Cutting Out The Middle Man

[Jim Meade / Iowa City]

disintermediation (eliminating middlemen) seems to be a goal of many farmers.  Do you try to cut out the middlemen?

What do methodds do you use to minimize intermediate steps?  Do you try to buy from jobbers or wholesalers?  Do you try to buy in sufficient bulk?  Do you set yourself up as a company or organization like a feed mill, seed company or wholesaler yourself?

Or, do you figure the middleman provides enough value tto offset any money they cost you?  Do they give enough advice, financial support, give services for free or otherwise give good value for their cut?

I have to admit, I will cut out the middlemen most of the time when I can, especially if it is not too much trouble.

[Mike M2692830]

Jim, we all want to save money on inputs but the cost of having to own the equipment that eliminates the middle guy could overwhelm most farming operations. Fuel delivery, fertilizer storage and applications bulk seed handling and treating, lp and nh3 delivery,storage and use etc. I know I'm missing a lot but looking at some big ticket items there doesn't seem to be a fit for smaller ops.... MikeM

[Shaggy98]

I read an article awhile back pertaining to several small producers in a given area that teamed up to share storage for many of their needed inputs. I can't remember where it was at or what products they bought and stored during the off season, but if I recall correctly it was for inputs only no equipment. Not sure if they formed a corporation and each individual purchased products from the corporation or how they had it structured, but they most definitely eliminated the middle man.

[Kay/NC]

Jim, when we were independent hog farmers, we gained dealership status with two different feed companies, ordered in sufficient bulk to justify semi- loads of feed supplement and bagged products like baby pig pellets, pet food, etc. Our daughter has done the same for horse feed.

Ordering cooperatively and dropping freight where it is needed can be a great savings strategy. I did a good bit of that in building this farm, and only wish I had done way more.

The only concern I would have in buying with others would be any liability all the concerned buyers might have for a failure to pay by one of them. Our enterprises are so different from everyone around us here in NC, it would be hard to find common needs.

[BA Deere]

"cutting out the middle man" was suposed to be the goal of the local coop elevator, however it seems everyone has "taken the gloves off".  One local elevator was given a Bigshot a sweetheart deal on fertilizer, the fertilizer man was warned not to do it, but continued and got canned, the Bigshot said "Beep `em! I`ll start selling fertilizer and hire you to run it for me" and that`s what he did now they`re trying to under cut the elevator.

I will say, if you`re adicted to name brand seed and are a liitle shot, a elevator can probably get you a better deal, cause they combine all the little shots into one Bigshot order.  "Farmer dealers" in some cases can`t get you jack (other times they can do quite well for you).

With chemicals, everybody and their brother is a chemical jockey these days.

When I fed alot of hogs I bought soybean meal direct from the plant in 15 ton loads (cash on the barrelhead) I figured it was $50/ton cheaper than the elevator.  Also mixed my own premix.

But I`m too old and tired to go crawling on the floor for nickels these days, I just get a tube of "DB Super Lube" and ask "what do I owe you?"   🙂

[Mike M2692830]

BA. Don't underestimate the power of a farmer who is also a seed dealer. Coops may be able to offer extra discounts on fert and chem but what kind of service do you get if you happen to have a product problem. I don't see any reps from coops at the meetings I go to all winter. Hard for me to believe they can have the knowledge about the products they sell so how can they have the knowledge about product placement. I'd like to think I can get any customer "jack". MikeM

[BA Deere]

Hi Mike, I think there are differences in seed companies, I believe that you sell Garst, well they are probably better than some I`ve dealt with.  I started doing business with a company farmer dealer that we`ll call "company D" in the 90`s the year that they offered new customers "$50 seed corn" totally cutting off old loyal customers that pre-payed at the knees.  It was okay for years but as the farmer dealer got bigger (it isn`t the guy by the radio station) I became less important.  The last year I didn`t get a prepay card to pay in October for the best discount, so I figured they wasn`t having it that year so I showed up in December and he laughed at me, I can still hear the "Har Har Har you sure missed out Har har har" then when I placed the order he though his computer was giving me "Too big of discount on volume".  I should`ve told him to shove it right there.  Then being a bigshot farmer he was always busy never around to pick up my seed, that was the final straw. 

That fall I was at the elevator unloading corn in late November and the manager comes up "have you bought your seed yet? we have company D".   I says" well it`s November i supose all the deals are gone?"   "Oh Noooo, you`ll get 10% off plus volume discounts cause we combine everyone`s order and just pay in January, whenever it`s good for you"   and he said "we`er open every day, we`ll store until you need to plant, if you need a earlier corn we can get it for you within a day here`s our cell numbers if you need seed on Sunday call us and we`ll open up for you".   I thought wow with all these Bigshot deals great, but I probably won`t get a hat, but I really like company D.....oh well I`ll buy a hundred hats with all the saving$$$$   The elevator man said "Oh yeah, what size jacket do you where?"   Jacket???? That Bigshot dealer maybe ...maybe gave me 2 caps and 1 pocket knife.  I know it`s just trinkets...but honestly!

I don`t know what to think about this other seed corn company, that farmer dealer is a bit of a playboy always on "vacations" in September the company rep tracked me down to a farm 10 miles away than i figured he`d know about, he must`ve traced my phone location 🙂  but he said "i had to hunt you down, today is the last day to book seed, you don`t have to pay today but book for the best deal".  I said where`s the playboy?   "oh, he`s on vacation"    At least the company rep is on the job  🙂

[Mike M2692830]

BA, this site is no place to do business but all those comments you made about your local farmer dealer are his decisions. That's too bad. I would like to think and I'm pretty sure I'm right that I know more about the product I sell then any coop agronomist selling muliple company's products. The comment you made about that they will open up for you on Sunday..I'm always open during planting season. 24 hours a day. 7 days a week. I also let customers use seed tenders I own and will come and get yours, fill, and bring to the farm your on. All I ask is you give me a chance to sell you the best product you can buy at a competitive price. Call me sometime when you can come over for coffee. I'll let Ida know and we can have a good chat.....MikeM.

[BA Deere]

Thank you Mike, I hope you know i`m just doing `shtick` those are honest stories, but shtick  🙂

I`m one of those that likes to prepay early to maximize discounts, so my seed is bought for `14. 

Now, is Garst going to be selling Funk seeds?  If so, does that company have the early October discounts?

[Red Steele]

Funny that the name that starts with a "G" would come up...I used to have a dealer seed account with the "G", as well as the "LG", and the best thing that happened to me was when the big "M" bought out the direct sellers and I could get the new big M triple dipple stacked hybrids for $138 for a couple of years. I jumped ship and saw my yields soar. I still feel bad about all the hours I wasted of my life trying to sell the crap. Not being affiliated with any seed supplier now enables me to shop around, and I save way more by competition than my puny dealer earnings ever were. Probably well over $10,000 this year alone.

I remember putting G 8777 in competitive plots and having it finish dead last...not by a few bushels, but by 20-30. It was chaffy, too. The farmers that had it called it flint corn. How that was their top dog baffles me, and how I was stupid enough to not listen to my friendly area agronomist, a private guy not affiliated with anyone, who said that the G hybrids were the worst. The G DSM finally did me a favor, closed out the dealer account, and gave me DSM discounts as a friend that were bigger than any dealer discounts, and steered me into the big M hybrids that G was buying to try to salvage some yields. I guess the company that starts with an S also went to the big M for hybrids, and that got them competitive yields, too.

Having said all of that, I do believe that Syngenta now has a few competitive lines of corn, and based on the yield summaries, I am going to plant quite a bit of the new 101 day Artesian corn. G should have that one in their lineup, too, as both NK, GH, and the area private breeders all have that one. A little wetter than the competition, but a good stander. And the price is right, Jack.