If You Build It, They Might Come
Farm Business Management Update, October/November 2006
By Matthew Miller, (email@example.com), Extension Agent, Agriculture and Natural Resources, Farm Business Management, Southwest District
Most people have seen the Kevin Costner classic “Field of Dreams” with a mixture of farm struggles, sports, and family relationships. It’s a definite top ten on my list of Hollywood’s productions. Lately, I feel like I’m hearing the voice in the corn field “If you build it, they will come.” The baseball diamond in the middle of an Iowa corn field worked wonders for the Hollywood farm family. However, Hollywood and everyday farm production are further apart then just miles on a map.
Please don’t misunderstand my point. I am not implying that value added or product differentiation is not a good idea. In fact, value added and creating a differentiated product is a real profit opportunity and one of the success stories of the meat industry in recent years. My discussion goes beyond that level of product change. A Certified Angus Steak is a differentiated steak, raised and produced in a conventional marketing system. Strict Quality Standards and astute marketing create the value and recognized difference in the retail marketplace. My concern revolves around the desire to create a new product. Recently, I have been apart of multiple discussions regarding the creation of a variety of products ranging from meat to wine and everything in between. These new products are not what I would classify as value added or improved products. These new products fall outside of the typical production and marketing methods. Little to no market research, production science, cost projections, and sales estimations are done. There is, however, an overwhelming feeling that the new product will be better. That feeling much like the voice in the corn field has the ability to drive decisions not based on science or markets but on emotion. Again, don’t think that I am against thinking outside the box, but agriculture is already an emotionally charged business. Business decisions cannot be solely based on emotion. No doubt markets and consumers will try new products. However, these products must be created with a foundation of sound science, market research, consumer preference, etc.
Another main concern that revolves around the production of new products is ability of the producer themselves. The individuals and groups that have been successful in such ventures have a common denominator: an unbelievable work ethic and managerial skill. If you are at the top of your game then a new venture may be for you. However, if in the course of your production you have been an average or sub par producer, history would indicate that moving in to a new product arena will probably not be a profitable move. New product ideas often have roots in the feeling that it will enhance farmers’ ability to make more money. While increased profits may or may not happen, certainly expenses and challenges will increase in the new marketplace.
While traditional marketing methods for many commodities may be frustrating, they do work and are recognized by buyers and sellers alike. Traditional markets have created not only product expectations but are tried and true in matching supply and demand. I fully understand the need to differentiate commodity products. Product differentiation must continue to meet consumer demand and expectations and increase demand in the marketplace. Consumers will continue to demand product enhancement. But before a new product can be placed on the market, the producer needs to do more homework. Ideas are powerful tools that have the ability to change a farm for the better. If products or ideas are to succeed, they must be based on more than just a feeling or voice in the corn field.
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