Whether they call it “bundling” or a financing program, major seed and herbicide companies are offering growers package deals. Those deals provide more products, financing options and flexibility than ever before.

Companies such as Syngenta, Monsanto and Pioneer/DuPont now provide early payment discounts, low interest rates or deferred payments — if growers buy certain amounts of either seed or herbicide or both.

Whatever these deals are called in the field, the bigger question is whether or not farmers are using them.

In a Soybean Digest online survey of 688 readers, 28% say they use specific herbicide-seed financing programs such as Pioneer's TruChoice, Monsanto's Bottom-Line Booster Guarantee, Syngenta's AgriFit or “other.” Other includes dealer and local financing offered by other seed and/or herbicide companies, banks and other lenders.

Yet Rick Matthiesen, Rowley, IA, is of the opinion that most farmers need to use financing — whether it's from a seed or herbicide company or a bank operating loan. He's a corn-soybean grower who sells Pioneer seed. And many of his customers use the company's financing programs — or someone else's. “It's pretty hard to farm without financing of some type,” Matthiesen says.

He adds that farmers are happy with both the financial help and the expertise he provides. “Hybrids and varieties are rotated through more quickly because better genetics keep coming out, and they're hard to keep up with. In a lot of cases, the customer is looking for someone to do that for him,” he says.

That's why companies are selling what they call “product portfolios,” says Tony Minnichsoffer, communications director for Syngenta Seeds.

“We've developed a portfolio selling approach because growers increasingly want to buy seed from a seed specialist to help them put together the most effective set of inputs,” he adds. “To differentiate themselves, seed dealers and ag retailers who sell seed must work harder today to put together the best offer and the ideal set of inputs for each customer.”

According to our survey, in which 72% of respondents said they didn't use herbicide-seed financing packages, companies may have a lot of work to do. Survey response, which reflects multiple answers, included:

  • Thought the product offering was restrictive (46%)
  • Didn't like the product combination (41%)
  • Felt there was no cost savings (29%)
  • Felt the packages were too complicated (19.6%).

When growers consider what seed to buy, product performance and yield are most important, according to 90% of respondents. Only 15.3% of those responding consider financing as most critical. In selecting herbicides, 97% say product performance is important; 80.3% say price is. A total of 8.5% say financing programs are important.

“Growers should buy corn hybrids and soybean varieties based on performance data,” says Dale Hicks, University of Minnesota extension agronomist. “It may be a good interest rate, but if the package isn't what you're looking for, it isn't a sound investment.”

Doug Starks, Owatonna, MN, agrees. He looks at how his seed performed the past year, prices inputs individually, then buys them packaged from Central Co-op, a local retailer.

Starks, who grows 1,400 acres of corn and beans, gets what he needs at a price he can afford. “Because I'm coming in with a whole package, I'm able to utilize volume discounts that I wouldn't have received if I'd bought from other retailers in bits and pieces.”

Farmers also like the one-stop shopping convenience of packaged inputs, says Larry Hermanns, who sells Monsanto's Dekalb and Asgrow brand seed and grows 1,500 acres of corn and soybeans near Coulterville, IL. Because his customers want it, he's now selling chemicals, too.

“There are certain farmers who want those bundling packages. So to compete, we hooked up with a retailer,” Hermanns adds.

Where Do You Turn For Seed-Herbicide Information?
Seed Herbicide
Dealers 80.7% 80.8%
Input companies 51.3% 36.1%
Other farmers 43.4% 42.4%
Farm magazines 27.6% 34.9%
Crop consultants 23.6% 34.6%
What's Most Important When Buying Inputs?
Seed Herbicide Seed/Herbicide Package
Product performance 90.2% 97.2% 90.5%
Yield 90.1% 33.1% 65.9%
Price 57.7% 80.3% 77.3%
Dealer service 47.2% 54.3% 46.4%
Herbicide-resistant seed 39.1% 19.7% 24.6%
Disease-resistant seed 31.8% 9.1% 17.2%
Brand 15.9% 8.5% 15.7%
Financing program 15.3% 6.0% 8.0%
Percents may reflect multiple answers SOURCE: SOYBEAN DIGEST ONLINE SURVEY

He's not out to sell herbicide to everybody, however. “I'm using the chemical sales to ensure the business I've got today. A lot of guys don't care about buying chemicals from me. They want to buy them from a retailer they've been with for years.”

Some growers don't like the financing packages that larger companies offer, Hermanns adds. “They don't want to be tied up 100% with one company. They want to make the decision of where they want to go and what they want to do. We give them that option.”

Although Starks is enjoying the one-stop convenience from his local co-op, he too is concerned about buying everything from one source. “I sometimes wonder if I'm shooting myself in the foot because I'm eliminating competition. I guess that's why I still price around,” he says.

Don't Write Off Crop Costs Too Quickly

IRS auditors are watching when farmers write off crop input costs from financing programs or bundled buys, says Robert Fleming, Ohio State University farm management specialist.

“There are concerns from a tax standpoint that people are trying to write down the expenses from acquired inputs too quickly, before they are paid,” Fleming warns. If a supplier tells a grower that he can borrow the money, write it off in one year and pay the supplier back the next, check it out, he adds.

Deductions are allowed the year a grower buys inputs if the financing comes from a third party, but not necessarily if they're financed by a lending subsidiary of the vendor.

Fleming advises growers to double check with their tax professionals about whether there's enough of a separation between the company selling the inputs and its financing unit.

The Advantages Of Finance Packages*
Lower prices 54.5%
Convenience 46.4%
Good agronomics 41.6%
Time savings 18.7%
*According to online survey respondents who used seed-herbicide finance packages. Percents may reflect multiple answers.