Growing sales with seed

Watonwan Farm Service (WFS), Truman, MN, has realized 325% growth in its seed corn business in the last two years. Henry Farmers Co-op, Paris, TN, has doubled its seed business over the last three to four years. Ag Resources, Turbotville, PA, also has enjoyed significant seed sales growth. All three of these retailers have sold seed for some time, but they recently have seen greatly improved sales by focusing on seed and adding value through such services as proper seed placement, seed treatments and bulk handling.

Shane Freese, Croplan Genetics district sales manager and seed division manager for WFS, attributes WFS's seed business growth to product performance, the support of management and sales staff, and a strong philosophy of proper seed placement. WFS uses its internal site-specific program to derive the soil information used to place seed correctly.

“We study genetic backgrounds and soil maps, and spend a lot of time with our producers to place the type of seed that will work best in their fields,” Freese says.

The cooperative has an extensive research plot program. At five locations, with corn and soybean plots at each, it evaluates all of the genetic backgrounds plus competitive products. Some locations have as many as 130 entries.

“We use these plots to compare yields and to study how hybrids react to different soil environments,” Freese explains. “Again, the focus is on placement, and we share this information with our producers.” Each August, the cooperative hosts plot days, turning them into an agronomic information experience, Freese says.

WFS sells Croplan Genetics, NK and Monsanto branded corn and soybean seed. WFS also sells Croplan Genetics alfalfa seed varieties. The brands offer WFS's members a broad portfolio from which to choose, Freese says, adding that NK generally offers strength in the cooler seasons, whereas the Monsanto-branded seed is generally stronger in the heat-driven seasons. Croplan Genetics has shown strong, consistent performance in both cool and heat-driven seasons due to its diverse genetic lineup.

WFS is a $270 million farmers' cooperative serving members in eight southern Minnesota counties. In addition to seed, it offers agronomic services, feed, petroleum, financing, lumber and grain. The area's main crops are corn, soybeans and canning crops (sweet corn and peas).

WFS has sold seed since it was established in 1937. But the real push began in 1999 when the cooperative decided it needed to provide another value-added service to combat declining margins in the crop protection product business.

“We feel seed is a real value we can offer. We're passionate about saving customers time and/or adding to their bottom line,” Freese says. The cooperative has directions and goals for the seed business and a strong, supportive sales team. WFS has invested in people with a solid knowledge of seed. Freese is responsible for half the sales locations, and Vern Quade has the other half. Before joining WFS, Freese was a crop consultant and then an APS with Cenex Land O'Lakes. Quade had previously worked for NK.

In addition to offering diverse genetics, WFS offers seed-treating services. It has invested in two commercial seed treaters, applying ApronMaxx RTA to soybean seed.

The cooperative also has invested in a TruPlant calibration system. According to WFS, the TruPlant system is part of a systems approach to improving producer profit from cropping programs. TruPlant is a test stand on which John Deere and Kinze seed units are mounted. Seed will run through the units to determine the best settings (tension for finger units and vacuum for air units) and planting ground speed to maximize seed and planter investment. “We see excellent, uniform stands from it,” Freese says, noting that WFS follows up by doing stand and deviation counts. “We do a lot of field scouting all season long.”

Henry Farmers Co-op also has strengthened its seed business by offering a weed-scouting program. According to Rodney Gallimore, general manager, customers who used the scouting service last year averaged a 10- to 12-bu./acre yield advantage. The co-op scouted 10,000 to 12,000 acres for stinkbug and disease control, using Quadris and Karate on soybeans.

Seed has been critical in tying the entire agronomic package together, Gallimore says. The cooperative also offers agronomic services, fuel, feed, farm hardware and tires. Three locations serve customers in Henry County in northwestern Tennessee and part of Calloway County in neighboring Kentucky. If the cooperative can get on a farm with one product, it is easier to pick up business in other product categories as well, Gallimore says, adding that seed has allowed the cooperative to do just that. Seed sales represent 30% of the co-op's agronomy sales.

The co-op has sold seed since it was established in 1949, but sales dramatically increased after the introduction of Roundup Ready soybeans a few years ago. Before that, many farmers saved their seed, Gallimore says. Today, 92% of the co-op's soybean seed business is in Roundup Ready soybeans.

Soybeans, corn and wheat are the primary crops grown in the area. Henry Farmers Co-op sells primarily Pioneer brand seed, but also Asgrow, DeKalb and FFR seed. “Pioneer is a proven performer in our area year in and year out,” Gallimore says. He emphasizes that the key to selling seed is offering varieties that perform consistently well. “As long as you make recommendations that work, customers develop trust in you,” he says.

The Tennessee retailer also attributes recent growth in seed sales to aggressively pursuing and serving the business. To help it do this, it has six CCAs on staff.

Like WFS, Henry Farmers Co-op has grown its seed business by offering the convenience of commercial seed-treating services and bulk seed. About 35% of its soybean seed business is treated with ApronMaxx. It also treats wheat seed with Dividend. Next year it will offer Cruiser-treated seed corn. “Customers have responded well to seed treatments, and we've seen some definite yield differences between treated and untreated seed,” Gallimore says, noting that treated soybean seed has been yielding an extra 6 to 7 bu./acre. The Tennessee co-op also recently added two Friesen bulk seed bins and offers bulk boxes and seed tenders to customers.

Ag Resources, an independent ag retailer in central Pennsylvania, began offering bulk seed two years ago. “It has given us a competitive advantage in the marketplace,” says Shawn Miller, the company's business manager. “We also offer delivery of bulk seed in a bulk seed tender giving additional value to our growers.”

The company is in its 15th year of business. It has sold seed for about 10 years and has seen significant growth in the last several years due in part to a focus on seed. “We concentrate on communicating with growers throughout the growing season,” Miller says. “Selling seed is more than a once-a-year sale because it is built upon a relationship. In the fall we have on-farm visits and provide incentives for early ordering.”

Ag Resources serves a six-county area from three locations, offering NK-brand corn, soybean and alfalfa seed. “NK genetics consistently give excellent yields, and we have great support from the company,” Miller says.

Selling seed has been a good way to grow the business and round out services to area growers, Miller says. He points out that selling seed begins the contact with growers for the upcoming growing season.

He also attributes seed sales growth to the company's testing program. “We've been doing a test plot for 10 years where we test different seed varieties and chemical and fertilizer programs,” he says. “The test plot is local research for our growers. We also deliver seed early in the year so growers have immediate access to seed when planting time comes.”

As retailers well know, selling seed is not without its challenges. Miller thinks the most significant challenge is the many grower visits required to manage a sale. “Numerous sales calls, delivery, potential exchanges or returns and in-field follow-up all add up to a large investment of time,” he says. “Relational selling can shorten this cycle, but it still is time consuming.”

These retailers agree that inventory management is one of the greatest challenges. “Managing inventory through challenging spring weather can be demanding. We plan to stock heavy and always follow through on the sale, building that relationship from one year to the next,” Miller says.

“Inventory is a necessary evil,” Gallimore says. His co-op has had to add warehouse space in the last couple of years, but bulk seed has helped take up less warehouse space. “And if you get varieties that perform and promote them well, you can turn them,” he adds.

Judging by the increased seed sales these retailers have enjoyed, it appears they are indeed turning inventory and, most importantly, a profit.

Internet tool enhances retailer's efficiency
Bulk seed tenders and commercial seed treaters are some of the tools retailers are using today to build their seed businesses. Another tool that retailer Dean Oberle, Cargill Ag Horizons, Holdrege, NE, uses is DealerNET, developed by NC+ Hybrids, Lincoln, NE.

With DealerNET, dealers can handle order entry and many other functions online. “We can use it to price out seed, print an invoice for the customer and get product information,” Oberle says. The online program has improved efficiencies in recording and reporting transactional data, which is especially important for some of the new genetically modified products, he says.

“DealerNET allows us to build a database under the customer's name and early order his seed,” Oberle says. “Once his seed has been delivered and the planting season is finished, we go into DealerNET and record all his NC+ purchases for that seed year, which records the customer's transactional data.”

That information goes directly to NC+ Hybrids, eliminating time-consuming paperwork, says Ken Anderson, marketing manager for NC+ Hybrids.

Oberle says the program allows dealers to develop a customer base and a history of what each grower plants. It can track net sales and compare those figures to previous years. It also provides product and plot information.

DealerNET has the potential to help dealers increase seed sales and profitability by making their seed business more efficient. The key is that it provides real-time access to current product supplies, order confirmation and reports on back orders. Anderson says, “By making it more efficient to do business, dealers have more time to do what they want to do — sell seed to customers.”
—

Lynn Grooms is an agricultural writer living in Mt. Horeb, WI