“Assessing fertilizer buying behavior of emerging farmers in a South African grain producing area”

Fertilizer not only plays a major role in the profitability of the farmer’s business, but also represents an expensive farm input. The emerging farmer market segment is expanding and holds a great deal of potential for fertilizer companies to supply the growing need for fertilizer in this market. Almost all fertilizer marketing strategies of South African companies have been designed to cater for the commercial farming sector; however, if fertilizer suppliers want to focus on the emerging farmer market seg- ment, they need to understand buying behavior of emerging farmers, as well as their needs when developing strategies to utilize opportunities in this developing market. This study aims to identify factors playing an important role in the buying behavior of emerging farmers in the Free State when purchasing fertilizer. The results show that service, brand, product, and learning or psychological factors highly influence emerging farmers’ fertilizer purchase decision. The study also finally draws recommenda- tions and conclusions for managerial perusal


INTRODUCTION
In South Africa, agriculture is a crucial sector to create jobs and to grow the economy. Commercial agriculture is one of the country's most important employers, employing 5.2% of the SA labor force. This sector particularly absorbs unskilled and semi-skilled workers with little formal education (KPMG, 2013). The primary agricultural sector directly contributes about 3% to the country's GDP, but if the entire value chain is taken into account, its contribution to GDP reaches about 12% (SA, 2015; Gosling & Moolla, 2011). Food security is a major issue, and without enough production, South Africa is in danger of becoming even bigger net importer of food (that started in 2007).
The grain industry in South Africa accounts for 25-33% of the total gross value of agricultural production (SA, 2012). Grains such as barley, maize, oats, wheat, and sorghum, as well as various oilseeds (sunflower, canola, soya bean and groundnuts) make up the "Grain industry" in SA. Maize is the most important grain crop in South Africa, being both the major feed grain and the staple food of the majority of the South African population (DAFF, 2013). The largest contributor towards the gross value of field crops for the past five seasons is maize (46.1%), followed by sugar cane (14.2%), wheat (10.6%), hay (8.7%) and soya beans (7.1%). The contribution by provinces to maize production during the 2012/13 production season is depicted in the following figure (DAFF, 2013).
The estimated area that South African commercial producers planted to maize during the 2012/13 season is 2,781 million ha. This is 3% or 82,000 ha more than the 2,699 million ha planted the previous season and 6.6% or 173,120 ha more than the five-year average of 2,608 million ha planted. The Free State province produced the most with 41% followed by Mpumalanga with 26%. The Free State province also produces almost 378 million tons of wheat, which are the second most in SA (SA, 2011).
Agriculture in SA is made up of both emerging and commercially developed farmers (Armour, 2014;WWF, 2010). Until now, agricultural censuses have largely concentrated on commercial agriculture leaving out small-scale and subsistence agriculture (SA, 2016). In this regard, commercial farmers constitute between 40 000-46 000, which is almost 95% of the total marketed agricultural output (Ntsebeza & Hall, 2007, p. 143; News 24, 2013;Van Wyk, 2014). However, emerging farmers are expected to be between 1.3-3 million and situated largely in communal areas and former homelands (Machete et al., 2004). The Land and Agricultural Bank of South Africa developed a categorization model ( Figure 2) to show that emergent farmers are indeed diverse (Mabaya, 2011, p. 3

Commercial
From the above, it can be inferred that the emerging farmer sector can be broadly described as previously disadvantaged farmers who are attempting to make a transition to commercially based agriculture. Many land reform schemes currently in SA give impetus to growing a new sector of emerging farmers. The smallholder farmers typically lack productive assets and produce mainly for their personal consumption instead of production for markets. The black emerging farmer is slightly more advanced than the smallholder farmer and holds more production assets, but struggles to scale up production, and has difficulty in getting connected to markets (Barlow & Van Dijk, 2013). Amongst the cropping based farmer groups are smallholder farmers with varying capacities and desires to make a transition from survivalist farming to more commercially oriented farming systems (ACIAR, 2009).
It should be noted that significant differences exist between large commercial farmers and emerging farmers in the South African grain industry. Therefore, in this study, grain farmers are limited to crop producing farmers only. The differences provide a clearer view of their needs, requirements and subsequently, also their buying behavior.  Figure 3 shows the inclination of growing input costs. Clearly, fertilizer is the most expensive farm input, followed by feeds and fuel. Retail prices of these commodities are linked to the oil price and the rand/dollar exchange rate, both of which are out of the farmer's control (WWF, 2010). The combined index of prices of intermediate production inputs and services showed an increase of 11.0% for 2012/13 (DAFF, 2013): Prices of farming requisites rose by 10.8% in 2012/13, compared to an increase of 13.7% in the previous year, prices for seed increased by 19.0%, fuel by 14.0%, packing material by 12.9%, feeds by 10.0%, trucks by 9.6%, dips and sprays by 9.0% fertilisers and tractors by 8.8% each, building material by 8.6%, fencing material by 7.5% and maintenance and repairs by 7.0% (DAFF, 2013).
Therefore, increased yields are closely linked to fertilizer usage and application rates. Through improving the productivity of the emerging market, the food deficiency of the rural population could be alleviated and, as a consequence, increase the demand for intermediate inputs like fertilizer (SA, 2011, p. 608). However, fertilizer is one of the most expensive farm inputs for emerging grain farmers, which makes the buying decision the focal point of their farming operations. To reduce buying confusion and disagreement by consumers, fertilizer companies should enquire whether customers are satisfied with their buying decision by contacting them directly after purchase or through the use of tracking studies to evaluate levels of customer satisfaction or dissatisfaction over time (Blythe, 2013 Predominately, South African farmers engage in low level subsistence agriculture, however, many emerging farmers already receive government support. Furthermore, additional support is provided by commercial producer organisations and private sector fertilizer companies with the aim of increasing productivity of smallholder agriculture. The largest target market of fertilizer companies is commercial farmers. Therefore, their marketing strategies are designed for commercial farmers and subsequently adapted to small-scale farmers. In contradiction, the emergent sector represents a golden opportunity that has been largely ignored by the corporate sector, and it is argued that companies need to embrace the potential of this market by helping them to source materials, which can be distributed to them as well (Jiang, 2015). A great deal of government developmental program exist. The South African Comprehensive Agricultural Support Program (CASP) and the Farmer Recapitalization Program (RECAP) are both assisting emerging farmers.

PURPOSE
The number of emerging farmers in South Africa grew into a substantial market segment, creating an opportunity for fertilizer companies to engage. As this is a new market segment, the buying behavior of these farmers is unfamiliar, and, as a result, to successfully enter this market segment, research in buying behavior is needed. A better understanding of emerging farmers' buying behavior would improve fertilizer company's chances to prosper in this market in future. This would be a result of incorporating and adapting their marketing strategies to the changes in the South African agricultural environment, thus, serve the needs of their new farmer-customers better. The purpose of the study is, therefore, to identify the factors that play an important role in the buying behavior of emerging farmers when buying fertilizer.

LITERATURE REVIEW
Farmers are faced with various complex choices today, and, as such, it is important for a fertilizer company to understand the buying behavior of the targeted customer.
The consumer decision-making process Decision-making is a complicated process. The process consists of five stages; they are: • Need recognition. Buying behavior is activated by the customer sensing a need. If this need is backed up by money (or purchasing power), an economic demand realizes, and there is a mark for products that could satisfy the need.
• Information search. Following need recognition, the customer (or, in this case, the emerging farmer), requires information on the different products that could satisfy the need. Various sources of information exist. Additionally, a number of influential factors play a role in the final decision taken by the customer. This is more so in the event of more expensive product. Hence, emerging grain farmers buying an expensive production, such as fertilizer, would show exten-sive involvement in decision-making before reaching the final step of the actual purchase. Typically they would consider views held by various reference groups or opinion leaders, where the word-of-mouth process would play an important role in their buying behavior (Kotler & Armstrong, 2012, p. 163). Du Plessis et al. (2007, p. 67) describe opinion leaders as people in the buyer's reference group who possess specific knowledge or skills, personality or some other characteristics, which make them worthy of consulting as exert in a buying decision. Both agricultural organizations and farmer associations are suitable to act as opinion leaders and reference groups when advice regarding the buying of fertilizer is needed. In fact, many emerging farmers regard their fertilizer company's agricultural adviser as a trusted opinion leader, and consequently they follow their advice stringently when they make their fertilizer (and sometimes also with other farming production inputs) buying decisions.
• Evaluation of alternatives. Having armed himself/herself with the information on alternative products that could satisfy the need, the farmers is, then, involved in a process to evaluate the various (attractive) options available. Farmers are at liberty to compare and analyze the alternatives, even revert to more information sourcing, before they make a final decision, namely to purchase, and, if so, which product from what supplier (Quester et al., 2011, p. 228). Here fertilizer companies equip their agricultural advisors well so that they can assist farmers in making the correct decision; this is especially important in the case of emerging farmers who have limited experience and knowledge. In this stage, the marketing strategies should focus on product awareness, assistance in physical distribution (delivery), product benefits and product availability (Lantos, 2011, p. 439). It is also important that the fertilizer company's agricultural advisor explains well the attributes of the specific fertilizer mixture and the application thereof during the growth stages of the crops. This, in addition to the brand, product quality and product • Buying decision. Once all options are considered the farmer makes the final buying decision. Here the marketing mix (offering a product at a certain price, after being promoted and then distributed to where the customer can buy the product) plays a significant role to influence the final buying deci-sion. Farmers need to decide if the product is priced competitively, is of the required quality, and if the company can deliver the fertilizer on time at the farm (hence, performing the distributing products).
• Post-purchase behavior. The final stage of the buying behavior process is to evaluate the purchase. In some cases, this evaluation is immediate (such as drinking the soft drink just bought), while in other cases such as fertilizer, the final evaluation can only be made once the crops are harvested. The farmer will use this post-purchase evaluation are part of his next buying decision as an information source before he re-buys the specific fertilizer brand or mixture.
Buying behavior can also be explained by the Stimulus Response Model where the external and internal influences, the marketing mixture and the buying decision is incorporated. The model is depicted in Figure 4.

Study population
The study population consisted of 32 emerging grain farmers from the Free State province in South Africa. As a result, no sample was drawn, and all farmers were included in the study. These farmers farm with gain and for the purpose of the study, the grain industry includes both oilseeds and grains. Small holder, developing and subsistence farmers are defined as emerging farmers in this study.

Collection of data
The emerging farmers targeted in this study are located throughout the province. Data were collected via interviews, because the farmers generally have low literacy levels. This also resulted in extra time spent to explain the study aims. This had to be done in person, and, as a result, data collection required substantial travelling. The researcher visited organized farmer activities such as farmers' associations, farmer gatherings and information days to collect the data. The questionnaire was drafted in English and Sesotho (this is the mother tongue of the emerging farmers in the province). As a result, the respondents showed a high understanding of the questions.

Measuring instrument
A structured questionnaire consisting of 30 questions was drafted. The questionnaire measured farmer perceptions on their fertilizer buying behavior and the role industry plays in their farming success on a 5-point Likert scale, where five indicated "importance" versus one that indicated "non-importance" with the question.

Section: demographic profile
The respondents were demographically profiled based on their gender, age, years of farming experience, farm size (hectare), fertilizer application rate per hectare and from whom they purchase fertilizer.
The results indicate that: • As expected in a physically demanding activity such as farming, most of the emerging farmers are men (90.6%).
• A third of the farmers are between 36-45 years old. Encouraging is the fact that almost all (93%) are younger than 60 years old, while 15.6% are aged between 26-35 years.
• Some 15.6% of farmers are new to farming with 3 years or less experience. Some 37.5% of the farmers have 4-10 years farming experience, and only 4% have more than 20 years experience on the farm.
• Most farmers (68.8%) are relatively small scale farmers (about commercial farm in the Free State). They cultivate less than 250 hectares. The common farm size ranges between 60-150 hectares. However, some 15.6% have larger farms. They cultivate 500 hectares and more.
• Most farmers (71.9%) apply less than 250 kg of fertilizer per hectare. Only 28.1% apply more than 250 kg of fertilizer per hectare.
• The representatives of the fertilizer companies are the supplier in the majority of transactions (45.2%). Next, farmers purchase fertilizer from agents (38.7%), while only 16.1% buy fertilizer from established agricultural co-operatives.

Perceptions of the fertilizer industry by emerging farmers
The responses to the 30 questions on the fertilizer industry (as viewed by the emerging farmers) indicate that: • Some 69% believe that the fertilizer industry has an understanding of their farming needs and that the fertilizer industry plays an important role to play in their farming businesses. However, 21.9% believe fertilizer companies do not understand the farming needs of emerging farmers.
• Two thirds of the respondents believe that the fertilizer companies are progressive and improving.
• Interestingly, 62.5% feel that fertilizer companies have a direct impact on their farming profitability.
• Some 78.2% do understand how the fertilizer industry works.
• The majority (90.7%) believe that the fertilizer company they buy fertilizer from, provide them with fast service and 84.4% of them perceive that these fertilizer companies do provide services specific to their farming needs.
• Emerging farmers (75%) also believe that fertilizer companies differentiate their products from that of their competitors.
• Most farmers (90.6%) agree that the fertilizer company they buy from provides them with technical/agronomic services. Some 9.4% believe they do net get these services.
• Most farmers (87.1%) are also happy to do business with their fertilizer supplier.
• The majority of respondents (84.4%) feels that buying fertilizer is an easy and uncomplicated process, and 81.2% of them indicated that they would continue.
• To buy from their current fertilizer supplier. The flexibility of the fertilizer company to do business is also pointed out as important in the re-buy decision.
• Almost all of the farmers (87.6%) are satisfied that the fertilizer company provides them with good product information. They are also satisfied with the quality of the fertilizer and do believe that using fertilizer add value to the crops.
• 84.4% feel that fertilizer company representatives should continue to conduct farm visits as part of the service offering, and 75% indicated that this should continue as aftersales services.
• Most (87.1%) believe that the fertilizer companies add value to their farming operations.
• 90.3% consider the delivery of fertilizer products (transportation services) as key to their buying decision. This is expected, as emerging farmers have limited infrastructure and few possess transport capabilities.
• 73.3% of the respondents believe agricultural organizations which they are members of play a role in their fertilizer purchase decisions and only 10% of the respondents don't.
• 65.5% of the respondents believe advertisements influence their purchase decisions, while 10.3% do not believe that with almost a quarter (24.1%) of the respondents neutral.
• Interestingly price is not the key criterion in the buying decision of fertilizer. Some 69% do not purchase the cheapest fertilizer products. Trust in the company and its representative, as well as additional services, play a role in selecting a fertilizer supplier. Here the majority (83.4%) considers support and services as important choice criteria that influence the fertilizer buying decision.
• Some 73.3% of the farmers are brand loyal when it comes to their preferred fertilizer brand and would rather wait for their brand to become available than to buy a competitive brand. Here 80% indicated that they always buy the same brand of fertilizer. They of them also indicated that they buy only reputable (73.3%) and stable (89.3%) fertilizer brands.

Mean values of categories
The mean values of all factors were calculated and converted into percentage format. Mean values more or equal to 3 on a 5-point scale (or, then, 60%) are important, while those equal or above 3.5 (75%) are very important.
The questionnaire consists of four categories: • Category 1 (Q1-Q5). I understand how the fertilizer industry works, displayed the lowest mean percentages.
• Category 2 (Q6-Q19). The perceptions about the fertilizer company, agents, and distributors from which they buy (Q6-Q19). Here,  Figure 5. Mean values of all categories Q7 (providing specific services to farmers' needs) and Q12 (Providing good information about company fertilizer product) had the highest percentages. Both these criteria are service related issues. This is understandable because learning and psychological factors and information about fertilizer products have both been identified as very important criteria when an emerging farmer considers buying fertilizer products.
The line of importance (60%) in Figure 5 indicates which factors are regarded as important (above the line) and those not (below the line) in buying behavior of fertilizer by emerging farmers. In addition to not understanding how the industry works (Q1-Q5), only family (Q18) and the influence of price on fertilizer buying decisions (Q22) are regarded as the not-so-important buying behavioral factors that influence the emerging farmers. Figure 5 also shows that ser-vice, brand, product and psychological factors are important factors that influence fertilizer buying behavior.

RELIABILITY
Cronbach's Alpha coefficient was used to statistically measure the reliability of the data (Pallant, 2013, p. 104). A high level of reliability indicates that the same construct is measured by the questions in the questionnaire. An Alpha coefficient of 0.7 or higher is regarded as acceptable reliability. The Alpha coefficients appear in Table 2.