About 12,000 years ago, the Agricultural Revolution changed the landscape of the world. Since then, grains have been an important part of our diet. Things are not likely to change in the near future. Crops will be part of our meals for millennia to come. Production of both food and beverage services and products is highly dependent on grains. In this article, we’ll examine the topic of wholesale grains, what they are, and how you can profit by starting a successful wholesale distribution business in that niche. If you’re currently a business owner in that field, you’ll probably find some useful information as well.
What Are Wholesale Grains?
Buying grains in bulk quantities is a standard business practice used by restaurants and other companies. The main benefit of bulk buying is that it usually comes at a lower price. Furthermore, the prices of commodities such as wheat, oat, and rice are constantly changing. Therefore, if businesses believe they’re about to increase, it might be better to stock these agricultural products while the prices are low.
Some of the most popular grains are wheat, corn, rice, barley, and oats. Wholesale vendors of these products trade primarily with food producers, food industry suppliers, retailers, and animal food producers. Since grains have a fairly long shelf life if stored properly, it can be beneficial for companies to buy bulk grains.
Key takeaway: Starting a wholesale grains business requires a fairly big investment. However, as the need for food is constantly expanding, there are many growth opportunities, and it can prove to be a very profitable one.
What Is Needed to Start a Wholesale Grains Business?
If you want to start a company in the field of wholesale grain trade, there are a few main steps to prepare the enterprise.
Develop a Detailed Business Plan
It should include major components such as goals, competition, financial projections, and marketing channels. A wholesale grains business requires an investment of tens of thousands of dollars. Therefore, things such as the current macro environment should also be taken into consideration. The business plan needs to have future predictions on key metrics such as business growth, revenue, and profit. This way, it will serve as a roadmap for the business.
Research the Market Regulations
Before you start your wholesale grains business, check how the grains should be stored, what permits are needed to buy and sell them, and how long it will take to obtain the needed licenses. Getting a tax ID number and business license are fairly common procedures. The ones that might require more time and additional investments are the certifications required to operate a grains business. They depend on the scale, the types of traded products, and other factors.
Find the Right Producers
A wholesale grains company acts as a middleman between agricultural producers and businesses such as food manufacturers. This means you need to take care of finding both clients and producers. Make sure to establish partnerships with farming companies in places such as trade shows or via membership in industry associations.
Additionally, choose the right types of grains to buy and sell. If your business investment is not very big, you should start with the most common types such as corn and wheat.
The Location Shouldn’t Be Underestimated
Finding a proper location is very important. It should be with good logistics in terms of roads. Proximity to railway stations and ports is also a bonus. Probably the main factor is the space itself. It should be enough to store the different grains. Also, cold temperatures and dry conditions are required in any grain storage.
Tools and Machinery
The main investments in that regard should be related to trucks, forklifts, pallet jacks, and other tools related to warehouse management.
Marketing and Pricing
If you’re planning to sell bulk grains, you should create a detailed marketing plan. It should include channels, personas, and ad budgets. In this business niche, attending local and international conferences can be a great way to find new customers and partners. Also, benefit from the opportunity to become a member of all relevant associations.
Consider your pricing carefully. As mentioned above the price of agricultural commodities is constantly changing. Thus, you need to be flexible and base your prices not only on business costs and competition but also on factors such as future crop yields.
What Clients Does a Wholesale Grains Business Aim For?
A variety of businesses can be clients of a wholesale grains business. Let’s check the main ones.
- Food manufacturers. Whole grains are key ingredients in a variety of foods like whole grain breakfast cereal. Manufacturers usually buy bulk quantities so acquiring even a few clients in that market has the potential to maximize revenue.
- Retailers. Grocery stores and supermarkets sell packaged grains in small and large quantities. If your business has the right packaging equipment, you can offer your products to supermarkets.
- Restaurants and catering businesses. A lot of recipes have grains as the main ingredients. That’s why restaurants are valuable potential clients to a wholesale grains business.
- Animal feed producers. These companies buy wholesale grains in very large quantities. Corn, barley, and wheat are used in the animal feeding of poultry and livestock. Keep in mind that animal feed producers or livestock management companies primarily focus on the price, and you should consider giving a discount for long-term commitment or large quantities ordered.
- Exporters. The US is the biggest producer and exporter of corn in the world. But corn is not the only thing exported. The fertile soils of America combined with modern agricultural solutions equal high yields. Ergo, a wholesale grains business should aim to partner with exporters and international buyers. This is especially true for countries with worse climates or regions that have suffered a drought as the prices there might be higher.
Can You Sell Wholesale Grains Online?
Nowadays, the eCommerce market is growing rapidly. All kinds of products and services can be bought online and grains are no exception. Having a modern website can be a big benefit for a grain wholesaler. It allows using modern digital marketing channels such as email marketing, social media, or search engine optimization.
One of the reasons why a grains wholesale business should have a website is the fact this is your online business card. If you’re attending trade shows or international conferences, businesses and potential customers will look you up online. Additionally, an online store will help your business sell directly to customers as well. If your plan includes being both B2B and B2C business, a well-maintained eCommerce solution is a must.
Among the most important eCommerce marketing channels for a wholesale gran business is eCommerce email marketing. You can collect customer data and create different audiences based on your B2B or B2C customers. Furthermore, you can promote informational content such as blogs to your current customers. This creates brand loyalty and increases the likelihood of people buying again.
Frequently Asked Questions about Wholesale Grains
Are you considering starting a grains wholesale business? Or maybe you’re generally interested in this market niche? Either way, allow us to answer some of the most common questions on this topic.
Where to Buy Wholesale Grains?
You can find wholesale vendors in online marketplaces such as BlueCart. Additionally, there are many websites, such as Webstaurant Store, that specialize in products for the food industry.
Should I Buy Bulk Grains?
There are many benefits to buying large quantities of grains. For starters, they have a long shelf life if stored properly. Additionally, food prices are always rising and bulk buying makes fiscal sense.
How Are Grains Traded?
Like most commodities, a large part of grains trade is in the futures market. That makes sense as businesses plan for how many grains they will require in the future. On the other hand, producers benefit from the opportunity to sell their future yields.