“The farmer is the only man in our economy who buys everything at retail, sells everything at wholesale and pays the freight both ways.” — John F. Kennedy
In recent years that Kennedy quote seems to have taken on new life, as if to console farmers for their predicament. But farmers are proving they can still punch up the power of their farm input dollar.
For some, it means contacting new suppliers to bid for their business. For others, it is maximizing supplier relationships for services that go beyond just the dollar.
Mark Wachtman, who farms 2,800 acres of popcorn, corn and soybeans in Napoleon, Ohio, joins with other farmers in a local peer group to send out bids or a request for proposal (RFP) to five suppliers. They detail what they need for the upcoming season. Suppliers have the option to price items à la carte or bundle together.
In the end, he ended up going à la carte in 2017. “We saved a significant amount of money going à la carte,” Wachtman notes, with one bid saving him 10% to 20% on chemicals, for example.
He doesn’t go back and forth on sharing prices and asking for updated prices, but in his RFP he states the first bid needs to be the best bid. The only time he follows up is if something is so far out of the range of everybody else’s to ensure the bid offers the apples-to-apples comparison.
It wasn’t easy for Wachtman to switch to a straight-bid process to choose who he will do business with each year. He began to get solicitations from internet suppliers, but was content to make business decisions based on relationships.
Then, after a couple of bad stretches with a chemical company not backing a product’s performance, he began to see things differently.
“Why spend the money for somewhat of a guarantee that didn’t happen?” he recalls in leading to the decision to change buying habits.
Every time a product touches someone’s hands there’s a markup, so he’s buying wholesale wherever he can. In 2016, he ended up making more internet purchases than in 2017, proving that every year is different. The lesson: Stay flexible with your buying plans.
Wachtman checks on input prices two to three times per month both online and by phone. In summer, for example, he can sometimes grab a bargain from a company with leftover product.
“You have to strike when the iron is hot,” he says, adding his on-farm storage allows him to buy things on seasonal lows.
Next: For some farmers, it’s not just about savings. Retail relationships matter, too.
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