How Does Large-Scale Land Management Affect the Agricultural Inputs Industry

With the development of modern agriculture in China, especially with the advancement of land ownership confirmation, the process of land transfer will further accelerate, and this change will bring a profound impact on the future agricultural inputs industry.

Agricultural input consumers are gradually changing from individual farmers to large-scale growers, family farms and professional cooperatives. The agricultural input consumer group has changed and will undergo large-scale shrinkage and concentration. It is estimated that after 5 years, the agricultural input consumer group will shrink to 10% of the original.

Agricultural input production and agricultural input distribution channels will be reshuffled. For example, in the past, because of decentralized operations, there were 1,000 households buying agricultural inputs; in the future, there may be 50. Will large-scale growers, family farms and professional cooperatives continue to go to terminal agricultural input stores to buy agricultural inputs? Obviously not, which means a sharp reduction in the number of terminals.

The process of land transfer is the process of elimination and selection at every link of the agricultural input channel. The fittest survive, and the rest are eliminated. Agricultural input distribution will develop toward two poles: one side will rapidly become bigger and stronger, while the other side will be eliminated.

The sharp reduction in target customers will make traditional tiered distribution channels meaningless, and distribution levels will also become blurred. Channels will ultimately sink down to the consumer link.

The intensive cultivation of crops enables large-scale growers to strictly control the procurement cost of agricultural inputs. The traditional product price system will be broken, and product profit margins will show a downward trend.

The single marketing model of merely buying and selling agricultural input products may exit the stage of history, while new plant protection service companies that integrate products, services, technology and logistics will appear in large numbers. The internal division of labor in new plant protection service companies will be clearer, with business personnel, technical personnel and delivery personnel working in coordination, achieving a qualitative leap in both the depth and breadth of service quality.

In the future, large-scale growers will have increasingly high demand for the standardization of the agricultural input market, the promotion and demonstration of new products, and new services (technical guidance, warehousing, recovery of agricultural products, and deep processing of agricultural products). This will also provide huge potential for market extension for the agricultural inputs industry, and the in-depth development of services will give rise to new supporting service markets.

So how should agricultural input distributors respond to the agricultural input changes brought by large-scale land management?

Agricultural input distributors must first update their concepts. Those without far-reaching concerns will surely have near-term worries. Traditional business concepts are already outdated. Whoever can foresee earlier can get ahead of competitors and gain an advantage in the final competition.

Agricultural scale development still requires a gradual process. Land transfer is only the beginning.

At present, China's land scale is still far below the level of the United States in 1910. The agricultural population of the United States accounts for only about 1.5% of the total population, and Canada's agricultural population also accounts for only about 2.7% of the country's total labor force. Both the United States and Canada have highly developed modern agriculture, with very high overall agricultural labor productivity. One agricultural person can feed more than 100 people.

The urgent task is for agricultural input distributors to become bigger and stronger and lock in the large-scale growers they already have. The more advantageous resources one has in hand, the greater the market initiative one controls. The process of land transfer is the process in which big fish eat small fish and fast fish eat slow fish in the agricultural inputs industry. In the end, those left will all be strong agricultural input distributors.

After land scale development, agricultural input manufacturers without strength, features or brands will quickly be eliminated. At present, agricultural input distributors must rapidly integrate the resources of excellent manufacturers. The more branded products and specialty products one controls, the more one has a “golden rice bowl.” After land scale development, family farms and large-scale growers will pay more attention to imported products and branded products from excellent manufacturers.

After land scale development, competition will be based not only on products, but more on product added value, and more and more service items derived beyond products will appear. Technical service marketing is the core competitiveness of agricultural input distributors. Helping large-scale growers increase production and income and increasing land returns is the goal of technical service marketing.

New plant protection technical service companies will replace existing traditional stores. The companies will be equipped with full-time technical service teams, and the focus of their work will also be placed on technical services and logistics delivery services. Technical services will be a long-term, regular project.

In-depth technical services are the future direction of development. Contracting contracts are signed with large-scale growers, and seeds, fertilizers, pesticides and other agricultural inputs are all provided by the plant protection company, or even one-stop package services from planting to harvest are provided. Large-scale growers only need to pay according to each mu.

With the development of land scale development, derivative projects beyond agricultural production materials can also be generated, such as providing warehouse use for a fee or free of charge, recovering agricultural and sideline products from large-scale growers, and carrying out deep processing of agricultural products.