As farmers plan for the next farming season amidst predictions of a slow-growth economy, input suppliers, service providers, and other stakeholders are interested in understanding the farmer’s approach to agri-input buying. Their individual and collective decisions will impact food security and entire agri-supply chains in the months ahead.
The purchase of agri-inputs is a B2B decision, and like all B2B decision-makers, farmers are also accountable to their bottom line, though their motivations may also be emotional. Farmers make significant buying decisions based on information about the return on investment, yield or quality improvements, or increased efficiency.
Factors influencing farmer buying behavior
- Price, quality, and brand – Whether a farmer is looking to buy consumable or durable agri-inputs, the price, quality, and make are always the critical determinants in the buying decision.
- Impact of debt and credit availability – Given that net farm income has broadly suffered in recent years due to covid movement restrictions, growing input cost, and farm losses due to weather unpredictability, an extension of credit by the dealers is significant to the farmer’s purchase decision.
- Purchase frequency of an agri-input – How frequently an agri-input is purchased determines how comprehensive its purchase process is. The process for regularly purchased inputs, like organic manure, seeds, and pesticides, is less comprehensive. In contrast, the purchase process becomes more comprehensive when looking for durables that are purchased selectively or as long-term assets (e.g., a tractor or a generator).
- Role of opinion leaders – The farming and village ecosystem functions as a strong community, with opinion leaders like family elders, the Sarpanch and the Panchayat (Village Headman and the local self-governing body), large farmers, and farmer co-operatives. Even a sales rep or equipment trainer may be asked for an opinion on farm inputs other than the one he / his company represents. E.g., a technician visiting to set up a purchased motor may be asked which pipes are most suitable for the local farming conditions.
- In-store influences – Additional information received at the retail outlet (from dealers, company representatives, fellow farmers), point of purchase advertisements, and non-availability of preferred brands all influence the buying decisions.
Why do farmers change the product/service during the crop’s lifecycle?
- Unforeseen changes in weather conditions – Most agri-input consumables like fertilizers and pesticides are bought with the expectation of a specific weather type and behavior. If the weather conditions change during the cropping cycle, farmers look for alternative inputs that can slow down or hasten the ripening process, to help the crop get through the disturbance with minor damage to quality and quantity.
- Credit gestation period – As a generally observed tendency, mostly farmers take the agri-input on credit from the retailer and repay post-harvest of the produce. Similarly, the retailers also take produce on credit at the beginning of the season and repay after receiving it from farmers. Receiving extended credit periods is another reason for farmers to switch brands mid-cycle.
Not an easy one to predict
The unpredictable nature of agriculture creates considerable demand variability, which increases the seasonal risks of stocking inventory for the sellers; hence, the farmers often do not get the right agri-inputs when required during the crop cycle. In addition, farmers, especially the marginal ones, may be unaware of what is suitable for their farm and the variety.
When understanding farmer buying behavior, it is essential to go beyond acreage and view the farm as a human-centric, family and community unit, with multiple softer aspects influencing buying decisions. With the traditional agri-input distribution model relying heavily on the dealership model, there is a high degree of inherent channel inefficiency, leading to losses in value, time, and the mass availability of fake/sub-standard products.
Agri-input suppliers now leverage technology and data to create robust delivery models to overcome many challenges. They derive potent insights from vast amounts of data that recognize patterns. With this, their supply chains have actionable signals on market demand to make accurate decisions. It helps focus on eliminating supply chain lag by reducing the time between events and the response to those events. Further, it helps understand consumer behavior and variables by synthesizing big data in real time.
With DforD, you can achieve end-to-end digitization of your agri-input supply chain ecosystem and connect all your stakeholders. You can benefit from demand sensing that uses AI and real-time data capture to create a forecast of demand based on the current realities of the supply chain. By facilitating the information exchange, our platform provides actionable insights and simplifies your enterprise-critical information.
Discover how we can help you build a high-performance agri-input supply chain with sales visibility, inventory & demand visibility, demand sensing, demand forecasting, and more. Talk to our experts.
