Three Clarifications on Bayer’s Outcome Based Pricing

On December 10, Farm Foundation hosted a panel at the National Press Club in Washington DC, where during his remarks Chad Bilby, North America commercial innovation experimentation lead at Bayer Crop Science, provided key clarifications on Bayer’s Outcome Based Pricing model. 

1.    This is still a pilot program. 

Bilby reiterated that the program is currently being piloted, and no final decisions on the new business model have been made. 

“We piloted outcome based pricing in 2019, and we will continue to pilot it in 2020,” Bilby says. “In this we’ll continue to gain feedback on the value farmers see.” 

He says outcome based pricing is a business model that can provide tailored solutions and risk sharing. Here are the four components:
•    Having a customized prescription. Farmer chooses to share the data with us, and we can provide back a custom prescription. 
•    Bayer’s integrated portfolio of products
•    Innovative pricing
•    Establish a yield-based guarantee

2.    This is not the only way for farmers to do business with Bayer in the future.

Outcome based pricing is currently been pursued as another option for farmers to do business with Bayer—not the only way forward. 

“Farmers continue to say they want choice,” Bilby says. “We see this as another choice farmers have in how they want to purchase seed. We’re continuing to learn and get feedback.”

Seed Advisor laid the groundwork for the current testing of outcome based pricing, and seed will be a focus of the pilots (primarily in the corn belt) this year. And Bilby said the pilot programs will also be looking at fungicide performance. 

3.    Bayer does not see this as displacing trusted advisors. 

He said farmers are seeking tailored solutions, and he said the role of ag retail as a trusted advisor has been amplified as their business has experienced digital transformations. 

“Trusted advisors – whether that be a seed dealer, crop consultant or agronomist – will continue to play a key role in helping deliver customized solutions and localized service to growers,” he says. “These advisors can begin using these new tools to help anticipate grower needs.”

As an example of proactively addressing a farmer’s needs he shared the story of a Bayer Climate platform dealer had a farmer customer share the real-time view of the planter with them. Via the remote view function, the dealer noticed a row or two was not performing as expected, and he drove right out to the farm to address the sensor issue in the field.  

A full audio recording is available here: Exploring Outcome Based Pricing In Agriculture by FarmFoundation

Two other panelists were: 
Joe Young, president and chief operating officer with Growers Edge Financial
Ben Riensche, owner and manager of Blue Diamond Farming Company
 

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