Strategic Business Planning for Commercial Producers What Changes Are Possible in World Agriculture in the 21 st Century?

Strategic Business Planning for Commercial Producers Agriculture’s New Era A new era in agriculture created by drivers. These drivers are revolutionizing the industry and permanently altering traditional relationships. Farm businesses that recognize, understand and pro-actively adapt to the WORLD’S needs will grow and prosper.

Strategic Business Planning for Commercial Producers Drivers of Change Globalization of Markets and Resources Consumers’ Evolving Preferences A More Demanding Food Industry Government Interaction/Regulation The Pivotal Role of Technology

Strategic Business Planning for Commercial Producers World Population Growth Populations continue to rise … End of the Cold War has allowed countries to reallocate resources and increase standards of living. Growing incomes allow people to buy more and better quality food (changing preferences).

Strategic Business Planning for Commercial Producers Drivers & The Farm Business Globalization Consumers Food Industry Technology Government The Farm Business Environment ??

Strategic Business Planning for Commercial Producers The New Agriculture … Farm Business Environment International Markets Commercialization/Biological Manufacturing Ecological Agriculture Differentiated Products Food Supply Chains Information/Precision Risk Diversity

Strategic Business Planning for Commercial Producers International Markets New Markets in Old Places More Liberal Trade Environment Competitive Pressure ! Global Access to Technology Increased World Wide Production Capacity Global Sourcing and Selling

Strategic Business Planning for Commercial Producers Soybeans6045 Wheat1611 Corn5040 Percent of World Grains and Oilseeds Produced in U.S.

Strategic Business Planning for Commercial Producers Commercialization Commercial (Industrialized) Mentality –Full Utilization of Resources –Managing Inventories –Specification Buying –Outsourcing –Process Control Technology

Strategic Business Planning for Commercial Producers Process Control Technology Monitoring/Measuring and Information Technology –attribute traceability throughout the chain Biotechnology/Nutritional Technology –manipulation of attribute development and deterioration Intervention Technology –anytime intervention if attribute development deviates from potential (gap resolution)

Strategic Business Planning for Commercial Producers Ecological Agriculture Total Biological Systems Recycling Nutrients Capturing Value from Byproducts New Revenue Streams –Carbon sequestering –Environmental amenities –Wildlife/wildlands

Strategic Business Planning for Commercial Producers More Differentiated, Less Commodity More Attribute Driven/Value More Traceability/Identity Preserved Types of Products –Generic commodities –Enhanced component commodities –Specific attribute raw materials Differentiated Products

Strategic Business Planning for Commercial Producers The Food Supply Chain More End-User Responsive Better Flow Scheduling Improved Quality Control Food Safety-Traceback Competitive Advantage? Sustainability? Who Will Control?

Strategic Business Planning for Commercial Producers Information/Precision Monitoring/Measuring Technology Smarter Machines Process Control/Quality Span of Control

Strategic Business Planning for Commercial Producers Risk Operating/Tactical Risk –More volatility –Short peaks, long troughs Strategic Risk –Relationships –Environmental –Policy changes

Strategic Business Planning for Commercial Producers Diversity More Differences Between Farms (no typical farm!) More Market Segments Customized Solutions More Conflict/Confrontation

Strategic Business Planning for Commercial Producers Business Models Independent Producers Multiple Plant Entrepreneurs –General managers –Plant managers –Workers Franchise Growers Network Qualified Suppliers Piece Work Contractors

Strategic Business Planning for Commercial Producers Management Skills Areas Strategy Production Finance Procurement/Merchandising Personnel Leadership

Strategic Business Planning for Commercial Producers Successful Strategies? Develop a Strategic Direction Adopt New Technology Appropriately Control Cost Evaluate Networks/Alliances/Linkages Manage Risk Expand Carefully Think like a CEO/general manager

Strategic Business Planning for Commercial Producers Key Challenges in Agriculture’s Future Adapting to change Evaluating technology Achieving profitability –Cost cutting –Growth Defining organizational capabilities Achieving organizational transformation

Strategic Business Planning for Commercial Producers