1. The 2003 National Conference for Agribusiness Serving Commercial Producers: Meeting Needs, Adding Value Center for Food and Agricultural Business Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

2. Successful agribusinesses recognize the importance of thoroughly understanding their customer’s business Staying ahead of an industry that is evolving at a breakneck pace is no easy task Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

3. As the agricultural production landscape changes, so do the needs of the commercial producers in that landscape. Anticipating the needs of today’s and tomorrow’s producer can position your firm to be the the producer’s partners of choice. Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

4. The Commercial Producer Survey In January, Purdue University and its partners began a project to: Provide a comprehensive profile of commercial farming operations To better understand the decision-making processes of commercial producers To assess what the findings imply for the marketing strategies of input suppliers Compare the results to the ’93 and ’98 Commercial Producer Survey Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

5. The Conference Results from the 2003 Commercial Producer Survey are the driver of this conference’s themes: Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

6. Conference Themes Reconfiguring the Value Bundle Christine Wilson and Corinne Alexander with… Doug Bowman- Emory University, GA Chip Donahue – Brandt Consolidated, IL Focus … Product, service, and information in the value bundle and the implications for market segmentation, targeted marketing and branding Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

7. Serving the Next Level Michael Boehlje with… Ken Doyle, Farmer, IL Scott Fullen, Farmer, TN Ben Riensche, Farmer, IA Focus Meeting the needs of the large producer Conference Themes Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

8. Serving Multiple Market Segments Joan Fulton and Scott Downey with … Andrew Miller, Weaver Popcorn, IN Jeff Simmons, Elanco, IN Tim Kavanaugh, Federated Coops, MN Focus … Serving the midsize, commercial, and large producer at the same time Conference Themes Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

9. Selling Key Accounts Dave Downey with … Rodney Green, Ravensdown Fertiliser, Christchurch, NZ Focus … Positioning our sales force to deliver value and create a relationship with key commercial producers Conference Themes Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

10. Keynote Speakers –Steve Bishop, Procter and Gamble Growing Profits in “Mature” Markets: Lessons from Procter and Gamble –Doug Devries, John Deere Adding Value for Commercial Producers: A Vision for the Future Conference Themes Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

11. The 2003 Commercial Producer Survey The Changing Characteristics of Commercial Producers Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

12. Agrium Incorporated Dow AgroSciences Farm Journal Monsanto Company Pioneer Hi-Bred Consortium Members Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

13. 14,301 Questionnaires ……mailed January 2003 Names from Farm Journal Producers in states accounting for 75% of production (by enterprise) –Corn/Soybeans, Wheat/Barley/Canola, and Cotton –Dairy, Swine, Beef –Fruits/Nuts/Vegetables/Vines Study Design Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

14. Study Design Targeted producers with greater than $100,000 in sales in at least one enterprise Special focus on producers with greater than $500,000 in sales in at least one enterprise Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

15. Number of Respondents by Primary Operation Primary OperationMid-SizeCommercial Corn/soybeans443356 Wheat/barley/canola11341 Cotton133129 Dairy106266 Swine76191 Beef192150 TOTAL10631133 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

16. Commercial Corn/Soybean Producers 6% 11% 13% 8% 5% 12% 13% Total: 356 Other States: 11% 9% 5% 4% Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

17. Commercial Wheat/Barley/Canola Producers 7% 18% 7% 32% 23% Total: 41 Other States: 2% 2% Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

18. Commercial Cotton Producers 63% 3% 14% 6% Total: 129 Other States: 2% Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

19. Commercial Dairy Producers 8% 21% 8% 4% 11% Total: 266 Other States: 9% 20% 3% 2% 4% Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

20. Commercial Pork Producers 6% 15% 23% 5% 6% 17% Total: 191 Other States: 9% 5% 4% Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

21. Commercial Beef Producers 19% 4% 7% 19% 10% 7% Total: 103 Other States: 5% 7% 2% 4% 1% 2% 4% 1% Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

22. Fruit, Nut, Vine and Vegetable Growers 15% 5% 37% 5% 8% Total: 169 Other States: 8% 8% 5% 4% 1% 2% 1% Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

23. The Commercial Producer Study Allan Gray Focus … Who are the producers and what are their plans? Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

24. Defining Enterprise Sizes Respondents defined as “Mid-Size” or “Commercial” based on calculated revenues –Mid-Size Sales in one enterprise of $100K-$499K –Commercial Sales in one enterprise of $500K plus 1.Commercial-T (“Typical” commercial producer) –Majority of the Commercial segment 2.Large –Top 15% of respondents in Commercial enterprise segment Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

25. Physical Units Defining Mid-Size, Commercial, and Large Crop Enterprises Farm TypeMid-SizeCommercialLarge Corn/soybeans (acres) 300-14991500+4600+ Wheat/barley/canola (acres) 700-34993500+9000+ Cotton (acres) 200-10991100+3000+ Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

26. Physical Units Defining Mid-Size, Commercial, and Large Livestock Enterprises Farm TypeMid-SizeCommercialLarge Dairy (cows milked/day) 40-199200+1600+ Finished Hogs (head marketed/year) 800-39994000+25000+ Feeder Pigs (head marketed/year) 3300-1649916500+100000+ Finished Cattle (head marketed/year) 150-799800+3000+ Feeder/Stocker Cattle (head marketed/year) 250-12491250+20000+ Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

27. Average Size of Crop Operations Mid-SizeCommercial-TLarge Corn/soybeans (acres)7712,3788,270 Wheat/barley (acres)1,6245,53512,250 Cotton (acres)6061,6414,650 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

28. Average Size of Livestock Operations Mid-SizeCommercial-TLarge Dairy (head)947213,007 Hogs (head)3,20613,73455,940 Cattle (head)5942,58331,174 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

29. Characteristics Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

30. Participant Demographics I 97% of Commercial respondents are male 90% of Commercial respondents are the primary decision-maker 32% of Commercial respondents are college graduates –29% of Commercial respondents are high school graduates Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

31. Participant Demographics II 33% of Commercial respondents are in 45-54 year age group –33% under 44 years of age –14% under 35 years of age Cotton and wheat/barley producers fewer Under 35 Swine and corn/soybean producers younger, more in Under 35 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

32. Respondent’s Age by Size Significantly different at p<.05 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

33. Farm Operation General Attitudes Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

34. General Attitude Questions I consider myself successful I am very confident in my own ability Farming is one of the best jobs on earth Other producers often ask my opinion about new products I am achieving most of my goals I am very optimistic about the future of farming Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

35. I am very confident in my own ability by Age Significantly different at p<.05 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

36. I am very optimistic about the future of farming by Age Significantly different at p<.05 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

37. General Attitudes Producers tend to be confident and feel that they are successful –High growth and Under 35 producers are more confident, feel that they are successful, and see themselves as opinion leaders Commercial producers are somewhat optimistic about the future of farming Compared to 1993 and 1998, participants were more confident but less optimistic about the overall future of farming Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

38. Management Challenges by Primary Operation (Commercial Only) Profitability –53% of cotton growers vs. only 32% of dairy producers Environment –35% of dairy producers vs. 6% of cotton producers Marketing –14% of cattle producers vs. 1% of dairy producers Expansion –15% of corn/bean growers Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

39. Growth Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

40. Growth Plans Understanding producers growth plans is critical in understanding the changing needs of producers The survey asks producers about the growth plans over the next 5 years We compare this to 1998 and 1993 to get a sense of how growth is changing in each enterprise Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

41. Growth of Operation Commercial corn/soybean producers anticipate strong growth Commercial wheat/barley/canola producers anticipate the least growth Commercial dairy producers anticipate the highest growth Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

42. Expected Growth in Next 5 Years for Crop Producers** ** Does not include those exiting farming * Significantly different at p<.05 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

43. Expected Growth in Next 5 Years for Livestock Producers** ** Does not include those exiting farming * Significantly different at p<.05 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

44. Growth Predictions by Year * Significantly different at p<.05 NOTE: These do not include anyone who indicated they would not be farming in 5 years AND takes out all outliers with >300% growth predicted Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

45. Growth Predictions by Year for Commercial Livestock Producers * Significantly different at p<.05 NOTE: These do not include anyone who indicated they would not be farming in 5 years AND takes out all outliers with >300% growth predicted Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

46. High Growth Producers We took a look at the top 20% of growth in each enterprise to provide a quick view of the characteristics of high growth operators and here are some of the highlights: Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

47. High Growth in Each Commercial Segment (Top 20%) Most 44 and under Most concerned about expansion and management challenges Most confident and optimistic Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

48. High Growth in Each Commercial Segment (Top 20%) Higher reliance on local sources for information More direct relationship with both Capital and Expendable suppliers More reliance on sales/tech reps for information than before Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

49. Farm Operation Value-Enhanced/Contract Production Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

50. Value-Enhanced Production What percentage of your gross farm sales in 2002 (and 2008) to come from value-enhanced crops and/or livestock such as organic beef, tofu soybeans, etc.? Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

51. Gross Farm Sales from Value-Enhanced Crops for Commercial Producers Significantly different between Commercial and Mid-Size in 2003 at p<.05 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

52. Gross Farm Sales from Value-Enhanced Livestock for Commercial Producers Significantly different between Commercial and Mid-Size in 2008 at p<.05 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

53. Value-Enhanced Summary Increase in value-enhanced products by Commercial Crop producers Large producers have most value- enhanced crops now Corn/soybeans most value-enhanced now and in 5 years High growth producers expect the most value-enhanced in 5 years Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

54. Contracting On average, what percentage of your total production is produced under contract in which the buyer/contractor sets guidelines for at least one input such as genetics, pesticides, feed, equipment, etc.? Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

55. Percent currently produced under contract by Primary Operation Significantly different at p<.05 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

56. Percent currently produced under contract by Primary Operation Significantly different at p<.05 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

57. In the future, more agricultural products will be produced to specification under contracts with buyers by Primary Operation Significantly different at p<.05 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

58. In the future, more agricultural products will be produced to specification under contracts with buyers by Primary Operation Significantly different at p<.05 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

59. In 5 years, I anticipate producing more products under contract by Primary Operation Significantly different at p<.05 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

60. In 5 years, I anticipate producing more products under contract by Primary Operation Significantly different at p<.05 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

61. Contract Summary Younger, Larger, and High Growth producers have the most product under contract and expect to produce more under contract in 5 years Cotton producers have the least under contract and do not to expect more to be under contract in 5 years Relative to 1998 and 1993 Commercial Crop producers are less enthusiastic about the future of contract production Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

62. In the future, more agricultural products will be produced to specification under contracts with buyers: Commercial Crop Producers by Year Significantly different at p<.05 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

63. Brand Issues Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

64. I consider myself loyal to the brands of expendable items I buy by Primary Operation Not significantly different at p<.05 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

65. I consider myself loyal to the brands of capital items I buy by Primary Operation Not significantly different at p<.05 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

66. Expendable Brand Loyalty for Commercial Producers * Not significantly different at p<.05 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

67. Expendable Brand Loyalty Demographic Differences No significant differences between Brand Loyal Producers and Others on any demographic factors: –No difference in age, education, gender, farm size, farm demographics But there were attitudinal differences between brand loyal producers and others. Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

68. Less likely to buy lowest price expendables More likely to want to buy locally More likely to want to deal with one dealer More likely to buy from cooperatives More likely to see significant differences among suppliers More likely to agree that they rely more on sales reps than in the past Expendable Brand Loyal Commercial Producers: Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

69. Generics Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

70. Relative to branded products, my farm will increase its use of generic expendable items over the next five years by Primary Operation Significantly different at p<.05 Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

71. Generic Products 31% Commercial producers will increase the use of generic expendables –Cotton most agreement –Wheat/barley least agreement 34% Commercial producers believe that generics represent a good trade off Livestock and FNVV are less likely to increase their use of generics than other crop producers Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business

72. More to Come… More of the key results will be highlighted in each of the conference sessions Tomorrow we will explore some of the key attitudes of producers in terms of the Internet, media sources, and consultants In December we will release a report covering the issues in this 2 day conference plus some more details on the survey we can’t cover here. Source: 2003 National Conference for Agribusiness, “Serving Commercial Producers: Meeting Needs, Adding Value” Center for Food and Agricultural Business