, just liked any other unpaid bill?

Don't over complicate things, this is just a contra.

If you can find the person to sue though, and if you do he has to have the funds. This is something that actually happened and I have no doubts that it's not an isolated incident.

 

[Flat 10]

I was chatting to an interested party yesterday, who enlightened a naive yours truly of the extent to which certain large distributors / intermediaries are involved in some arable operations:

A full service package to include supply of seed and all inputs, agronomy, marketing, purchase and movement, with the "farmer" being nothing more than an applicator, who gets given one balancing cheque at the end of the year.

Is this really happening?

If so, at any scale?

Great business model for the distributor...

Its a choice. If people are daft enough to go down that route let them get on with it. Surely in most instances the distributor doesn't want to kill the golden goose......

 

[Steevo]

Its a choice. If people are daft enough to go down that route let them get on with it. Surely in most instances the distributor doesn't want to kill the golden goose......

Just break its legs and wings so it can't walk away even if it wanted to and keeps producing eggs year after year without a fuss.

I like to consider myself an optimist!

 

[Brisel]

I was chatting to an interested party yesterday, who enlightened a naive yours truly of the extent to which certain large distributors / intermediaries are involved in some arable operations:

A full service package to include supply of seed and all inputs, agronomy, marketing, purchase and movement, with the "farmer" being nothing more than an applicator, who gets given one balancing cheque at the end of the year.

Is this really happening?

If so, at any scale?

Great business model for the distributor...

This is more common in USA, especially for GM crops. Syngenta tried it with Colossus winter barley (seed, PGRS and fungicides in a package) but it never really got going.

Of course the providers of these packages will try and extract the maximum value from the farmer, but if you can make a margin with a more managed risk, why not consider it? Plenty of farmers doing contract finishing, bed & breakfast pigs & dairy replacements so it's hardly a new concept. You need to enter into these with eyes wide open and a well used calculator.

 

[Wigeon]

Indeed- it's an extension of the niche crop seed and buy back arrangements that exist, eg canary seed.

 

[Goffer]

Agrii been doing it for years!