Generic Products Yield Generic Results

EDMONTON - Mar 9/04 - SNS -- Agricultural producers who are no longer interested in getting generic returns from their crops need to change both their approach to marketing what they produce and decided what to produce.

"It makes good economic sense for producers to keep an eye on this competitive, changing marketplace so that they can be in a position to differentiate and supply these new markets versus just growing a commodity," says Karla Bergstrom, crop specialist with Alberta Agriculture, Food and Rural Development's Ag-Info Centre, Stettler. "Producers need to move away from the 'one size fits all' concept and start thinking and planning to accommodate the very real 'one size fits one' trend."

Brent VanKoughnet, owner of Agri Skills Inc., commented at a recent presentation to producers and retail agronomists that only five% of the producers with about 20% of Alberta's crop production acres are eager to add value and de-commoditize their business to capture price premiums.

Many producers have been programmed to be 'price takers' not price makers. Roughly 60% of producers who farm 30% of the acres will always be commodity suppliers where delivering to the elevator is the last decision they have to make. The remaining 35% of producers who farm 50% of the acres might be interested in specializing, but they are content to wait and see.

"Creating value for your business by meeting a specific customer need is what 'price making' is all about," adds Bergstrom. "In a recently published Nexerar canola print advertisement, this concept was demonstrated by showing three farmers in discussion where one says, "I grow for the Board"; one says, "I grow for the processor"; and the last one says, "I grow for earls." This last producer hit it right on the money because supplying a specific market allows him to attain a premium price that adds value to his business."

Identity Preserved Contracts means that producers take a direct stake in growing new opportunities. They have an increased accountability because they are ensuring the customer gets exactly the quality they specify. Segregation is the essential first step in accessing new and higher-value markets for many crop types.

Process control is where the future of agriculture is moving. Agriculture is a sophisticated business and there is more and more emphasis being placed on liability and detailed farm records. This doesn't mean keeping five years of yield data stored on the yield monitor card or in the producer's head; the information must be used to make better decisions.

"The term value chain has had a lot of attention in the agriculture industry of late," says Bergstrom. "During Red Deer's Agri-Trade an example of a value chain in action was when Dow AgroSciences invited Nexera canola producers to have supper at earls. The importance of this connection was reinforced when the chef made a special presentation explaining the benefits of Natreon oil for his food preparation. Natreon canola oil is produced from Nexera canola, which is a high oleic, low linolenic fatty acid vegetable oil. This is a new generation of canola engineered to meet very specific needs of the health conscious consumers and food manufacturers."

Alberta processors are in a good position to respond to the growing consumer demand for healthier grains and oilseeds. The key to winning over health conscious consumers is by using the strengths of the functional properties of these crops.

"For producers who want to be 'price makers' versus 'price takers', specialized cropping systems may be an option to consider and Nexera canola is one option of many available to producers," says Bergstrom.

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