Latest articles

Farmers like grower rebate programs

Everyone likes a little free cash from those input rebates. But is it really free?

Grower programs offer cash rebates or other rewards against purchases of crop inputs such as seed and chemicals. How much producers receive back usually depends on how much product and, in some cases, the combination of products they buy from a specific company.

Some could argue that in essence, the farmer has already paid for that reward, so why doesn’t the supplier simply lower product prices? Because producers don’t base all their purchasing decisions solely on price, but on what works for their farm. Recognizing that, grower rebate programs are as much about inspiring customer loyalty to the company as just selling its products.

“Our industry is very competitive and most grower programs promote portfolio use from a specific manufacturer,” says Jarek Nowak, business and marketing integration leader for Dow AgroSciences Canada “At Dow AgroSciences, we believe that specific field needs should drive product selection and grower programs should be secondary in a decision making process. The grower program is our way of saying “thank you” for trusting our solutions. It is my belief that positive brand experience on-farm is critical to high probability of reuse or new use from a trusted source.”

Dow AgroSciences redesigned its grower program with the introduction of Diamond Rewards in 2016 to expand program participation and enhance value to their customers. Growers can qualify by authorizing Dow AgroSciences to access their purchase data through an authorization form available online or through retailers. The rebates that growers can achieve vary depending on the combination of eligible products that they buy. It’s possible to earn up to a maximum rebate of $5.15 per cereal acre, and the minimum purchase is $5,000 to participate in the program.

“Our previous program rewarded around 35 per cent of our known customer base,” says Nowak. “Based on payments we made to date that number has almost doubled with Diamond Rewards, delivering on our objective of being more inclusive. Additionally, we simplified our grower program so growers and retailers can quickly estimate a reward value.”

There is no doubt that grower programs are popular with producers, says Kent Fraser, a researcher with Stratus Research, which conducted an extensive survey of farmers opinions on crop protection products and seed companies a couple of years ago.

“About half of the farmers surveyed said they found these programs to be useful,” says Fraser. The only things they ranked as more useful were free samples, customer call centres and field tours. “Despite what people so often say and think about these programs, they are important to many farmers.”

Farmers gave twice as much business to companies with programs that they liked. “If it’s a good program, farmers will definitely respond to it, and are happy to get involved,” says Fraser. “We did see some differences in different groups, so larger farms tended to see programs more useful likely because they receive a bigger cheque. As well, younger farmers rated the programs as more useful than did some others.”

Why younger producers tend to embrace grower programs more enthusiastically than established producers could be because, as they start out in the industry, they are less able to access operating capital and more acutely feel how every dollar counts. It could also be that younger producers are more used to using technology — computers and Smartphones — that allow them to understand and participate in these programs easily online. “It may be that younger producers are more accustomed and adept at dealing with some of the complexities of these programs,” says Fraser. “Older producers are more likely, in general, to depend on their retailer and that may translate to the programs as well. They may just trust their retailer to figure things out and get them the best deal.”

But do grower programs really influence producers’ purchasing decisions to any great extent, or encourage loyalty to a particular company and its products? “If it’s a brand that the grower holds in high esteem I suspect that what they like about a program is that it is offered by a company that has products they really like,” says Fraser. “But I do believe that farmers’ purchasing decisions are going to be driven by product performance.”

“We focus on agronomy first and foremost,” says Blaine Cochrane, sales manager for Shur-Gro Farm Services Limited in Manitoba. Retailers don’t actually market rebate programs per se — companies will have representatives who visit farms to explain and promote their specific programs — but retailers play an important role in understanding not just products and programs, but their customers’ needs. “Only then does the programming come into play, and if all things are equal, and you have two similar products, and a grower is maximizing one program already, he is probably going to continue with that program and choose that company’s product. But growers aren’t going to use product X when they know it doesn’t work on their farm just for programming, when product Y is the right way to go.”

Grower programs help reduce input costs so it’s understandable that growers like them, but a grower program on its own does not guarantee a satisfactory use experience, says Nowak. “At Dow AgroSciences, we strive to deliver value through the right product recommendation supported by a grower program,” he says. “Creating grower success goes beyond reducing input cost and builds trust in the business relationship. And yes, many growers participating in the program make larger purchases as their show of trust in our solutions and services.”

In some cases, producers will mix and match programs from different companies to try and maximize rebates or savings. “Farmers are often involved in more than one program and they’re just trying to manage it all to get the best deal that they can,” says Fraser.

With so many different chemical and seed products available on the market, grower rebate programs play a role in helping companies differentiate themselves from their competitors. Twenty years ago when a company came up with a new product it was usually distinctly better than previous products. Today it’s not always as obvious that a product is significantly different or better than others on the market. Time may prove that to be the case, but differences in products are more likely to be small and less significant. So companies have to find ways to sell themselves alongside their products.

“It’s a competitive market space,” says Cochrane. “There’s the major companies, and there’s a lot of generic companies that are all going after the same space so they all have got to have their story and part of that may be a rebate program.”

But it’s not the only part of the story. For companies to set themselves apart, every facet of their marketing program becomes important — from the sales representatives to their customer service helpdesk — alongside what they are offering growers in terms of product performance, value and rebates.

“Although we recognize that programs are an important consideration in a grower’s decision-making process, we encourage growers to consider product merits first and then try to maximize the opportunity through available grower programs,” says Nowak. “The reverse behaviour can lead to a less-than-desired outcome.”

About the author

Contributor

Angela Lovell is a freelance writer based in Manitou, Manitoba. Visit her website at http://alovell.ca or follow her on Twitter @angelalovell10.

explore

Stories from our other publications

Comments