A1 chemical solution
Faced with rising agro-chemical costs, Lincs-based A1 Farmers has decided its time for a little group therapy. Philip Clarke reports
RISING agro-chemical costs have placed an unwelcome burden on most farm businesses over the past couple of seasons.
But Lincolnshire farmer Andrew Sharpley reckons to have saved up to 10% on this years spray bill alone as a direct result of his involvement with A1 Farmers group buying scheme.
"We have our own independent agronomist, so we dont mind who we buy from," he says. "Indeed, the savings we have made on chemicals go a long way towards the cost of employing the agronomist."
Currently there are eight members of A1 Farmers, including farmers weeklys farms manager John Lambkin. Together they account for 2760ha (6820 acres) of arable land, buying up to £250,000 worth of agro-chemicals every year – an attractive chunk of business for any distributor to play for.
The system is a simple one. The farmers sit down with their agronomists in January to decide on their spring requirements. Despite a concerted effort to restrict the choice of sprays, a final list of about 130 products is sent out to distributors in February, together with an invitation to tender.
With a bit of gentle persuasion from Easton Lodge secretary Heather Shead, most quotes are back in by April and entered on a spreadsheet. From this, the cheapest price for each product is selected and put on a separate list with the name of the supplier. This is then faxed to all group members.
So far A1 Farmers has 13 distributors touting for its business. "Building up their confidence has been crucial," says Mr Sharpley. "The last thing they want is to expose their best price to us, only to find it has been revealed to a competitor over a pint in the pub. Discretion is essential."
To ensure this, the scheme is designed so that the spreadsheet with all the quotes never goes outside the Easton Lodge office. The eight farmers only get to see the list of cheapest prices.
The group has also developed a system whereby each farms chemical store has a sealed letter box in it so that, if more than one supplier delivers on the same day, there is no chance of them seeing each others delivery notes.
"We have established a good rapport with all our distributors, although there is still one who is reluctant to quote," says Mr Sharpley.
The range of prices for most products is widespread, (see table). For example, this season seven potential suppliers quoted between £25 and £35 for 10 litres of sugar beet herbicide, phenmedipham. Although it is still left to the individual farmer to decide where to place his order, in this cut-throat game, the cheapest almost always gets the business.
No brand loyalty
"We are no longer loyal to any supplier or any brand," says John Lambkin. "So long as it has a MAFF-approved sticker and appears in The UK Pesticide Guide we will take it."
Mr Sharpley agrees, adding that, since switching to the tendering scheme, the group has been much more willing to use active ingredients rather than brands.
And, though he acknowledges that the attraction for distributors is the volume of potential sales, the reality is that the group still spreads its orders around. "It has been known for us to place orders with six different people and get six different vans turn up in the farmyard on the same morning," he says. "Last year, the most any one supplier got was 29% of our business."
So are there any circumstances when price is not the determining factor?
"I make two provisos," says Mr Sharpley. "If the weather is tight and we need a product quickly I will go to the supplier who I know will get the product to us. Secondly, there are some chemicals where we only need one or two cans. I would not expect someone to drive many miles for such a small order."
But group buying has not been without its problems. In the first year, one or two members got carried away with the prices on offer and bought more of some products than they actually needed.
There have also been run-ins with suppliers who gave the cheapest price, but still did not get the business. "Some have claimed that their quote has been used to force a competitor lower still. But this is not the case. It is simply because more than one supplier has tendered the same price," explains Mr Lambkin.
A more serious problem arises when a supplier either neglects to tell the group if it has raised its price, or tries to invoice the farmer for more than it quoted. It is therefore essential to confirm the price when any order is placed.
"But generally our scheme has worked very well," says Mr Lambkin. "There is absolutely no reason why like-minded farmers should not set up their own tendering system for any of their inputs and reap the same benefits."
A1 Farmers agro-chemical prices, 1994/95
Range of quotesAverage(Number
phenmedipham (10 litres)25.00 – 35.0028.87(7)
mecoprop-P (10 litres)49.00 – 52.4050.43(9)
ethofumesate (5 litres)52.00 – 59.7555.71(8)
glyphosate 360g/l (5 litres)29.90 – 36.0032.78(10)
paraquat (5 litres)25.70 – 30.4027.00(11)
propiconazole (1 litre)30.00 – 36.0032.93(10)
cypermethrin (1 litre)4.75 – 6.605.14(12)
Spring growth regulator
chlormequat 700g/litre (10 litres)14.99 – 17.2515.90(8)
Panther (5 litres)59.25 – 61.9560.50(9)
(diflufenican + isoproturon)
isoproturon 500g/litre (1 litre)13.00 – 16.0014.40(5)
• A co-operative of eight farming businesses adjacent to the A1 near Stamford, Lincs.
• Total farmed area 2760ha (6820 acres) – mainly combinable crops.
• Sugar beet grown on all units and potatoes on two.
• Formed in 1969 to handle sugar beet.
• Main activities centred on reducing capital investment, cutting operating costs, improving timeliness of operations and sharing agronomy services.
• Now into second year of running agro-chemical buying group, recently set up pig feed buying group and looking at central sourcing of fertilisers and pooling machinery.
Spring fungicide propiconazole is applied at a rate of 0.3 litres/ha to a crop of winter wheat being grown for seed at Easton Lodge, Lincs. The tank also contained a wetter and magnesium sulphate.