Rebate season is in full swing in the agrochemical industry. If you are getting less than £15/Ha (£6/acre) for your rebate this year, the following may be useful.
What is a rebate?
Rebates are end of season cash or credit returned to the farm against their purchases.
Who gets them, and how much are they worth?
We have found around 50% of our customers have pre-existing rebates from their supplier. These average £1.50/Ha (60p/ac).
With our data and help, our customers have achieved £15/Ha (£6/ac) average rebates, with the highest at £30/Ha (£12/ac).
How does it work?
It is standard practice in the UK for distributors to set up deals where prices will not be discussed until the end of the season. Often, this will be cited that the market will move significantly through the season so it is best to see ‘where prices land out’ (in fact, agrochemical prices have nearly no in-season variability).
At this stage, there will be a review of prices paid, against any benchmark information available to the farm - often only coming from the distributor themselves. Distributors will normally offer a cash refund to make up this difference.
Why does it really happen?
The supply chain is designed on rebates to encourage high volumes of agrochemical sales. UK distributors will be awarded lump sum payments discounts from manufacturers on hitting certain volume targets. In theory therefore, your distributor is only in a position to ‘pass on’ these rebates at the end of the season. But this mechanism is far from transparent, and leads to farms paying vast differences in product prices.
How can I access these rebates?
There are two simple rules to get started:
- Don’t be rushed into a rebate by your supplier. Get hold of the most accurate and detailed benchmarking information you can lay your hands on.
- Prepare a very clear and simple position, and tell your supplier you want to start the conversation.
And to close the best rebate possible: Remember you are the customer. Negotiate professionally. Be honest, be clear, and be firm. If your supplier values your business, they will be happy to meet your position.
At Yagro, we provide the most accurate chemical price benchmarking service in the UK, built on verified data points from c.1m acres of UK farming. We review all your season’s prices and give you a product-by-product breakdown of where and how much you could save. You also get an overall ‘Buying Score’ to measure your performance improvement over the seasons.
Using this information, we have helped farms achieve rebates of £15/Ha (£6/ac) on average, with best cases of £30/Ha (£12/ac). This is direct money to the bottom line for any farm; and an average 10x rebate increase for those farms already receiving them.
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