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Posts Tagged ‘agribusiness blog’

What is your favorite thing about Kansas?

In Uncategorized on November 14, 2009 at 2:49 am

What is your favorite thing about Kansas? I posed this question this week on Facebook, and within hours, I had 36 responses from friends from as far away as Los Angeles chiming in.

The Flint Hills was a popular answer.

Lots of people love fall and the changing of the seasons.

Several folks said they love the friendly, caring people.

A couple people are suckers for Kansas thunderstorms.

Wide open spaces.

Sunsets, KU basketball, K-State football and, yes, someone actually said wind.

Wind?

There certainly is a lot to love about Kansas.

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.

Cheap food or value-added products: the choice is yours

In Agribusiness, Agricultural Entrepreneurship, Innovation on April 15, 2009 at 2:47 pm

We have a choice to make in this country. It is the choice between pouring billions in government subsidies into a race to the bottom with countries like Brazil and China and pouring billions in investment into the next wave of ag-borne technology.

For too long, we have been enticed by other nations’ “rope-a-dope” strategy. And we’ve been wearing out our banks, our farmers and our soil as we swing away while our competitors wait for their opportunity to deliver a knockout punch.

Now this isn’t to say that we should or will abdicate our position in production agriculture. But the current state of affairs-note the pace of new ag land coming into production in Brazil-should serve as an alarm bell that we need a mix of products that is more robust and diverse.

As one of my good friends and colleagues Dr. Vincent Amanor-Boadu reminded me once, we are actually put into the position of trying to grow commodities cheaply and ship them out of the country only to see them come back to us in the form of value-added products that our consumers then purchase.

We are transgressing our own strengths-innovative thinking, infrastructure, capital-with an antiquated system that focuses on cost instead of profit. Profit is a function of cost AND revenue.

And I’m not going to quote numbers here. I want you to go look them up for yourself.

So what are we to do? Well, first we need to admit there is a problem with the status quo. And second, we need to start spending money at a level of investment that is commensurate with the appropriate product mix of low-cost, heavily-subsidized commodities and value-added products. And I’m not just talking about natural and organic food. I’m talking about polymers, construction materials, household goods and cures for diseases.

It’s time to answer the bell.

Resources for financing and guidance for agribusiness start-up

In Agribusiness, Agricultural Entrepreneurship, Innovation, Small Business on March 29, 2009 at 1:28 pm

If you’re looking to start an agribusiness and you need resources, be sure to contact the Kansas Department of Agriculture. KSDA has a portal to several programs located here.

Another great resource in your quest is the Kansas Small Business Development Center. The KSBDC is online at http://www.kansas.gov/ksbdc/.

And you can always contact Maverick Creative Group at maverick@letmaverick.com for consultation and referrals.

History’s great innovators are the ones who do something

In Agribusiness, Agricultural Entrepreneurship, Innovation on March 29, 2009 at 11:53 am

Innovation is profitability’s greatest friend, and inaction is innovation’s greatest enemy.

Some of the greatest innovators have made some pretty bad mistakes because they weren’t afraid to take action.

Apple introduced the Newton years ago, and people thought it was the dumbest thing ever. But the clunky organizer helped create a category that spawned the PDA, and Apple took advantage of its learning to create the iPhone.

Thomas Edison said, “invention is 10 percent inspiration and 90 percent perspiration.” Maybe that’s because he tried and failed so many times before creating the light bulb and the phonograph. Same for da Vinci. Same for Einstein. Same for John Deere, Cyrus¬†McCormick and Eli Whitney.

Being willing to try something new is sometimes just as important as being willing to try. More recently, we’ve seen companies change their stripes in response to new market dynamics and consumer desires. Who ever thought direct-to-consumer purveyor Dell would start selling computers in brick-and-mortar retail establishments?

Perhaps you’ve been doing things on your farm or in your business the same way for a long time. Or maybe you’re thinking about starting a new business.

Whatever your situation, don’t sit around. Do something. History teaches us that those who take action are the ones who win.

Volatility breeds opportunity

In Agribusiness, Agricultural Entrepreneurship, Innovation on March 19, 2009 at 10:52 pm

When I worked in and around the commodity futures markets, I learned that volatile markets were good. They were usually more liquid and the ups and downs created more opportunities to profit by getting in and out of the market.

It may not seem like it, but the same is true in most any market. Risk is good because without risk there is nothing to manage, and better risk management is how one business outperforms another.

Now don’t confuse risk with uncertainty. Uncertainty is most certainly not a good thing. Risk can be managed, but uncertainty means there is no way of knowing what’s going to happen. You can’t plan for uncertainty, but risk is about probabilities and likelihoods, which can be planned for.

When launching a new business, or expanding or reconfiguring an existing business, you can anticipate risk by creating a model that simulates what might happen. You can even simulate various scenarios and test the sensitivity of your major performance indicators to changes in input costs, prices and demand.

If you’re not sure how to do this kind of modeling, we can help.

But whatever you do, keep this in mind: the current state of the economy and the situation in our agricultural markets makes it imperative that we see opportunity in what may seem like a risky proposition. When we have a trade deficit in part because we export commodities and import value-added products, it is incumbent on us to look for profit potential in the volatility.

Welcome to the new ag world order

In Agribusiness, Agricultural Entrepreneurship, Innovation on March 19, 2009 at 3:34 am

Agriculture and agribusiness are much like the rest of the world, ever-changing and fast becoming a flat landscape where the rules favor no one.

And because there are fewer distinct advantages in terms of natural resources and access to technology, the best way to be competitive is to assemble a really good team and give it room to innovate.

Just as there is no other person like you, there is no other team like the one you put together. Another company can have all the same knowledge, skills and experience, but it can’t imitate the special synergy between your team members. Given the chance to be fully creative and cooperative, no other team will generate the quality and magnitude of ideas that your team can.

A really good team is something to be treasured and guarded jealously.

By the same token, it is easier and more critical than ever to be innovative.

We have access to people who are on the whole smarter than ever before and to technology that allows us to access to information that we can turn into proprietary knowledge.

That combination creates the resources necessary to be innovative. And innovation is the necessary component for being competitive.

The new ag world order demands that we continually reinvent ourselves in terms of our businesses. It might be a process innovation. It could be a complete makeover of your product line. Or it could mean it’s time for you to start a value-added business from your farm.

In any case, do so in the knowledge that the worst thing is to do nothing.

Your future starts with your decision.