Pricing -Marketing

Topics: Retailing, Value added, Inflation Pages: 4 (850 words) Published: April 11, 2013
As farmers use 20kg. of seed per hectare, how much profit do farmers make ( per hectare) if they buy Cargill seeds? If they buy pioneer seeds?

The below calculation is based on the following assumptions: * Farmers are buying from the Distributers of both Cargill & Pioneer * Cargill distributers will charge a margin of 15%, the selling price to farmers will be $2.87

Item| Pioneer| Cargill|
Revenue| 4000 x0.30 1200| 3000 x 0.30 900| Cost per 20 kg of seeds| 20 x 3.59 ( 71.80)| 20 x2.87 = ( 57.50) | Growing corn cost| (741)| (741)| Profit / Hectare| 387.20| 101.50|

* Farmers make a profit of $101.50 per hectare if they buy Cargill seeds * Farmers make a profit of $387.2 per hectare if they buy Pioneer seeds

How much greater value does pioneer give farmers per kilogram of seed purchased than Cargill?

Item| Pioneer| Cargill|
Value /Kg of seed| 4000 /20 = 200| 3000 / 20 = 150|

* Pioneer gives farmers (50 Kg) greater value per Kilogram of seed purchased than Cargill. * Which is equivalent to (50 x 0.30) = $15/kg of greater value, for each Kilogram of seed purchased from Pioneer as opposed to Cargill.

Why is pioneer so unsuccessful with the small farmers? Should pioneer target them?

Pioneer is so unsuccessful with small farmers for the following reasons:

* Small farmers who were not part of buying associations, bought from retail stores that sold and financed all the supplies a farmer could need. And pioneer was not ventured into retailing. * More over Pioneer could not offer small farmers packages that include financing and transportation costs, unlike Himeca that sold their seeds as a complete package of agriculture supplies...
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