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What is best crop chemical purchasing strategy?

We often get asked when is the best time to purchase your chemicals to secure the best possible price? What is the best strategy?

Everyone has an opinon on this, but we think we are pretty well placed to comment. We are off cropping operations ourselves, 4th generation in fact. We have spent a number of years in traditional rural retail (didn't enjoy it), and then spent a few years in direct distribution before going out on our own to bring you TrueCrop. We also have strong relationships with the major Chinese tech manufacturers so we have a firm grip on what is also happening on the supply side.

Our observations across the journey are this:
  1. most farmers don't plan ahead sufficiently enough with their chemical purchases
  2. behaviour of the traditional rural retailers often does not facilitate planning ahead
  3. every season is different, so what worked last year may not work this year
First of all, our view is that every farmer should have enough chemical either in their shed or on order for at least one pass. You don't necessarily need to plan for the worst case scenario, but enough for one pass will get you out of trouble and will hopefully buy you enough time to purchase more if you need too. Price is meaningless if you can't even get hold of the chemical you need. We have seen this first hand on triclopyr earlier in the year and more recently on fungicides like carbendazim. We were trucking triclopyr from QLD to WA and fungicide from SA and VIC to northern NSW and QLD.

We also think that over the years, the behaviour of the traditional rural retailers has not been great for farmers acheiving a good price and at the same ensuring they have access to supply. Seemingly it has been one or the other. So as a farmer, what are the tell tale signs your local rural retailer may or may not be doing the right thing by you 100% of the time?
  • "We won't know our price until the product arrives in our store in 6-8 weeks time"
    • rural retailers know the price at the time of ordering which is always 2-3 months out
  • "We don't know our price yet but don't worry mate, we'll look after you"
    • again they already know what the price will be, but are reluctant to be the first to offer
  • "Head office hasn't told us what the price is yet"
    • as per the first two points above, this again is a nonsense
  • "This product is going to be short" or "the price is heading north so jump on it now"
    • this may or may not be true, but our tip is to keep a record of how often you hear this from your local and if it turns out to be correct or not? Hold them accountable. Also ask yourself, do they ever recommend you hold off because the price is falling?
So why are the rural retailers often so reluctant to offer a price before the season gets under way? Well the answer is simple. Effectlvely they don't want to be the first to put a price out into the market, even in a local area, because they first want to eastablish what price they think they can get away with charging the farmer (e.g. how much margin they can bank for the season). Even then the price will be on a quote for quote basis (e.g. no fixed price) which will involve offering an A, B or C price to growers. The larger growers often get the A price and smaller growers the B or C price. It will also often mean the more loyal growers who don't actually ask the question will get the B or C price. The strategy is about what price they think they can get away with charging or the margin they think they can bank per individual grower.

So what about the age old strategy of leaving the purchase decision to the last minute because that is when you get the best deals? We think this is the highest risk strategy of them all. A number of our growers employ this strategy because "it's worked for me every year". Well, it was these same growers we were trucking chemical across the country for throughout the year. We don't recommend this strategy.

So what does all this mean? Well we think you should be thinking about locking away part of your pre-emergent requirements sooner rather than later. Don't go too crazy and load up on absolutely everything, you have to manage your cash flow appropriately, but definitely think about what you'll need for at least one pass and when you'll need it, then go ahead and lock that away on order now.

Then as you start to move through the season and find you may need some more chemical, start calling around and getting quotes from different sources. We recommend you maintain a relationship with a number of rural retailers or distributors and not just one. It is impossible for just one to have all the product you need, when you need it and at the right price every time. We encourage you to have a number of different sources for your chemical and share some of your spend around so as to maintain that relationship. This is exaclty what we do and it works for us with our suppliers so we think it's a good idea for the farmer also.

The actives you want to be thinking about right now include triclopyr, glyphosate and trifluralin. If you haven't already registered your details with us, see link below, give us a call or send us an email to request a quote. We think you'll be relatively pleased with our price and our free share options are a bonus too. They will definitely be worth something in future.

www.truecrop.com.au
Ph: 1300 342 199
Email: customercare@truecrop.com.au
http://www.truecrop.com.au/page/Contact/