Friday, December 19, 2008

The Value of Management

The other day, I was talking with a colleague about the importance of business planning and, more generally, business management, in the success of entrepreneurial endeavors. That person told me that most farm business owners simply don't have the time to develop a plan or review their records. This wasn't the first time I've heard this and it won't be the last. But this general notion requires a response. I'm going to write directly to the entrepreneurs who may be reading this...

If it's important to you, you'll take the time to manage your farm business. Farming, like any other business, is not a right. It's a privilege! You can't expect to succeed by simply growing or making things. If you're in the commodity business, you can't control price too much (maybe only through premiums offered by your cooperative), so keep looking for ways to control your per-unit costs. Farmers, particularly dairy farmers, tell me that they are tired of hearing us farm management Extension folks preach the importance of production efficiency. Well, in a commodity world, that's the one key gauge you need to watch if you are to succeed. Track your unit costs and keep searching for ways to keep them low. That's pretty much the whole story. It's all about management!

It's clear that differentiating your product results in an even greater management burden. Once you try to capture the value associated with direct marketing or other "value-added" schemes, you move beyond production efficieny into the world of promotions, customer service, choosing product prices, etc. You now have many gauges to watch and adjusting one often affects several others. If you are unable to manage in the commodity world, don't think for a second that switching into some other market venue will be the key to success. You'll need to ratchet up your managerial capabilities before you will succeed in that arena.

If you want your farm business to be here in 5, 10, or 25 years, you need to steer your business toward that goal. Many of you are doing exactly that. But we in Extension, government, or industry sometimes have done you a disservice by not pushing you harder. We need to tell you in no uncertain terms that producing stuff is a necessary, but in no way sufficient, step toward profitability. Managing that production, your employees, your finances, your risks, and your marketing efforts together will provide the best chance of success. That sounds an awful lot like a business plan, to me.

I firmly believe that there is lots of space in the market for all diferent types of farmers. Consumers want a diverse array of foods. Some want cheap food, some organic, local, top-quality, etc. Other consumers want to vistit some of your farm markets, festivals, and pumpkin patches. There is no shortage of opportunities. It's your decision on whether or not you seize any of them. That decision can't be made without taking time to manage your business.

I realize many of you are already top flight managers, ready to move forward with great success. But many of you have a long way to go, yet. Take advantage of all opportunities to learn more and apply it in your business. You'll soon learn that taking time to review your records and make decisions is much more valuable than you think. By doing this, you'll strengthen your business and our industry. Extension is here to work with you to develop your skills.

Monday, December 15, 2008

New caging laws killing ag industry in California?

On November 4, 2008, California adopted a new law banning restrictive cages for egg-laying hens, veal calves, and pregnant pigs. "Restrictive caging" is defined as cages that prevent the animals from standing, lying, and stretching limbs. Cages like this are used by 95% of the industry.

Since California doesn't have a big veal or pork industry, the main effect is on the egg industry. The law will go into affect in 2015. Producers claim that the expenses to update caging facilities will drive egg prices up and make their egg prices uncompetitive with other states and Mexico.

If your state was thinking of instituting this law, how would this affect your farm? Would the result be so devastating in cost that you couldn't stay in business? Or, do you think being "cage free" would help you sell more product?

Caging article

Wednesday, December 3, 2008

Popular Flavors of 2009

Are you ready to try new flavors? Mintel International (a global consumer, product, and market research company) is predicting 2009's most popular flavors will favor exotic fruits and soothing tastes with a hint of spice. Lynn Dornblaser, Mintel's leading new product expert, predicts that "Today's manufacturer is looking for...tastes and aromas that...capture shoppers' imaginations. By adding exotic fruits and unusual ingredients to everyday products, companies give people the opportunity to experiment...without breaking the bank."

These new flavors include persimmon, starfruit, lavendar, cactus, chimichurri, peri-peri, and masala. How do you feel about these new flavors? Would you try adding them to your current products to give them an updated taste? Or, do these flavors seem too odd to add to your product line?

There seems to be a trend toward ingredients that take on a "natural" quality. Have you added any natural ingredients to your products recently? What are some natural ingredients you would like to see more frequently in products?

Food Trends article