Only 58 percent of farmers were profitable in 2024, down from 78 percent the year before, per the latest lender research from Farmer Mac and the American Bankers Association. The causes are familiar to anyone in ag retail: low commodity prices (and therefore declining income), high input costs, and interest rates that remain relatively high (Figure 1).
Figure 1: Low commodity prices + high costs make a difficult environment for farmers
Add in uncertainty around tariffs and all the usual uncertainty about weather and crop yields, and it’s no wonder many farmers are considering every purchase with more scrutiny than ever.
But, as experienced ag retailers know, down markets happen. The savviest retailers make it through stronger than ever. In this piece, we’ll highlight three strategies retailers can use – and one to avoid – while current market conditions persist to stay financially sturdy and provide customers what they need.
#0: DON’T Cut Prices Unless You Have To
First, let’s address what may seem like the obvious go-to strategy when farmers are starting to reconsider things like additional fertilizer and plant health foliar treatments: cutting prices.
While lowering prices can indeed boost sales in the short-term, the math for maintaining margin is brutal. Assuming a 25 percent gross margin before a price cut and a mere five percent reduction in costs, you’d need to increase sales by 19 percent to break even.
If you cut prices by 10 percent, you’d need to grow sales by 50 percent.
And if your initial margin is less than 25 percent, of course, those numbers increase.
Worse, cutting prices could have the long-term impact of damaging your brand. Once you start offering discounts, customers come to expect them. That can be a tough position to claw your way out of, even when macroeconomic conditions turn.
The good news: ag retailers have plenty of other options for meeting their customers needs and maintaining their revenue.
#1: DO Focus on “Switchers”
While it’s important to continue to cater to loyal customers, it’s also important not to over-index your efforts on them. They are also experiencing difficult financial times, so it’s unreasonable to expect them to make up for revenue you’re losing elsewhere.
Instead, focus on “switchers.” Switchers are farmers you already know who are always on the lookout for the best – whether that’s the best deal, the best new product, or the best way to purchase. These folks are not excessively loyal but are lured by legitimately good offers.
The switchers you want to target are those who are only getting some products from you so that there’s room to grow wallet share. Once you’ve identified your switchers (the easy part), it’s time to convince them to do more of their purchasing from you (the hard part).
Typically, winning over switchers requires two things:
- Carrots (aka incentives): Incentives, product bundles, attractive financing terms, etc.
- Shields (aka risk reduction): Free trials, warranties, money-backed guarantees, etc.
In other words, you want to differentiate yourself from your competitors and give switchers a reason to give you their business. You don’t need to win all of them, but knowing what to offer to entice some of them will help you ride out the stormy economic waters.
For example: one Top Five CropLife 100 retailer put together a Crop Plan Warranty program that combines seeds, fungicides, fertilizer, farm technology, and additional inputs into a whole-acre prescription. Since launching the program, they’ve doubled enrolled acres every year, helping them grow wallet share while also helping their customers improve their outcomes (Figure 2).
Figure 2: Enrolled Acres at Top 5 CropLife 100 retailer, 2021 – 2024
Get more info on how you can use a Crop Plan Warranty to grow wallet share.
#2: DO Woo Underserved Customer Segments
While it’s true that everybody loves a discount, it’s also true that everybody cares about ROI. When you’re avoiding price cuts (and we hope you can!), finding other ways to help customers achieve ROI is crucial to maintaining and growing market and wallet share.
Here’s a rough sketch of likely customer segments and which ROI drivers are likely to appeal to them.
| Persona | What They’re Like | What They Value | Where They Look for ROI |
| Traditionalist | 55+, male, part of multi-generational farming families | Trusted advisors, community events | Risk-reduction tools, warranties, guarantees around outcomes |
| Progressive | 30 – 50, data-driven, early adopters | “Best” decision based on data, information, challenging the whys / whats / hows | Digital products, cutting-edge offerings |
| Cost Conscious | 40 – 60, large operations, cost conscious | Low-cost offerings | Carrots: incentives, bundles, attractive financing terms |
| Sustainability-Focused | Millennial and Gen Y, higher concentration of women, smaller & more diversified farms | Biodiversity, things that appeal to eco-conscious consumers | Advisors, input financing, suite of products |
We mentioned the Crop Plan Warranty above; another offering that can appeal to some of these segments is input financing. Across customer segments, input financing may appeal as long as input costs and interest rates from traditional loans are high and commodity prices are low. What’s more, it empowers retailers to offer attractive purchase terms without creating a lot of bad loans for their accounts receivable.
Regardless of which tool you use, the key to wooing new segments is to employ the right framing. While a progressive farmer may be swayed by the ability to manage everything from a digital dashboard, a cost-conscious farmer may be more interested in how it helps improve cash flow.
For more tips on how to inspire new behavior, check out our eBook How Agricultural Sales Leaders Can Inspire Change.
#3: DO Eliminate Bad Costs
Ag retailers right now may have goals like “cut 10 percent of costs across the business,” but it’s important to be strategic and cut the 10 percent that helps you stay afloat (by winning over switchers and wooing underserved segments).
So what are some “bad” costs retailers can look for? A few we’ve identified:
- Convenience costs
- Product selection
- Shopping experiences
- Customer financing costs
- Inventory carried
Of course, the specifics will vary from one retailer – and even one location – to another. As you assess your expenses, consider the following.
What appeals to switchers?
In inventory management, keep switchers’ preferences top of mind. Invest in what’s important to them and cut areas that aren’t:
- Are there any products or categories you don’t currently carry that you should? Vice versa?
- Can you eliminate excess inventory of items that sell more slowly?
- How important is having items onsite? Would switchers be okay with slower delivery for certain items?
- Is there any additional information, content, or educational materials that would make your offerings more attractive to switchers? (I.e., what do they need beyond your products to purchase?)
Get granular with in-house credit
Understand the hard math of convenience credit lines, especially unmonitored credit.
- Small writeoffs can add up if not carefully monitored.
- A $100,000 writeoff at a five percent profit margin means you have to sell $500,000 worth of goods to break even.
Smart Retailers Have Options for Surviving the Current Market
Per CropLife, most retailers expect ag sales to remain flat in 2025. But an Indiana retailer we recently spoke with said they’d be surprised to see flat sales – in fact, they’re expecting declines.
This year’s conditions won’t be easy on anyone, but smart retailers will find ways to deliver value to farmers through a combination of strategic cutting, innovation, and a relentless focus on helping farmers achieve ROI. For more insights on how to survive the coming months, listen to our recent webinar: Tough times don’t last. Smart retailers do.