AgraCity Sales Meeting November 3 - 5, 2014 Mike Snyder Fargo, ND

AgraCity Sales Meeting

November 3 - 5, 2014

Mike Snyder

Fargo, ND

Agenda

1. FNA vs AgraCity

2. Grower Presentation

3. Pricing Strategy / MPower Rewards

4. Pricing Discovery / Competitive Intelligence

5. Product Lines

6. Promotional Materials

FNA vs AgraCity• FNA

– Membership based organization– Objective is to “Maximize Farmer Profitability”– Focused on 3 FNA platforms to increase profitability

• Supply, Marketing and Regulatory

• AgraCity– Exclusive input supplier to FNA members– Solution provider with a partner mentality

3 Generations of FNA• 1st Generation Price disrupters• 2nd Generation Low cost suppliers i.e.

– AgraCity– AgServe

• 3rd Generation Farmer Ownership– ProjectN– Project Genesis Grain and Fertilizer

FNA Platforms

FNA Platforms• Supply: Reduce Costs• Marketing: Increase Revenue• Regulations: Freedom to Operate

FNA

Areas of Cost Reduction:

1. Ag Chemicals / Adjuvants

2. Fertilizers

3. Seed

4. Oil and Lubricants

5. Grain Marketing, Handling, Transportation

6. Regulatory Influence

AgraCity

• Lower cost input provider • Solution provider with a partner mentality• We have to help the farmer understand how we can

help….

You, (Farmer)

Help me, (AgraCity Sales Rep)

Help you! (Discuss Goals and Issues)

Solution ProviderExample #1:• Farmer wants to reduce their cost on corn inputs• Farmer wants to purchase a corn fungicide• Last year, he used Quilt fungicide (Syngenta)• Quilt is a premix of Azoxystrobin and Propiconazole• Solution #1: Generic alternative of pre-mix• Solution #2: Tank mix generic Azoxystrobin and

Propiconazole

FNA Member Opportunities

Farm BusinessAlliance

Nitrogen PlantOwner / Operator

Crop Input & LogisticsService Provider

“To Maximize Farm Profitability”

Farm Direct Delivery

Intermediate ProgramNegotiator & Preferred Supplier

Program Provider

FNA vs AgraCity

Any Questions?

Or

Comments?

Grower Presentation

Farmers of North America

AgraCity Crops & Nutrition, Inc.

US Market Launch 2014




Crop Input & LogisticsService Provider

“To Maximize Farm Profitability”



Program Provider


• FNA is a membership based business alliance of farmers designed to engage in activities that “Maximize Farm Profitability”

• Founded by a Saskatchewan farm family in 1998

10,000

5000

3000

1000100


• FNA is a membership based business alliance of farmers designed to engage in activities that “Maximize Farm Profitability”

• Founded by a Saskatchewan farm family in 1998• Today FNA represents 10,000 farms and over 20 million acres in

Canada

1999 2002 2005 2008

2013

Membership Growth 1999 – 2013FNA Platforms

• Supply: Reduce Costs• Marketing: Increase Revenue• Regulations: Freedom to Operate


• Direct-to-Farm logistics and distribution provider• US Market entry targeting eastern Dakotas and western Minnesota• Offering products in Crop Protection, Adjuvants, Plant Nutrition,

Seed, Seed Treatments, NPK Fertilizers, Oils & Lubricants

“Our mission is to provide quality farm products at a fair price with the underlying goal to maximize farm

profitability and empower farmers”

- ProjectN

The next phase… – “Member Equity Participation”– “What FNA priority areas would be of greatest interest to you for an equity

participation opportunity?”– Fertilizer & Grain Marketing and Handling were the top investment choices of

Members

- ProjectN



Members

- ProjectN



Members

Highlights:• Member owned, closed loop

system• Advanced stages, first to market• Infrastructure and gas supply• Attractive economics• Safe operational jurisdiction

AgServe

• Intermediate programs designed to help members reduce costs on parts, tires, equipment and other important items

AgServe

• Intermediate programs designed to help members reduce costs on parts, tires, equipment and other important items

• Preferred supplier programs designed to give members discount opportunities




Crop Input & Logistics Service Provider



Program Provider


• Direct-to-Farm logistics and distribution provider• US Market entry targeting eastern Dakotas and western Minnesota• Offering products in Crop Protection, Adjuvants, Plant Nutrition,

Seed, Seed Treatments, NPK Fertilizers, Oils & Lubricants

“Our mission is to provide quality farm products at a fair price with the underlying goal to maximize farm

profitability and empower farmers”

AgraCity“Quality Farm Products at a Fair Price”

• Low overhead logistics and distribution model• Shorter supply chain than traditional distribution• Collective purchasing power through business alliance• For farmers (FNA Members) who:

– Only want to pay for necessary products and services– Want to control the timing of input applications– Don’t want to pay for large company overhead– Want to improve their own bottom line– Want a business partner focused on their needs


Traditional Supply Model

Each step of the channel focuses on maximizing company profits*

Ingredient Producer

Formulator Distributor Retailer Grower


*Some companies have a shorter supply chain, but savings go to their own bottom line

Traditional Supply Model

Each step of the channel focuses on maximizing company profits*

Ingredient Producer

Formulator Distributor Retailer Grower

AgraCity Supply Model

Ingredient Producer

Formulator Grower

AgraCity is focused on improving FNA Member profitabilityAbility to shorten the supply chain will vary by product offer

AgraCityAnticipated Savings by Category

• Savings will vary by product within a category and by supplier comparison

• Expect minimum 5% up front savings vs traditional suppliers supplemented by Cash Rewards

Crop Protection

Adjuvants Plant Nutrition

Seed Oils and Lubricants

5 – 15% 10 – 30% 5 – 20% 5 – 15% 10 – 25%

Partnership Builds SuccessIt starts with you…

• Forecast your needs

• Take product early

• Pay up front

AgraCity will…• Group forecasts for volume

discounts• Secure early purchases for

best “deals”• Minimize terms for cash

discounts

Traditional suppliers realize additional margin on “services” such as inventory stocking, next day delivery, and financing. Our partnership will minimize these costs, putting money back in each farmer’s pocket.

MPower ® Cash Rewards

• Prepaid MasterCard® for use anywhere credit cards are accepted

• Cash awarded for purchases of eligible products• Member benefit over and above competitive pricing• Protects opportunity for FNA Members

AgraCity – Product Focus

Segments Current Offers 2015 & Beyond

Crop Protection Generics, Limited Branded Products Products, Generics, Limited Branded Products




Adjuvants Key Drexel Products Products





Plant Nutrition Specialty Products, Key Commodities

Specialty Products, Key Commodities







Seed Frontiersmen Corn & Soybean Frontiersmen Corn & Soybean








Seed Treatments Generics, Limited Branded Products Products, Limited Branded & Generic Products








Seed Treatments Generics, Limited Branded Products Products, Limited Branded & Generic Products

Oil & Lubricants Full Line of Martin Lubricants Full Line of Martin Lubricants

AgraCity Benefits

• Distribution company focused on improving member profits• Flexibility to address farmers current needs / issues• FNA members capture the value of collective forecasting• Multiple product lines across farm operation• Less layers of distribution and overhead• Convenience of direct-to-farm delivery

Reduce expenses and improve farm profits!

Participate Today!3 Easy Steps

1. Buy FNA Membership

2. Review AgraCity and AgServe Products and Prices

3. Place Orders through AgraCity Business Rep or call 1-844-BUY-AGRA (289-2472)

Grower Presentation

• Any Questions?• Comments?• Suggestions?

Pricing Strategy / MPower Rewards

• Strategy…“Maximize Farm Profitability”

We need to be able to sell our products

at a “Great” Low price.

Pricing Strategy / MPower Rewards• What is a Great Low Price?

Example:• Product “A” has an average price at $100/gal• Grower pricing ranges from $90/gal to $110/gal• AgraCity List target would be $90/gal

– A Good List price for the farmer• With MPower Rewards, our target price is $85/gal

– A Great Net price for the farmer

MPower Rewards

• What• Why• How

What is…MPower Rewards

• It’s FNA & AgraCity’s vehicle to pay back rebates to FNA members

• AgraCity’s intent, is to pay MPower Rewards to farmers four (4) times per year

MPower Payment Frequency has yet to be determined

Please DO NOT communicate payment frequency at this time

• For AgraCity…MPower Rewards will be based on an Unpublished or Published % of the list price of AgraCity products

Why…MPower Rewards• Preserves Value:

– By not publishing the full discount or net price to the farmer, the industry will have a more difficult time matching our full value

• Eliminates Free Riders:– If the industry matches our net price, then non-members will get

the industry matched price

• Creates an Alternative Reward without Adjusting List Pricing:– Early stocking discounts with published rewards– Large volume purchase incentives

How…MPower Rewards Works

• When a farmer joins as a member of FNA, they will be automatically enrolled and receive an MPower Rewards Prepaid MasterCard®

• Each time a farmer makes an eligible purchase, the farmer will earn MPower Rewards

• MPower Rewards are loaded onto the FNA member’s card• The FNA member may then spend their earned rewards on

anything they like, spends like cash

MPower Rewards…Example(Unpublished Reward)

• Farmer purchases 100 gallons of Product “A” for $90/gal from AgraCity in January of 2015:– Unpublished Rewards for Product “A” is 5%– Farmer’s MPower Reward is $4.50/gal– AgraCity will load $45.00 onto the farmer’s MPower

Rewards MasterCard in April of 2015 Nope…WAKE UP….AgraCity will deposit the $450.00

into the farmer’s MPower Rewards MasterCard in April of 2015

MPower Rewards…Example(Unpublished Reward)

Pro:– Competitors cannot easily match AgraCity’s price

Con:– Farmer doesn’t know the net price offered by AgraCity

MPower Rewards…Example(Published Reward)

• Farmer plans to purchase 100 gallons of Product “A” for $90/gal from AgraCity in January

• AgraCity offers an additional Published MPower Reward of 2% to purchase prior to the end of year– Unpublished Rewards for Product “A” is 5% or $4.50/gal– Published Reward for Dec. purchase is 2% or $1.80/gal– Farmer’s MPower Reward is now

$6.30/gal– AgraCity will load $630.00 onto the farmers MPower Rewards

MasterCard in April of 2015– Farmer’s net price is now $83.70/gallon

Pricing Discovery / Competitive Intelligence

Understanding What to Price vs Competition is Critical

How do we determine AgraCity’s target price?1. Supplier Information

2. Broker Price Sheets

3. Competitive Web Pages• XSAg

4. Sales Rep Feedbacka) Historical knowledge

b) Grower feedback

c) Pricing analysis worksheets

Farmer Savings Worksheets

• Spreadsheet that collects the;– Farmer’s current and/or believed to be current price– Farmer’s expected volume by product– AgraCity price – Calculates savings or additional cost / product– Keeps track of total net savings – Show Example

..\..\Desktop\Grower Savings Examples.pdf

Product Lines

• Crop Protection• Adjuvants• Plant Nutrition• Oil and Lubricants

Crop Protection Products

1. Standard Products on the AgraCity Price List• MPower Brands• Supplier Brands

2. Opportunistic Product List• Products we are purchasing sideways

3. One Timers• Thru sales rep request or opportunistic one-time

purchase

MPower Brands

• MPower brands will be developed from: – Technical registrations– Formulators exemption (exempt from data comp)– Repack agreements with generic suppliers

VERY IMPORTANT NOT TO REVEAL SUPPLIER • We expect most of our MPower Brand approval in

March/April, 2015

MPower Brands

Supplier Brands

• Supplier Brands will also be on AgraCity Price Sheet:– Supplier has to be comfortable with public support – Why a Supplier brand vs an MPower brand?

• Limited market size • Inconsistent opportunity• Lack of supplier support

AgraCity Price List

• Price Sheet– Date of Last Update– Molecule– Packaging Options– List Prices

– Docs to Reps\AgraCity Product Guide & Price List 11-3-14.xlsx

Opportunistic Products

• Purchased from an alternative supplier (Broker)• We have good supply • May not have MPower rewards offering • Prices communicated via email from Brad or Mike

One Timers

– Available only because of a Farmer/Rep request

– May not have MPower rewards

Adjuvants

• Limited Supply of heavily used options– 90% Non-ionic Surfactant– Ammonium Sulfate – Vegetable Oil– Drift Control Agent– Methylated Seed Oil

• Initial inventory is Drexel branded material• MPower Brands will replace current inventory

Plant Nutrition

FNA Member Needs

• Required products at the right prices• More consistent prices• More current infrastructure• Timely application• Ability to distinguish the right value added products• Economic ways to address environmental concerns and restrictions

AgraCity Objectives

• Become a viable, consistent fertilizer supplier for members• Provide savings to members on key fertilizer items• Deliver meaningful volumes effectively• Achieve sustainable margins that support growth• Complete ProjectN and reach associated targets• Participate in the value added segment

Key Strategies1. Develop targeted MPower brand products to deliver key value

added starters, foliars and micronutrients

2. Offer supplier-branded products to provide more options while minimizing working capital and resources

3. Develop commodity purchasing, sales and logistics process to provide major inputs direct-to-farm

4. Facilitate on-farm storage opportunities through tank and bin programs

5. Successfully execute the ProjectN initiative

6. Back-integrate specialty formulation and production capabilities

7. Identify and develop future product offers that address new technologies including PGR, Biostimulant and Nutrient Efficiency products

Questions?

Oil and Lubricants

Supplier Branded Line of Products– Martin Lubricants

• Diesel Engine Oil• Gasoline Engine Oil• Tractor & Hydraulic Fluid• Greases• Antifreeze & Coolant

Homework

• Give us your grower level pricing?– Chemical Products– Adjuvants– Plant Nutrition– Oils and Lubricants

Promotional Materials

• AgraCity Brochure• Product Guide• Plant Nutrition Sell Sheets / Brochures• AgraCity Website• Gloves with “844 BUY AGRA” on them• Price Sheet

Promotional Material

• What ideas do you have?• Keep in mind, our “Low Cost Provider” theme

Questions / Comments

1. FNA vs AgraCity

2. Grower Presentation

3. Pricing Strategy / MPower Rewards

4. Pricing Discovery / Competitive Intelligence

5. Product Lines

6. Promotional Materials

Seed Treatments• Corn

– 100% of seed corn is treated

• Soybeans– 70% of the seed beans are treated by treater– Almost all see beans are treated by seed company / treater– Those who want inoculant need treatment applied within 1-2

days of planting

• Cereals– 70% Spring wheat is treated– 50% is grower applied

Seed Treatment Plan• Develop a low cost on-farm treater• Offer straight ST products

– Imidacloprid– Metalaxyl– Fludioxanil– Color and polymer– Inoculant

• Test on-farm concept in 2014

Seed Treatment Action• Action Items:

– Find 4-5 farmers interested in treating their own soybeans and/or wheat

Then, we will need to: – Sell them bare seed– Sell them seed treatments– Coordinate seed treatment equipment test

Documents

AgraCity Sales Meeting November 3 - 5, 2014 Mike Snyder Fargo, ND