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RESEARCH REPORT
SMALL FARM MARKET STILL IMPORTANT TO AGRIMARKETERS
January/February 2004
Arecently released study by the Context Network shows small farmers are a prevalent force in agriculture and may offer marketers some unique and profitable potential. "Marketing to Lifestyle Farmers" was designed to improve the understanding of lifestyle farmers' service needs. The study evaluates the prevalence of existing marketing programs in creating disadvantages for producers not qualifying for high-volume programs.
The survey involved interviews with 400 growers in 10 Midwest corn and soybean states; 50 agricultural retailers and seed company district sales representatives were also interviewed. Results showed that small farms still represent a significant share of acres in the Corn Belt.
- More than 50 percent of corn acres are grown by producers with fewer than 500 corn acres.
- More than one-third of corn acres are grown by producers with fewer than 250 corn acres.
- Soybean acreage within this region reflects similar results.
The study yielded concrete data on an often-overlooked market segment and concludes that ag chem and seed companies may benefit from reconsidering marketing plans that assume the disappearance of small farmers. Some factors to consider are:
- Non-economic reasons prevail and motivate them to continue farming. They will continue to manage a small farm even if it is not economically rational.
- This segment of small farmers has very unique needs and criteria for measuring the value provided by their ag input suppliers.
- The retailer is best positioned to service the small farmer as these farmers view the retailer as the provider that most often satisfies their needs. Retailers should not abandon the segment but rather determine the value of offering appropriate services, then make the appropriate offer. Lifestyle growers are often less price sensitive than the larger farms.
- Ag chemical manufacturers should improve relations with retailers by assisting them in offering a sustainable value proposition to the small farm segment. Manufacturers may reach this market better by developing tools that better direct retailer sales efforts, product knowledge and communication.
- Seed companies with captive channels should measure value creation and address the segments with the most value, not simply direct their channel to focus on volume. Differentiated offers should be developed to support the value proposition. AM
For more information on "Marketing to Lifestyle Farmers," please contact The Context Network, 515-225-2204 or www.contextnet.com.
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