Information is Power: The Future of Ag Retail

Take a look at the practices beginning to hit agriculture in a big way, online agriculture retailers. What does the future of agriculture look like and how can producers weigh the positive and negative results of change?

Written By: Matthew Winterholler

We’ve all been there—we are shopping for a product at a store and we pull out our phones to compare prices at other retailers. Some big retailers like Walmart, and the big one—Amazon, even offer price matching, making it exponentially easier to know we are getting the best price possible.

Those practices are beginning to hit agriculture in a big way with the rise of online agricultural retailers like Farm Trade, CommoditAg, AgVend and Farmers Business Network—companies largely thought to be disruptors in the business because of their impact on change within agricultural retail.

Rick Tolman is a past National Corn Growers Association CEO of 14 years. After retiring in 2014, Tolman took on a new career—consulting for Farmers Business Network.

Tolman sees many advantages of moving toward online retail within agriculture, both with Farmers Business Network and other online agricultural retailers.

“The advantage is that you’re getting more efficiency and more effectiveness, and once you get used to it, you can save money,” Tolman said. “In some ways, it’s refreshing because you don’t have to wonder if you get the biggest discount or if you are paying the same as your neighbor. You just know.”

Tracy Zink is a sorghum producer from Indianola, Nebraska, who has been a Farmers Business Network member for four years. She agrees with Tolman and said it is not easy to put a price on the benefit of the services FBN offers.

“The positive of online is you have more access,” Zink said.

While Zink is an advocate for FBN, she still utilizes those traditional ag retailers and said FBN is not always cheaper than those companies for her inputs.

In a way, FBN’s model, by giving farmers buying power, reminds Tolman of the co-ops seen in the late 70s and 80s, but rather than receiving a dividend at the end of the year, FBN puts those discounts up front.

The way business is done is changing across the world, and agriculture is following along, Tolman said. The new model within agricultural retail, however, is a turn from the traditional way of buying inputs.

“Traditionally we thought ag retail had to be a handshake, be there to make sure you can back up the product and make sure it worked,” Tolman said. “It was a person-to-person kind of business, so it’s a big mindset change to think about doing it online.”

That change comes with hurdles. Many worry about the impact online agricultural retail could have on brick-and-mortar agricultural businesses, and FBN itself echoes that concern.

“I think that’s something FBN and others are concerned about, too,” Tolman said. “Everybody realizes the importance of supporting their local community. At what level that can be sustained is going to be the interesting question.”

Zink, who utilizes many of FBN’s benefits, including online retail for inputs, also worries about what online retail within agriculture will do to her surrounding rural community.

“I think with any online retailer you run the risk of losing the rural environment,” Zink said, “and small towns are dying. It’s those businesses that supported the farming industry and our families for so long. You can’t put a real price on that.”

Though it is a concern, both Tolman and Zink believe an equilibrium will eventually be seen.

“What FBN is doing will force or encourage some of the more traditional retailers to take a look at what they’re doing and change the way they’re doing business now,” Tolman said. “In the long run, that will be for the benefit of farmers.”

To help save some of those rural jobs—the heart of the farmers they serve—FBN has started building warehouses and employing regional representatives. Not only does this help give back to the communities, but it also helps FBN logistically, allowing product to get to the customers quicker, Tolman said.

“It’s exciting to have them getting young people and keeping them in ag,” Zink said. “My FBN rep has four or five just little precious kids, and getting to see them be part of the agriculture lifestyle is fantastic.”

While producers have many concerns—sometimes rightfully so—about online agricultural retail, outside of the product they sell, FBN can help farmers cut their costs other ways through the data they gather on seed prices, yields and much more, Tolman said, which is how FBN originally started in Silicon Valley.

“In a commodity business, any little edge you can get to make yourself more efficient is to your advantage,” Tolman said. “If you find you can buy seed that’s the same seed but under a different label, through these analytics, you figure out you can save $10 a bag or $20 a bag.”

In a way, FBN’s analytical services can be compared to Consumer Reports, Tolman said, allowing producers to see what results other producers have had on seed and chemical and how that could potentially fit into their operation.

Those Consumer Reports, as Tolman puts it, helped Zink increase her efficiency and risk management.

“Once they released that seed relabeling report, I realized I had not been spreading my risk across different varieties and trait packages because I was planting essentially the exact same seed from different companies,” Zink said.

Though other online agricultural retailers do not offer the same analytical services as FBN, they could very well be the future of agriculture.

FBN—since their start in 2014—has experienced quick expansion, both in their analytical services and their launch of online retail. Their growth has many wondering if the company is poised to become the Amazon of agriculture, and Tolman has some of the same thoughts.

“In a way, that’s what they aspire to be,” Tolman said. “I don’t think they see themselves as becoming a big online retailer in that sense, but I think as a subset of that within agriculture.”

Next time you are shopping for a product and pull out your phone to compare prices, it may soon be to check out FBN, CommoditAg, AgVend, Farm Trade or another start-up platform to find the best price for your seed or chemical.

The positive and negative may still need to be weighed, but if one thing is clear, the future of agriculture—because of those disruptors—is being shaped as you read this article.

“Everything grows and everything changes,” Zink said. “As producers, we’ve got to be ready to change with it.”