Like most sales-based industries, the world of ag retail sales is all about trends. External factors influence the purchases farmers make each year – and in 2020, those external factors were more significant than ever before. The COVID-19 pandemic has thrown most industries into a sense of uncertainty, and agriculture is no exception.
At first, it may seem like farmers would be immune to the effects of a pandemic that shut down the world. And while agricultural workers were deemed “essential,” the business of farmers changed dramatically over the past year – no more trade shows and no in-person sales to restaurants or other customers.
Even as we start to see the light at the end of this pandemic tunnel, many farmers are feeling uncertain about the future – and this will inevitably change their purchasing habits. A Buying Intentions Survey from Croplife magazine says that “…while respondents planned to increase spending (between 1% and more than 11%) across ten segments of the industry in 2020, only seven segments reached this level for 2021.
Seed purchases fell during 2020 (possibly because of a decreasing need for produce from places like restaurants). According to CropLife, total seed sales dropped from $4.8 billion in 2019 to $4.7 billion in 2020 – a 2.1% decrease that could point to trouble for ag retail sales.
But don’t worry: it does appear that seed sales will rebound with the coming growing season. According to the USDA, farmers will plant more acres across most high-value crops. An increase in planting will include:
- Over 90 million acres of corn (an increase of less than 1%)
- Over 87 million acres of soybeans (a rise of 5%)
- Over 46 million acres of wheat (an increase of 5%)
With more row crops expected for 2021, ag retailers can expect their clients to increase their spending on seed sales. CropLife’s Buying Intentions Survey reports that about 59% of farmers plan to spend more on corn and soybean seeds, while 34% expect to spend more on wheat seed. Ag retailers should concentrate on the sales of these seeds if they want to increase revenue and better serve their customers during this time.
If farmers are planting more crops this year, they’re going to need more fertilizer. However, fertilizer is one product category that retail trends have impacted hugely. In 2020, ag retailers saw fertilizer sales drop by 6.6%, from $13.7 billion to $12.8 billion. That 6.6% might seem significant, but it is essential to keep in mind that 2019 was a strong sales year – and about 50% of ag retailers expected to see spending increases with the 2020 growing season.
While we now know that 2020 sales did not perform as expected, early estimates show that fertilizer sales might start to rise again with this year. Of the farmers who responded to the survey, about 63% said they planned to increase spending on dry fertilizer, 60% said they would spend more on micronutrients, and 59% planned to spend more on liquid fertilizer.
There are two categories within fertilizer: nitrogen/phosphorus stabilizers and additives/enhancers. While more than 50% of growers utilize these fertilizer types (55% use phosphorus stabilizers and 52% use additives and enhancers), survey results indicate that spending for these categories will not increase during 2021. If ag retailers want to maximize their profits this growing season, they’re better off concentrating their efforts on dry fertilizer, micronutrients, and liquid fertilizer.
There is one segment of the agriculture market that saw growth despite COVID-19: crop protection. This segment has been growing steadily for many years, and 2020 sales reached $12.2 billion – a new record high. This growth seems to be due to farmers reclaiming acreage with herbicides, fungicides, seed treatments, and other crop protection tools.
This information might make ag retailers think that all forms of crop protection are great investments for the coming season. However, grower surveys suggest that herbicides and fungicides are the top priority for farmers – and therefore, they should be a top priority for ag retailers.
60% of ag retailers anticipate increased spending in herbicides for 2021. 57% of ag retailers plan to increase spending on fungicides during this year. These figures are significantly higher than other segments within this category, including:
- Insecticides (43% expect increased spending, 47% expect spending to remain the same)
- Seed Treatments (45% increasing spending, 49% staying the same)
- Adjuvants (45% increasing spending, 47% staying the same)
Ag retailers can best serve their customers (and their businesses) by focusing on herbicides and fungicides this growing season.
An ag retailer’s first priority is to serve their clients. However, your customers may want to purchase seed, equipment, or fertilizer that isn’t in line with the current trends, and you should have the resources available to meet their needs. However, following these trends and making purchases accordingly is a great way to ensure that you can serve a wider group of farmers.
Of course, keeping track of all the trends and data isn’t always easy. This is why many agricultural professionals rely on ag retailer software to help with their sales and customer support management. With software like this, you can collect and store data, analyze purchasing trends, and get the information necessary to provide farmers with the products they need to succeed.
When you use the proper ag technology, you are increasing your value as an ag retailer – and that will build better, longer-lasting relationships with all your clients.