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Feedstuffs is the news source for animal agriculture
August 19, 2019
One of the most consistently ignored truths about great marketing is find a niche and then fill it. Let me amend that statement. Find a new niche and then fill it."
It came to mind while I was attending the Organization for Competitive Market's (OCM) 21st Annual Food & Agriculture Conference in Kansas City. During a coffee break, I was talking with a group of farmers about their agricultural woes.
"On the way down, I saw a field with last year's corn crop still standing," said one man. Another, who said he didn't plant corn this year and several years before, talked about a neighbor.
"He planted corn, again," he said. "He's planted corn every year since I've known him and that's been a long time. He won't even consider another crop."
Of course, his neighbor makes money some years; loses it, too, in others. But he's just a corn kinda' guy. He's comfortable with it. He probably knows more about planting and harvesting corn than anyone within a few hundred miles of his Dakota farm.
When he first started farming 30 or 40 years ago, he probably thought he had discovered his niche and was exploiting it nicely. But what might have been a new niche in the mid-20th century is an old and well-worn niche now. Everybody is doing it. Corn is a pure commodity in the worst business sense. Expect no premiums. No bonuses. Just a take it or leave it price at harvest time.
Corn is the stuff of dreams for Big Ag. It's the very demon that OCM has been fighting for more than 21 years. It is the perfect raw material for food processors (let's call them Big Food). Find an agricultural product, create an irresistible demand for it, ask farmers to grow it in huge quantities, and buy it at the lowest possible price. The real money is not in the growing of it, it's in the processing, where added value can grow quicker than the most usurious of compound interests.
When it comes to farm commodities, seed suppliers can make money, fertilizer companies can make money, processors can make lots of money. Everyone along the supply chain regularly and most assuredly makes money with the exception the poor guys at the very beginning. They carry the burden of risk more than anyone else. They roll loaded dice on an often-insane bet against an increasingly unpredictable weather pattern, pests, disease and the hope that prices on the day he goes to market with his harvest at least covers his cost of production. It's like the worst of Las Vegas' back street sucker bets played out in Butte, Mont. It's the hucksters of Reno invading Rapid City.
Our intrepid small-scale farmers might win occasionally, but the losses will keep coming. The odds are always with the house. And they do not own the house.
So how can we expect the OCM's quixotic and decades long tilt against that big, all-consuming dragon called Big Ag to go? To switch metaphors, betting against the house is never a good idea. Changing the rules, though (AKA becoming a disruptive force), might be a better choice.
It's simple. If the odds of winning the game are long, why play by the other guy's rules?
Understand that OCM is not a group of Big Ag practitioners. Corporate farms and those big family-owned mega-farms are not the heart and soul of their membership. Their 'wheelhouse,' as the tritely overused phrase goes, is small stakes farms; operations of a few thousand acres or less; small businesses that cannot compete, head-to-head, with the big boys.
Here is what the OCM says about their reason for being, as well as the over-arching theme of their Kansas City meeting: "Consolidation and globalization in the food industry have reached a point where the top four firms in almost every sector have acquired abusive levels of power. This corporate control has allowed the top firms to reap record profits, paying lower prices to the farmers who produce our food and charging higher prices to consumers on the retail side. The U.S. is losing farmers at an alarming rate, agricultural jobs and wages are drying up, and rural communities are disappearing. These problems can be mitigated by reining in corporations and their economic power, allowing an opportunity for U.S. farmers and ranchers to compete in fair and open markets."
It was the fair and open markets fight that OCM was pressing in Kansas City. The often-repeated message throughout the day-and-a-half conference was a call to fight Senate bill S. 1596, a proposal "to impose a moratorium on large agribusinesses, food and beverage manufacturing and grocery retail mergers and to establish a commission to review large agriculture, food and beverage manufacturing, and grocery retail mergers, concentration and market power."
A simpler description: the bill's authors gave it this short title - "Food and Agribusiness Merger Moratorium and Antitrust Review At of 2019."
Politically speaking, the OCM's quest for fair and open markets is a noble theme but not a realistic charge. Better to reinvent the food business rather than do direct battle against the leviathans that control it. If you study history, you'll see that the big four in each of those markets were once pipsqueaks way back in the day. They were all small businesses that had a new idea and wanted to elbow their way into an entrenched market. They didn't try to 'reign in' the existing status, they reinvented the rules.
Don't like the way the game is played? Change the rules.
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