Bringing financing choices back to growers.

In the corporate world of consolidation, it's easy to assume that bigger is better. That is the philosophy many seed companies have taken in offering financing to growers. As a result of depressed commodity prices and tight cash flow, competition became intense. In order to gain an advantage, many seed companies developed nationally administered seed financing options for growers. While these low-cost, low-interest programs are appealing to growers, the unintended effect was that many seed purchase dollars were pulled out of rural economies.

The move from local financing to national programs may have saved growers a few dollars, but it ultimately hurt local banks and rural communities.

Two seed companies have taken the initiative in bringing the money back to rural communities by offering customers the opportunity to finance their purchases through local banks. The goal of the programs is to offer low-interest loan rates competitive with those offered at a national level, while still keeping resources in the local communities.

"As a family-owned seed company, we have always worked to develop programs that are helpful to the families and rural communities upon which our success obviously depends," says Guy Mockelman, program developer of Hometown Choices for J.C. Robinson Seeds, Waterloo, Neb. The idea for Hometown Choices came directly from a dealer nearly three years ago. "We had a dealer in northwest Iowa who was frustrated with the challenges of selling seed," says Ron Wulfkuhle, vice president of marketing and sales for J.C. Robinson. "He was friends with a local banker and managed to set up the program in his own dealership. It worked well and he brought the idea to us."

J.C. Robinson Seeds is now in its second year of the Hometown Choices program, after offering a one-year pilot program to banks in Nebraska. Hometown Choices is now available across all of J.C. Robinson's marketing areas. "We have nearly 900 banks enrolled, with more signing up every day," Mockelman says. "We project that Hometown Choices may account for more than 90 percent of the seed that is financed through J.C. Robinson Seeds this year."

J.C. Robinson was not the only company that recognized the need for local financing options. Syngenta Seeds first started looking into the option of working with local banks about two years ago. "We started with market research and then spoke to banks," says Marc Hennen, corn marketing manager for Syngenta Seeds. "Everywhere we went, we found high awareness and interest."

The pilot program for Community Choice took place in 2001-2002 and was offered in several northern states, including Minnesota and Wisconsin. The program is now being taken nationwide, with more than 300 contracts in place and financing being offered at more than 500 branch locations. "Last year as a pilot, about 10 percent of our financing was done through the Community Choice program," Hennen says. "It's still too early to tell, but I would expect it to be closer to 25 to 30 percent this year."

KEEPING IT LOCAL, KEEPING IT SIMPLE

Hometown Choices and Community Choice are both open to any banks that sign a contract with the companies. But J.C. Robinson and Syngenta Seeds took slightly different approaches in making the programs available to growers.

One key feature of Hometown Choices is the ease of enrollment. All the forms and information are available to loan officers over the Internet. "With all the miles of geography we cover, the online process keeps us all on the same page," says Mockelman. "It also makes it simpler for dealers and loan officers." Although all the information is provided online, dealers and bankers can also reach a live person by phone if they have, any questions.

When a grower comes into the bank, we can just log into the Web site, and all the information is right there," says Keith Caldwell, vice president of First National Bank in Hoxie, Kan. "It's really very simple."

Syngenta Seeds' enrollment process for the bank consists of a one-page contract, available from dealers or direct from the company. For the farmer seeking financing, it is even simpler--just walk into the local bank.

"From the simplicity standpoint, this program is great," Hennen says. "Farmers want to keep their business local; many growers prefer this face-to-face relationship that is available through their local bank."

SPREADING THE WORD

In developing seed financing programs focused on local communities, both companies recognized the importance of word of mouth. Grassroots efforts have been instrumental in getting the word out about Hometown Choices and Community Choice to dealers, bankers and growers.

"We primarily focus on where we already have NK Brand dealers," Hennen says. "We rely heavily on our dealers to promote and support the program. A good active dealer can sit down and explain the program to a bank; that reinforces those local relationships."

NK Brand supplied dealers with information and contracts and let them take it from there. "If a local dealer feels good about the program, this is going to come across to growers and bankers," Hennen says. Hennen also says the company may go to banking associations in the future to enlist their help in marketing Community Choice.

To meet their marketing goals, J.C. Robinson chose to rely primarily on the resources of its central office to avoid bogging down the dealer sales force. "By manning the phones from June to September, calling banks and answering questions, we let dealers concentrate on what they do best--which is selling and servicing seed," Mockelman says.

J.C. Robinson put countless miles on tires, as they went in person to banks and banking associations, enlisting the help of industry leaders. A three-phase mailing campaign also helped get the word out to rural communities.

"A marketing plan has to fit who you are as a company," Wulfkuhle points out. "Strategically, Hometown Choices, with its emphasis on local communities, is a good fit with us as a family-owned seed business. That's what made it so easy to sell to our customers."

GOOD FOR COMPANIES, GOOD FOR CUSTOMERS

Even in today's competitive business environment, J.C. Robinson Seeds and Syngenta Seeds have recognized that win-win solutions are the key to maintaining customer relationships. Through Hometown Choices and Community Choice, the companies have tried to find solutions that work for banks and growers, while still remaining profitable for the company. Both companies seem to feel that they have been successful in this endeavor.

"Banks appreciate that a seed company can remain a seed company," Mockelman says. "In this way, we can be a partner to local banks, not a competitor."

These programs have grown through the support of local bankers. "In our first year of the program, we've done three loans so far, and I'm sure we'll be doing more," says Terry Anderson, loan officer for Citizens Bank, Hamburg, Iowa. "J.C. Robinson has made the process painless for us; it's clear that they want this venture to work."

The greatest benefit that these programs offer to growers is choice. "The program is all about options," Hennen says. "We still offer national financing for customers who prefer that option. Our goal is not to force growers to go one way or another; it's to help them find the best fit for their financing needs."

Overall, these companies hope to maintain and improve relationships with customers through the programs. The reasoning is that the easier it is for a grower to finance a seed purchase, the more likely it is that the grower will purchase seed from the company again.

"We have a responsibility as well as a benefit in Hometown Choices," Mockelman says. "The benefit is that we are able to address the financial lending needs of our customers by referring them back to the people they normally do business with. This means more freedom of choice for everyone involved."