Custom application differs across the country

Ontario farmers use agri-retailers for input application much more than in the West

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University of Guelph – Speak to a farmer in Ontario and a farmer in the Prairies about the role their crop input dealer plays in their farm’s operations and they will give two very different answers.

This difference is due to the high subset of Ontario dealerships that custom apply crop inputs on behalf of their clients, something which is not common among dealerships in the Prairies.

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During the summer of 2019, the Department of Food, Agricultural and Resource Economics (FARE) at the University of Guelph sent out separate surveys to two groups: 1) members of the Ontario Agri Business Association (OABA) and 2) members of the Canadian Association of Agri Retailers (CAAR). The purpose was to determine the level of adoption for precision agriculture technology in crop production.

Rather than survey farmers directly, this survey interviewed input suppliers given the past success Purdue University has had through a long-standing survey with CropLife.

All crop input dealers in Ontario responding to the survey offer custom application services for the fertilizers and/or herbicides bought by farmers.

In contrast, only 47 per cent of respondents from the Prairies indicated that their retail outlet provides such services. The focus for most of the agri-retailers in the Prairies is on the actual sale of crop input products and the offering of agronomic advice rather than additional services.

Another indication of the relative importance of custom application between the two regions is the amount of area on which fertilizers and/or herbicides are applied by the agri-retailers for farmers rather than directly by the famers themselves.

Approximately half of the Ontario respondents custom apply agricultural inputs on more than 50,000 acres in a typical year, and this would represent close to half of the five million acres of corn and soybeans planted in Ontario.

Alberta, Saskatchewan, and Manitoba are three provinces that have significantly more farmland than Ontario, yet there were only six dealerships in all three provinces combined, who stated that they custom apply agricultural inputs on more than 50,000 acres in a typical year.

Additionally, a greater percentage of fertilizer and crop protection product sales are custom applied in Ontario compared to those Prairie dealerships who do offer custom application services. An average of 39 per cent of fertilizer and crop protection product sales are custom applied in Ontario, compared to 19 per cent in the Prairies.

Rates of custom application.

When looking at the relationship between dealerships’ annual sales and the percentage of crop input sales custom applied a trend emerges. In Ontario, as dealership annual agronomic product sales increase, the percentage of crop input sales that are custom applied decreases.

An average of 43 per cent of fertilizer and crop protection product sales are custom applied by Ontario dealerships with annual sales of less than $10 million.

For dealerships with annual sales between $10 and $20 million the percentage of crop input sales custom applied is 40 per cent. It falls further to 35 per cent of sales for dealerships with annual sales of greater than $20 million.

For agri-retail locations in the Prairie provinces that offer custom application services, 22 per cent of fertilizer and crop protection product sales are custom applied by dealerships with annual sales of less than $10 million.

As annual sales increase to between $10 million-$20 million the percentage of crop input product sales custom applied falls to 16 per cent. Interestingly, the percentage of crop input sales custom applied then increases to 19 per cent for dealerships with sales of greater than $20 million.

The reason for this occurrence may be explained by mega dealerships offering more custom application services compared to medium to large-sized dealerships. Prairie dealerships with annual sales of over $75 million custom applied 25 per cent of crop input sales, compared to only 16 per cent and 11 per cent for dealerships with annual sales between $10 – $25 million and $25 – $50 million.

How agricultural input dealers operate differs significantly across Canada, especially in the context of custom application service offerings. Custom application services are an essential part of agricultural input dealers’ operations in Ontario but are not nearly as critical to the success of dealerships in the Prairie provinces.

This difference can be attributed to the relative sizes of both individual farms and agricultural input suppliers in these provinces and results in regional differences in precision agriculture technology adoption, as well.

This first appeared at foodfocusguelph.ca.

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