Implications of Demographic Change: who will be your future customer
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10 th Annual Crop Insurance Conference January 2003
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Implications of Demographic Change: who will be your future customer. 10 th Annual Crop Insurance Conference. Cole Gustafson & Richard Rathge Dept. of Agribusiness & Applied Economics. January 2003. Traditional Family farm customers are disappearing Consolidation of Ag - PowerPoint PPT Presentation
Transcript of Implications of Demographic Change: who will be your future customer
10th Annual Crop Insurance Conference
January 2003
•Traditional Family farm customers are disappearing
–Consolidation of Ag–Number of farms in ND is declining
Center for the Study of Rural America, FRBKC
The Twin Challenges in Farm Country
• Half of farm-dependent counties lost population in the 1990s.
• Three-fourths of farm counties have sub-par economic growth.
Mark Drabenstott
Center for the Study of Rural America
Figure 2. Percent Change in Total Population for the U.S. by County: 1990 to 2000
Figure 13. Percent Change in Persons Ages 20 to 24 for the U.S. by County: 1990 to 2000
North Dakota Population Pyramids by State and County:
1980, 1990, and 2000
Change in Farm Youth, <18North Dakota, 1970 to 1997
11,662
63,557
33,930
17,380
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
1970 1980 1990 1997 Estimate
Num
ber
of P
eopl
e -46.6%
-48.8%
1970 to 1997 -81.7%
Source: Bureau of the Census, Census of Population 1970, 1980, 1990Prepared By: North Dakota State Data Center
-32.9%
North Dakota State Data CenterNorth Dakota State UniversityPO Box 5636, IACC 424Fargo, North Dakota 58105Phone: 701-231-7980 Fax: 231-9730http://www.sdc.ag.ndsu.nodak.edu/
Farms and Farm Size in North DakotaSource: USDA, National Agricultural Statistics Service, Census of Agriculture.
North Dakota State University, IACC Building, Room 424, Fargo, ND 58105 - Phone: (701) 231-8621 - Fax: (701) 231-9730 - URL: http://www.ndsu.edu/sdc
0
20,000
40,000
60,000
80,000
100,000
1900 1920 1930 1940 1950 1959 1969 1978 1987 1997
Year
Far
ms
0
200
400
600
800
1,000
1,200
1,400
Average A
cresFarms
Average Acres
Where Farmers Live in North DakotaSource: USDA, National Agricultural Statistics Service, Census of Agriculture.
North Dakota State University, IACC Building, Room 424, Fargo, ND 58105 - Phone: (701) 231-8621 - Fax: (701) 231-9730 - URL: http://www.ndsu.edu/sdc
70.7
21.9
7.4
65.8
23.7
10.5
0
10
20
30
40
50
60
70
80
On farm Off farm Not reported
Place of Residence of Farm Operator
Perc
ent
19871997
Working off the Farm in North DakotaSource: USDA, National Agricultural Statistics Service, Census of Agriculture.
North Dakota State University, IACC Building, Room 424, Fargo, ND 58105 - Phone: (701) 231-8621 - Fax: (701) 231-9730 - URL: http://www.ndsu.edu/sdc
15
22.2
55.4
7.4
20.122
49.8
8.2
0
10
20
30
40
50
60
200 or more 1 to 199 days None Not reported
Days Worked Off Farm by Farm Operator
Perc
ent
1987 1997
Who Are Your Future Customers?
• Segmentation of markets is occurring– Lending
Who Are Your Future Customers?
• How do lenders tailer products?– Profiling (scoring/screening)– Obtaining more info about you– Selling is key part of job
Who Are Your Future Customers?
• Goal is to sell up
Rural Residence Farms
• Limited-resource. Any small farm with gross sales less than $100,000, total farm assets less than $150,000, and total operator household income less than $20,000. Limited-resource farmers may report farming, a nonfarm occupation, or retirement as their major occupation
• Retirement. Small farms whose operators report they are retired (excludes limited-resource farms operated by retired farmers).
• Residential/lifestyle. Small farms whose operators report a major occupation other than farming (excludes limited-resource farms with operators reporting a nonfarm major occupation).
Intermediate Farms
• Farming occupation/lower-sales. Small farms with sales less than $100,000 whose operators report farming as their major occupation (excludes limited-resource farms whose operators report farming as their major occupation).
• Farming occupation/higher-sales. Small farms with sales between $100,000 and $249,000 whose operators report farming as their major occupation.
Commercial Farms
• Large family. Farms with sales between $250,000 and $499,999.
• Very large family. Farms with sales of $500,000 or more.
• Nonfamily. Farms organized as nonfamily corporations or cooperatives, as well as farms operated by hired managers. In analyzing the farm operator household, this group is excluded.
Farms Land Operated Value of Production
Source: 2000 ARMS, USDA
Intermediate CommercialRural residence
Share of farms, land operated, and value of production by typology group
Sources of operator household income by farm typology, 2001-02
Source: ARMS/USDA
2001 2002 2001 2002 2001 2002 2001 2002-20
0
20
40
60
80
100
120
140 Off-farm incomeFarm income
Rural residence Intermediate Commercial All farms
Who are Your Future Customers?
• Are you insuring acres or households?
Who Are Your Future Customers?
• Who is your customer?– Many work off-farm, do not have time for
details, paperwork– Consumers shop online– Your customers are shopping also– Weather, crop, and livestock insurance online
Farmers’ Use of Internet
0 50 100 150
Sales
Financial
Purchases
Information
Types of products sold through electronic commerce
Type of Service Percent
FeedSeedGrainCrop servicesConsultingCrop inputsmachineryPartsBreeding stockFinancial
8.3 5.6 2.8 2.8 5.6 61.1 41.7 2.8 25.0 0
Who Are Your Future Customers?
• RMA and private sector provides you with a range of products, need to see where they fit!
Who Are Your Future Customers?
• Bundling of services becoming important– Less concerned about competing with other
agents– More concerned with agribusiness
concentration
