After a record U.S. harvest and a period of relative calm, corn prices may drop steeply in 2015 … meaning, things are about to “get real.” Are your growers ready? Are you ready? Daren Coppock, president and CEO of Ag Retailers Association, weighs in on the reality check we're facing in the ag marketplace.
By Nancy Appelquist, Director of Operations, Entira
Our cyclical agriculture market is stirring things up in the marketplace, spawning movement and consolidation at a greater pace than previous years. In true see-saw fashion, what has gone up—and been up for a while—is bound to come down.
At the 2014 AgGateway Annual Conference in November, I had the privilege of talking with Ag Retailers Association President and CEO Daren Coppock, who was a keynote speaker for the meeting. I got his insightful perspective about what’s on the horizon for the ag industry, and how retailers can step up their game to provide the most value to growers. We talked about the changes in the marketplace that are creating an uptick in forces like consolidation, and delved into the vastness and complexity of technology. This all points to one great need for growers: To have a trusted advisor at their fingertips to help them navigate today’s complex environment.
“Consolidation has been going on at every level—suppliers, retailers, farmers. New data shows fewer farmers and bigger farmers, really hollowing out the midsized,” Coppock says. The 2012 Census of Agriculture released earlier this year shows the total number of farms is down 4.3 percent from the 2007 census, but the average farm size is up 3.8 percent. Meanwhile, mid-sized farms declined.
“We’re seeing a lot more consolidation now because of corn price drops,” Coppock says. “When corn was $8, you could almost go on auto pilot and make money, and it wasn’t generally hard. Now it’s going to be a challenge, which is going to put more pressure on the farm, retail and supplier level. I think it’s actually going to increase consolidation from where we were over the last three years.”
Another interesting point is that the average age of farmers is higher than ever. According to the 2012 Census of Agriculture, the average age of principal farm operators was 58.3 years. Will this change if conditions become less than ideal in the years ahead?
“There were many farmers who may have been about ready to retire, but decided to stick it out. When conditions are right, life is good and it’s fun, so you don’t want to give it up. But it might not be as much fun now, so we may see many who were on the cusp of retiring, decide ‘ok, now’s the time to retire or sell the business or pass it on to the next generation in the family.’”
And as the reins are passed on, an entirely new dynamic is created on the farm. As an industry, how should we prepare?
“The next generation tends to view the farm more as a business—much more so than their ancestors did—and have less of an emotional attachment to that piece of ground,” Coppock says. “The emotional attachment may still be there, of course, but they tend to make decisions more from a business and a return on investment standpoint. People who are good at that will do well.”
This is one place where retailers can jump in and help their farmer-customers step up their game.
The younger generation certainly is more comfortable with all the technology at their disposal. Every sector has a piece of the data and technology puzzle--manufactures, retailers, software companies, you name it. Everybody has promising tools to offer. Coppock says the most valuable thing retailers can do is help growers get a handle on data to make beneficial decisions for their operations.
“Fundamentally, what the retailer has to do is take the data that comes from the planter, the combine, the applicator, the satellite, the soil map…and all of these various sources, then put it all together into something that makes sense,” he says.
“That’s where retailers can bring the most value – making sense of the data so their clients don’t have to wade through the apps and the layers of data. Otherwise you just have a bunch of colorful maps sitting in a pile, and that’s not doing anyone any good. “
At the end of the day, if you’re able to decipher how it all fits together and synthesize it into something meaningful, you’ll be invaluable to your growers. Weed control, irrigation, and nutrient management are all areas where retailers can play this advisory role.
In an industry that’s highly regulated and very vulnerable to what’s going on in Washington, D.C., one certainty is that those who step up will be the ones taking ownership and influencing the next round of regulations and policies.
“The message from recent elections is that the world is run by those who show up,” Coppock says. “This will continue to be true in the regulatory environment over the next several years. Our message for retailers is this: It’s important to be engaged in it, not just ride it out and think it’s going to go away. We will never be less regulated than we are today. The trend is only going in one direction.”
Growers need guidance through the turbulent times we’re in today. Just as retailers help growers step up their operations, if your goal is to step up and strengthen your advisory role with your customers, we can help get you there. We can help you establish your goals and the options for reaching them. That’s our forte—we look at both sides of the equation to bring you a realistic and comprehensive view of your business. As an unbiased, outside perspective, we can make practical recommendations based on existing facts, market conditions, and perceptions. Contact us if you’d like to learn more, or email me directly at email@example.com.
Watch for part two of my interview with Daren Coppock, coming in January!