We recently had the chance to gather members of our editorial advisory board for a casual dinner meeting in Indianapolis. During 3 courses and more than 2 of hours of stimulating conversation, we touched on some of the topical challenges and opportunities each are facing within the industry today.
Brent Wiesenburger, precision ag manager with South Dakota Wheat Growers cooperative (Aberdeen, S.D.): For me, looking for the big space for precision agriculture with Wheat Growers, it’s "how in the world am I going to compete with Monsanto, maybe FBN, the big data players?" The margin that we’re enjoying in our precision data services, the MZB side of our business, we’re going to grow. They’ve got largely scalable platforms. Ours is as well but they’ve got a bunch of money backing it.
So for me to keep up in that space, it’s probably, I have to be thinking about collaboration and APIs, to where I can secure the MZB platform, not only within Wheat Growers but our existing customers to ensure that it’s going to survive and it can coexist with those others companies. That’s one.
The other one is probably really honing in on relationship management with some of those big companies. John Deere just fell into that with the Precision Planting acquisition. We’ve got a really good working relationship with John Deere and I don’t ever see them pulling that dealership away from us when their normal John Deere dealers start to take over some of that. But who knows?
Ken Diller, precision farming network manager with Hoober Inc. (Intercourse, Pa.): For us, it’s the big farm bill. I mean, I see collaboration as the only way that we’re going to be able to stay relevant. Regarding the data side of the business, there’s no reason why we think we shouldn’t be able to do it better than a lot of other people but there’s still a space that we can fill. But knowing how to fill that and be able to also work with all the different private independent people that work around us is going to be a challenge. Because some of them, not only do we have to work with them, we sell them pieces also.
Dave Nelson, owner of Brokaw Supply (Fort Dodge, Iowa): They’re your customers.
Diller: That’s right. So there’s a fine line to be drawn there.
We’ve got to figure out how we can do that so that it benefits not only our customers but us and the fertilizer dealer, or whoever the applicator is. That’s going to be a challenge going forward, I think.
Tim Norris, CEO of Ag Info Tech (Mount Vernon, Ohio): I think we’ve typically in the past – we’re the innovators, the ones just on the far side of that bell curve. And there’s not going to be any black box program that I think is really going to do what they want. And I think there’s still that potential with boots on the ground and local agronomy, to have a niche in the data for those growers. Maybe not that vast majority that really doesn’t care, they just want a VRT prescription map. But I don’t know that’s where we want to try to be anyway. Will we grow and be as huge of a player on the data side that some of the others are? No, there’s no way. We can’t, we can’t compete with them, especially nobody my size. But I think we still can work with some of the growers. I think the opportunity is – there’s going to be a lot of dealers that decide to get out some good buys or collaborate with them to keep them.
Mike Lessiter, editor/publisher of Precision Farming Dealer: What kind of dealers will be going out?
Tim: Like some precision ag. Or precision dealers or some ag leader dealers that just can’t – they’re not big enough to make it. I think there’s an opportunity to pick up some of their market share and even hire some of their employees or have them coming out with us.
Jack Zemlicka, managing editor of Precision Farming Dealer: So what about you, Dave?
Nelson: So we’re a fertilizer equipment distributor. So we cover – we have a store in Iowa, a store in Minnesota, a store in Missouri, and two stores in Nebraska. So we’re a shortline dealer, more or less, of Blu-Jet and Miller Sprayers. So that’s our space. So our largest customer – when the farmers got a lot of money here in the last five, six years, the farmer became a big part of our business, buying their own anhydrous applicators and that. But now what’s going to get us through these next years is our co-op retailer that we’re selling toolbars to. And so we got big in precision agriculture. We almost got too big, too fast. We were just kind of doing too much splashing. So we pulled in now, and scoping in more. So we’re not in the data piece at all. Just, we’re staying out of that. Because 60% of our customer base is trying to do it themselves, that large retailer. So you’re not going to go sell them a tool bar and then drive down the road and try to manage his customer’s data. You’re not going to do that. So we’re in the hardware side. And so it’s concerning a little bit, as Deere comes on and brings in more, as more of it goes to the OEM – it’s going to be harder and harder. When the controller and everything is ISO in the arm rests and all that, through the Deere or through the red, it’s going to be harder just to be that hardware sales.
But on the flip-side too, being a shortline, we don’t answer to one color, to John Deere or to Trimble, Case and all that. We can be colorblind and serve our customers no matter what they want. And so that’s our concern, is finding our space in that. We cover such a big geography, it would be hard to manage data, because we’re all over.
Lessiter: That’s simple for you, because a lot of the guys are wondering whether to get into the data or not. You’ve already defined your niche.
Nelson: Yeah. We’ve answered that. So our challenge is how do we add more services or more support so we can stay in that piece? A lot of times, a customer that comes with a Blu-Jet piece, he’s not only seeing green, to where we can tailor our toolbars so much to this and that, that a Deere’s not going to. And I refer to Deere – Deere is getting real strong in Iowa in the fertilizer application business and that. The more we can stay niche and specialty and do the planter starter fertilizer kits and in-furrow injection stuff, and do the little niche pieces. We’re pretty big in the bolt and seed equipment, like you’re local Pioneer dealer. Or at your retailer, putting up the seed treaters and the bins and the conveyors and all that. But on the precision side, I mean, we’ve answered it. We’re not collecting data. But we’ve still got to stay strong in the hardware side because the hardware is what controls everything that we sell to farmers. When we try to sell him a Blu-Jet toolbar and he’s got everything else John Deere; we want to make it plug and play as much as we can into his ISO system, to where he buys the Blu-Jet for what it is and it’s plug and play into whatever system.
Zemlicka: You guys mentioned collaboration. I mean, that seemed to be a theme. That’s something I’ll hear a lot too, talking with dealers. People kind of seem to say that’s going to be the future, we’re going to have to find those partnerships. What opportunities are you guys seeing? Is it exclusively on the data? Are you guys seeing other opportunities, not so much adding some of those additional lines? But you know, when you’re talking about your business in precision, what other potential is there when you’re talking partnerships or APIs?
Diller: I think it opens up opportunities when you start – if you can put together the right project that makes it advantageous for each one of you, it opens up opportunities, at least for us and our door, to not only sell precision products but also the opportunity to sell iron. You know? And along with that, if the services come along behind it, that small data management services come along behind it that allows us to be able to help the fertilizer dealer sell more fertilizer, it’s a win-win for all of us.
Yeah. Whether that can all be accomplished or not remains to be seen. But really, we just feel like if we don’t collaborate with somebody, we’re done. We’re dead in the water right now. I mean, as an iron dealer, we can’t go any further. Those basic data management services are where we’ve got to draw the line or else we’re done.
Zemlicka: I’ve talked with a lot of you guys about the regulatory impact that things are going to start – I mean, especially for you guys, where you’re at – and obviously anywhere though.
Nelson: For us in Iowa, it’s coming. Iowa’s got the three counties that were sued by the Des Moines Water Works. And something’s got to come out of it. I mean, it may not be the lawsuit but there’s going to be actions. It’s bringing enough attention to them. And that’s why they’re doing it, is to get attention to it. It’s political. And that’s – the more we conserve that niche of the marketplace of fertilizer application – ain’t no John Deere dealer – the international fertilizer equipment dealer in Iowa is not innovative, not ahead of the curve on that stuff. So I mean, that’s where we’re viewed as being innovators, to your point.
Zemlicka: So how do you guys see kind of your competition changing maybe in the next few years? Do you see that evolving. I mean, who you guys are competing with now versus how that’s going to differ in two or three years? I mean, you talked a little bit, about the partnerships that are going to take place. But is that going to kind of have an outside influence on what you guys are doing? Is the competition going to evolve for better or worse and is that going to have an impact on what you guys need to plan for?
Wiesenburger: The thing that keeps me up at night is our competitor, the North Central Farmers Elevator or the Full Circle, the people around us, is that there’s going to be a better widget or a better mousetrap in the software space that’s going to trump what we’re doing. But having the right team members on staff – like Djamel. And having the ability to look at the next project, I really feel like as long as we’re looking forward, Djamel, I passed him this spring. I’m very excited. We’re going to be able to bring, we’re going to be bringing our as applied information wirelessly back from our cabs of all of our application machinery. And we’re going to get ten growers, we’ve identified ten growers. We’re going to have a grower panel. We’re going to explain to them what they’re looking at on this map. Because they’re not going to like what they’re going to see with as applied information. They’re going to see the actual rate that, depending on if rate smoothing is turned on or off on that random display – they’re not going to see ten gallons all the time. They might see seven and they might see 12. And just to serve that map up in different formats – how do you want to see it? And for next fall, to be able to offer that to every customer that does business with Wheat Growers. And what that does is solidifies the trust in the local co-op. If we’re giving them the information back –
Nelson: The real – not a coverage map.
Wiesenburger: They’re always doubting what we’re doing. Here it is. This is what we did. And it’s going to step up the game with our applicators because the accountability is going to go from here to right here, where this is where we want it to be anyway. But they’re going to be forced to make a change if they’re doing something wrong today. And I told our leadership team going into this spring here, I said it would really awesome to do a customer survey right now and figure out what our trust level is with our customer base and then in two years, do it again, when we’re serving all this information back to them. I think as long as you try to position yourself with the next – try to stay one step ahead of them.
Diller: Well there are leaders and there’s followers in this industry. You soon find that out. If you’re the guy that’s out front, leading, everybody else, sooner or later, picks up on what you’re doing. There will be some iteration of what you’ve done and they’ll be trying to adopt it. But the trouble is, they’ll be three or four years late.
Norris: It’s what your X factor? I gave a presentation one time, what’s your X factor? Your X factor is only good until your neighbor starts doing it, too. But you should be onto your second or third X factor when they’re just – oh yeah, we figured out what Tim’s doing.
Wiesenburger: When we opened our innovation center, we had all these customers there that were really wondering why Wheat Growers spent $4 million on this facility. Which three-fourths of it is a shop for the existing location that completely outgrew it, their existing shop. But the presentation that I gave or the short little speech, I said we can choose to ignore technology. We had Mavericks there, we had Climate reps, Precision Planting, Ag Leader, Richhardt. Jayme was there from Richhardt. We had a lot of reps there. SESU was there with some of their equipment that they’re working on, that we’re collaborating with. And I told the producers, we can choose to put our heads in the sand and hope all this technology goes away and these smartphones disappear and technology doesn’t advance. Or we can have a center like this where we can embrace it and bring people in and train them. I said it’s not about just all you farmers in the room. It’s about you farmers and we had employees there and agronomists. I said it’s about our agronomists as well. Your applicators, your agronomists. I said we all need to keep up on this and there’s only one way to do it. need a facility like this to keep inspiring us. A lot of people came that hated that we spent the money. But after they came and they saw that and they left, they were like, "We need to get our neighbors in here to see this. This is cool."
Zemlicka: Tim, what’s your take on it? You’re obviously – you’ve kind of carved out where you guys are but you’ve got a fair amount of competition too that you’re dealing with. How do you see them kind of evolving and impacting you?
Norris: They’re forcing us to be better. That’s for sure. And before there was very little competition from the local equipment dealers. But they’re trying to step it up. They’re getting better but it seems like they’re still several steps behind. And if we slack off, that gap’s going to close. And we’ve got to make sure that we guard ourselves and we stay on that second and third thing, to keep us out ahead. And that’s what my challenge is and it’s one of the reasons that I separated myself from the day-to-day stuff of the business, is to try to figure out what is that next step? And thank goodness Matt agrees that that’s what we should do. And I get bored with day-to-day stuff anyway, so I think it works very well. But I really do think it’s going to be harder and harder to stay ahead, especially when you start seeing these big companies getting into the data side and throwing millions upon millions of dollars into it. You know? How do you stay ahead of that? So we’re going to have to, I think, find our areas that we can stay ahead on and really focus on those instead of trying to catch up to them. Because I think it’s a race you can’t win.