McKinsey suggests farmer skepticism of online purchasing is decreasing during pandemic

12:37 PM | September 4, 2020 | Joseph Harvey

The trend of European farmers rarely going online to buy feed additives could be declining, according to McKinsey.

While farmers in Europe are early adopters in the areas of yield improvement, sustainability and animal welfare, McKinsey suggested their general view of online purchasing has previously been skeptical.

The company surveyed over 1,000 farmers across Belgium, Denmark, France, Germany, the Netherlands, Poland and Spain in 2019. The firm found only 13% of respondents had made online purchase of seeds, fertilizer, crop protection, animal feed/feed additives, farm equipment or software/agritech in the previous 12 months. Only 3% had bought animal feed additives in the last year.

However, a follow-up survey in May 2020 found a much higher percentage of respondents now prefer to purchase agricultural products online.

McKinsey noted: “There is an opportunity for companies in the agriculture industry to accelerate their online presence, work out omni-channel strategies and maybe even change their business models entirely to meet farmers’ needs better.”

While many farmers do not purchase much online, more than half of dairy and livestock farmers use animal health optimization software – a clear sign of their willingness to take on new technologies.

McKinsey estimated the European online agriculture market is currently worth only €150 million to €200 million ($177 million to $236 million).

"The slow development of the online agriculture retail market in Europe is, in many ways, a self-inflicted wound," the firm explained. "It just isn't easy enough for farmers to go digital. Indeed, at a number of points along the customer decision journey, it is almost painful.

"Specifically, during the initial research process, 33% of survey respondents complain that it is difficult or impossible to compare products, and 31% say pricing is confusing. Many of the farmers stop their online experience right there. Even among those who move on to purchase, however, the complaints keep racking up. Among them are not being able to reach someone 24/7 (64%), difficulty connecting with the right representatives (32%), lack of real-time product availability (35%) and unclear pricing (21%). After purchase, the pain continues, with common complaints about lack of responsiveness and availability."

Impact of COVID-19

However, attitudes could be changing. Farmers – like many consumers throughout the animal health sector – are becoming more attuned to going online for their purchases. This trend will also be a boon to companies in the precision livestock farming sector, as producers acclimatize to social distancing measures and aim to reduce labor costs.

The more recent McKinsey survey covered 100 European farmers from the same countries as the 2019 research, with "a much higher percentage" of respondents buying online. The firm also said there was a more positive attitude among the farmers toward digital retail.

McKinsey added: "The COVID-19 crisis is of major concern. All farms surveyed report worse economic performance since the start of the pandemic, and 75% were pessimistic about the prospects of the post-crisis economy. In addition, 95% say they are considering adjusting purchasing behavior to minimize physical interactions.

"Compared with the pre-crisis survey, there is a 36-percentage-point increase in farmers' desire to use digital channels to make product-purchase decisions and a 36-percentage-point increase in their desire to use digital channels to make actual purchases.

"In 2019, only a third of European farmers surveyed reported wanting to use digital channels to purchase. In the more recent, smaller survey, 69% say they do. Across Europe, that adds up to almost four million more farmers who say they are ready to use online channels as their main sources of ordering."