Buying groups are proving their worth in an era of rapid change

Listening to the seasonal shoot trailer talk is always the same. Everyone’s sold their wheat at the top of the market and bought nitrogen at the cheapest price! One of the greatest challenges of managing a farmers’ purchasing group is that you’re set up as an ‘Aunt Sally’ for everyone to snipe at, commenting: “I can buy better”. Talk is indeed cheap.

The reality is far short of this as the Anglia Farmers (AF) benchmarking shows us. Each month we are taking on about 20 new members, each with a thorough comparison to show savings. These are substantial and across the board would equal 5-10% on a like-for-like basis. That, plus the time saving and paperwork removal, makes AF central procurement a real winner. Farming is a business and purchasing decisions have to be based on wider supply chain knowledge. The professional term for this is procurement.

In my grandfather’s day the local ‘traveller’ would call at the same time each fortnight for the order and write out the cheque, opening the envelope behind the clock and knocking off the pence. And in June each year the drive was busy with a dozen ICI reps all trying for the 20-tonne nitrogen order. Time moves on.

Input markets are changing rapidly with most input chains more concentrated than the retail sector. Locally you’ll have seen this with the closure of hundreds of local agricultural merchants, but in the wider industry, consolidation means sometimes you don’t know who owns who. Buying better is not just about volume, it’s about understanding market movements, margin aspirations of the supplier and timely decisions.

An example would be the red diesel market where two suppliers have 70% of the GB market. Buying fuel is now about following markets, monitoring usage (all AF large fuel users have TankScout fuel tank monitors installed) and making informed purchasing decisions – not just ordering when you run out. In reality, farmers’ concern should be the vast reduction of tankers on the road that will bite in a wet harvest or cold winter. That’s why our Platts-related contracts have a service level clause, because waiting until you run out could be expensive.

For most AF members their central purchasing office is the AF trading floor, where 50 buyers experienced in their own product area can advise, support and order every conservable input for the farming business. The concept is simple – no stocks, direct delivery and back-to-back invoicing. All invoices are checked, consolidated into one VAT invoice and presented electronically. The credit for a broken bag? We’ll deal with that as well. Our eAccounts system will even transfer them into your own accounting programme. So ordering over the counter, direct with a supplier and through the AF trading floor or even using the AF charge card when no direct account has been set up transforms your farming business.

Clarke Willis is CEO of Anglia Farmers.

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