Strategic Thinking And Opportunities
Agriculture and rural communities are in a major period of transition created by a confluence of major drivers of change seemingly happening all at the same time. Major drivers include shifting from supply push to demand pull, greater market volatility, farm/food industry restructuring and concentration, biotechnology revolution, e-commerce, international trade policy, and national policies of varying support for agriculture. <br
Continually decreasing margins across agricultural production accentuate the drive to bigger size in an attempt to capture economies of scale to maintain living standards. Concentration of farm output by the larger farms is evident in the analysis of farm typology statistics for Alberta, Canada. Smaller farms sustain living standards with significant off farm incomes. Responding to the evolving situation, firms generally employ one of three strategies:
- attempt to be low cost producer of the commodity.
- attempt to employ a differentiation strategy
- a focus strategy directed to a narrow market may contain components of either low cost or product differentiation
The ability to decide which of these themes to implement and then implement successfully will be key to the viability of many businesses and farms in these times of major change. We see the strategy in the retail markets as ‘big box’ or ‘boutique’ operations. Probably the toughest position to be in is to get caught without striving toward any of the three options.
Author(s): Loree, J. Wilson