25 February 2000

GROUP AGCHEM BUYING CAN BRING BEST PRICES…

Struggling to get the best deals on inputs? As crop margins

shrink, group sourcing of inputs can bring valuable savings.

Andrew Blake finds out more from a relatively new player

INDEPENDENT on-farm advice has long been part of ADASs business, but until last spring its consultants rarely became involved in obtaining the inputs they recommended.

All that changed last April with the introduction of ADAS Direct. Now estimates of the amounts of agrochemicals needed by clients are fed regularly to a central co-ordinator and circulated to distributors to get the most competitive prices for a range of products.

The service, available only to farms already receiving ADASs agronomy package, costs 75p/acre a year. But big savings easily off-setting that are already being obtained, says Surrey-based team leader Gordon Hickman. So far about 10% of clients have taken it up, with smaller units benefiting most. "The smaller the unit the bigger the savings."

Similar exercises can be adopted for seed and fertiliser and, for an extra fee, even electricity to ensure arable farmers get value for money.

"It is all about buying clout. We are effectively plugging the hole in our service to clients. They were happy with the independence of our advice. But they were beginning to say that because they had to go to the trade themselves for products, maybe they were not always getting a good deal."

ADAS had previously had limited involvement with local buying groups, but farm numbers have generally been too low to encourage distributors to hone prices as tightly as they might, he believes. "10-15 members is not enough."

Now, with four established regional direct sourcing groups, ADAS Direct has 222 members farming 35,500ha (87,700 acres), says Cambs-based manager Chris Page. "We are aiming at 100,000 acres in the short term."

The Wessex group has its origins in a former Dorset buying group. There are two Midlands groups and one in the north east.

Another group has recently been formed in Lincs. Within each, six key suppliers (not necessarily the same across the country) are invited to tender for the ADAS-generated business. In practice members are given unique identity numbers allowing them to tap into the best deals Mr Page identifies. Orders and accounts settlement are directly between farmer and supplier.

Key requirements, apart from price, are that distributors offer good quality products delivered on time, says Mr Page. "Timeliness is so important. Typically we have about 180 products on our lists, though the number may rise to 300 in the spring. It is very much consultant driven."

The system is flexible enough to permit distributors to quote for equivalent products, he adds. So-called trust deals with guaranteed maximum end-of-season prices can also be absorbed.

"I see the arrangements as a triangle between farms, the trade and ourselves with benefits to our clients, in terms of getting competitively-priced quality products, and to distributors through bigger customer bases."

ADAS Direct reflects a growing trend throughout the industry, says Mr Hickman. "There are fewer manufacturers, fewer distributors and fewer farmers. It is simply a matter of economy of scale. I expect to see more mergers between buying groups."

Combining pesticides orders from ADASs many crop consultant helps keep clients bill low, say Chris Page (left) and Gordon Hickman.

ADASDIRECT

&#8226 Consultant-driven.

&#8226 Bulk sourcing.

&#8226 Range of inputs.

&#8226 Competitive prices.