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Implications of Demographic Change: who will be your future customer

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

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Implications of Demographic Change: who will be your future customer

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  1. Implications of Demographic Change: who will be your future customer 10th Annual Crop Insurance Conference Cole Gustafson & Richard Rathge Dept. of Agribusiness & Applied Economics January 2003

  2. Traditional Family farm customers are disappearing Consolidation of Ag Number of farms in ND is declining

  3. 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 Center for the Study of Rural America, FRBKC

  4. Figure 2. Percent Change in Total Population for the U.S. by County: 1990 to 2000

  5. Figure 13. Percent Change in Persons Ages 20 to 24 for the U.S. by County: 1990 to 2000

  6. North Dakota Population Pyramids by State and County: 1980, 1990, and 2000

  7. Change in Farm Youth, <18North Dakota, 1970 to 1997 1970 to 1997 -81.7% -46.6% -48.8% -32.9% Source: Bureau of the Census, Census of Population 1970, 1980, 1990 Prepared By: North Dakota State Data Center

  8. 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

  9. 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

  10. 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

  11. Who Are Your Future Customers? • Segmentation of markets is occurring • Lending

  12. Who Are Your Future Customers? • How do lenders tailer products? • Profiling (scoring/screening) • Obtaining more info about you • Selling is key part of job

  13. Who Are Your Future Customers? • Goal is to sell up

  14. 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).

  15. 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.

  16. 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.

  17. Share of farms, land operated, and value of production by typology group Value of Production Land Operated Farms Intermediate Commercial Rural residence Source: 2000 ARMS, USDA

  18. Sources of operator household income by farm typology, 2001-02 Off-farm income 140 Farm income 120 100 80 60 40 20 0 -20 2001 2002 2001 2001 2002 2002 2001 2002 Rural residence All farms Intermediate Commercial Source: ARMS/USDA

  19. Who are Your Future Customers? • Are you insuring acres or households?

  20. 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

  21. Farmers’ Use of Internet

  22. Types of products sold through electronic commerce

  23. Who Are Your Future Customers? RMA and private sector provides you with a range of products, need to see where they fit!

  24. Who Are Your Future Customers? • Bundling of services becoming important • Less concerned about competing with other agents • More concerned with agribusiness concentration

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