Archive for August, 2009|Monthly archive page

Lax exports, tight credit and softening foreign markets create innovation opportunities

In Agribusiness, Agricultural Entrepreneurship, Agricultural Marketing, Innovation on August 28, 2009 at 11:28 pm

One of the underlying and persistent themes of this blog is the observation that it is no longer business as usual in the agribusiness sector.

In the past two weeks, I’ve had the distinct privilege of attending some truly beneficial seminars conducted by Kansas State University and the industry experts they invited to speak to us.

There was a great deal of talk about the current economic crisis and the reasons for it and how long it will last. The economists were not at all hopeful for a recovery inside of a year or even two. I pointed out that economists require two consecutive quarters of negative GDP growth to confirm a recession, but many of them are much quicker to declare the recession over. At least one K-State economist said we should not discount the possibility of a “double-dip” recession. That would not be good.

But what does this mean for agriculture? Well, like most other sectors, agriculture is seeing much more stringent standards for borrowing. Bottom line: you’d better have audited, solidly-performing financial statements or you might as well save yourself a trip to the bank. At the height of commodity prices last year, even the huge grain trading firms were scrambling to get credit to cover massive margin calls in the futures market.

That’s less of a problem this year, though, as the Chinese economy has cooled and there appears to be plenty of grain-for the moment. Now that’s bad news if you’re a wheat farmer and you didn’t book at least a portion of your crop before prices nosedived.

But I couldn’t help but think as I sat there listening that there are opportunities for  value-added agri-food products.

So we’re not moving as much pork and swine offal to other parts of the world? I’ve often wondered why someone doesn’t create an upscale, branded variety meats product for Hispanics and Latinos who have two cars and a boat and still want that taste of the homeland for their families.

Concerned about the soy complex and lax exports? Have you noticed all the dietary supplements people are pushing out there? Well, a lot of people are buying them. But as far as I know, there is no significant farmer-owned company selling its own line of soy, botanicals or other supplements. That could be you.

The fastest-growing segment of the beverage industry is energy drinks. How do we participate? Or are you content to supply the corn that is turned into the HFCS that is one ingredient in the high-margin product in the convenience store cooler?

Do you realize the Kaw River Valley once was-and still is in places-a immensely fertile spot for vegetable production, including potatoes, sweet potatoes and onions? In fact, the Sioux word Topeka means “a good place to grow potatoes.” We could capitalize on the health trend and create a Kansas-farmer-owned brand of sweet potato chips, fries and snacks, making us the capital of this tasty, nutritious tuber.

A great idea, solid planning, some capital infusion, belief and a heaping helping of marketing can go a long way toward managing the market risk created by economic situations like the one we face today.


K-State ag economist urges farmers to closely monitor costs

In Agribusiness on August 20, 2009 at 11:04 pm

Much of the current economic problems can be blamed on poor decision making at all levels and low interest rates, a Kansas State University agricultural economist told attendees at the Risk and Profit Conference today in Manhattan, KS.

At the same time, however, history teaches us that the state of the overall economy and the state of agriculture are not closely intertwined, said Dr. Allen Featherstone, a KSU professor. This means that the ag sector has fared relatively well compared with the rest of the economy.

Still, economic pressures in other parts of the world could dampen trade further, with the agricultural trade surplus forecast to drop to $11.5 billion this year. That, combined with potential spikes in prices for fertilizer and other petroleum-based inputs could put the squeeze on farm profits unless farmers take steps to closely manage costs.

USDA and the Food and Agricultural Policy Research Institute are forecasting a slight dip in farm income in the final quarter of 2009, followed by a gentle upward slope over the next couple of years.

We’ll have another update from the Risk and Profit Conference tomorrow.

These Kansas food companies know all about innovation

In Agribusiness, Innovation on August 14, 2009 at 6:49 pm

Mama Lupe’s Tortillas: Tortilla King, Moundridge, KS

Spanish Gardens

Spanish Gardens

No Web site, but here’s the Facebook page:

Original Juan

Skyview Farm

Good Farms

Genetics one key to entrepreneurship

In Agricultural Entrepreneurship, Innovation on August 3, 2009 at 9:24 pm

Economic development professionals-and small business consultants like me-are always searching for what it takes to spur entrepreneurship.  Well, it’s not very easy to imitate, but researchers have identified one important factor in creating entrpreneurs-genetics.

According to a study by Case Western Reserve University and others, genetics explain at least a portion of why certain people become entrepreneurs. The study examined several hundred sets of twins and found that traits such as extroverted personality and desire for education could lead some individuals down the entrepreneurship path.

Read more here.