Issue 7 April/May 1997	New Concepts for Farms, Agribusiness, Ag Policy
Library Home E-Mail Back Prairie Grains is the official publication of the Minnesota Association of Wheat Growers, North Dakota Grain Growers Association, South Dakota Wheat, Inc., and the Minnesota Barley Growers Association.	Brace yourself for a jolt of linear thinking toward agriculture. In the way farms, agribusinesses and ag policy are being viewed and managed, old concepts are giving way to new, and while some changes have occurred only recently, others are continuations of trends that began decades ago. These are the observations of Michael Boehlje, formerly with the University of Minnesota agricultural economics department, and now at Purdue. To stimulate dialogue about agricultural trends, Boehlje has presented his observations to the academic community and policy makers in Choices, a magazine published by the American Agricultural Economics Association. Bear in mind that in some cases, a new concept doesn't replace the old, but is an addition or extension of the former concept. You would not be out of line by taking issue with one or more of the concepts listed below on Boehlje's variation of "what's hot/what's not" in agriculture. These are points for discussion, he says, presented not as empirical fact but as informed observations. Old, new concepts in managing farms and agribusinesses OLD: Commodities NEW: Specific attribute/differentiated raw materials OLD: Staple products NEW: Fashion/niche products OLD: Assets drive the business NEW: Customer drives the business OLD: Hard assets (land, machinery, buildings) are the prime source of strategic competitive advantage. NEW: Soft assets (people, organization, plans) are the prime source of strategic competitive advantage OLD: Blending of commodity product from multiple source NEW: Separation of identity-preserved raw materials OLD: Geographically concentrated production sites NEW: Geographically dispersed/separated production sites OLD: Owning assets NEW: Control of assets OLD: Money/finance/assets are the prime source of power and control NEW: Information is the prime source of power and control. OLD: Labor is a cost; equipment is an investment NEW: Labor is an investment; equipment is a cost OLD: Sell product and give away service NEW: Sell service and give away product OLD: Expanding and getting into the business (entry) NEW: Contracting and getting out of the business (exiting) OLD: Impersonal/open markets NEW: Personal/negotiated/closed markets OLD: Adversarial relationship with suppliers and purchasers NEW: Partner with suppliers and purchasers OLD: Impersonal sourcing and selling NEW: Relationship sourcing and selling OLD: Insourcing (produce your own) inputs NEW: Outsourcing (buy from someone else) inputs OLD: Buying from multiple sources NEW: Buying from sole suppliers/qualified firms OLD: Price premiums for specific attributes and volume purchases NEW: Cost reductions for specific attributes and guaranteed markets OLD: Market (price) risk NEW: Relationship risk OLD: Independence NEW: Interdependence/systems OLD: Stability NEW: Change/chaos/flexibility OLD: Agriculture is an art form NEW: Agriculture is primarily science based OLD: Technical skills critical to success NEW: Personal/communication skills critical to success OLD: Technological change and innovation NEW: Institutional (ways of doing business) change and innovation OLD: Core competencies/expertise NEW: New/different/unique skills and capabilities OLD: Public/open information and research and development NEW: Private/proprietary/information and research and development OLD: Resource users and exploiters NEW: Resouce protectors OLD: Produce goods and dispose of bads/by-products NEW: Produce goods and bads; utilize/recycle bads/by-products Old/New concepts in viewing agricultural policy OLD: Agriculture is farming NEW: Agriculture is the food production and distribution system OLD: Family farming and small business NEW: Industrialized/corporate agriculture OLD: Unstable supply (primarily domestic) NEW: More stable supply (worldwide production) OLD: Unstable domestic demand NEW: Unstable foreign demand OLD: U.S. is prime world supplier NEW: Many suppliers worldwide OLD: Domestic markets are prime markets NEW: Foreign and industrial markets are critical markets OLD: Raising commodities NEW: Manufacturing food products OLD: Consumers fear high food costs and food shortages NEW: Food costs are decreasing part of the consumers budget, and worldwide sourcing reduces the prospects of shortage OLD: Consumers believe their food is safe NEW: Consumers question food safety OLD: Significant political influence NEW: Limited political influence OLD: Adequate budget funds for agriculture NEW: Reduced funding for agriculture OLD: Farmers are economically disadvantaged NEW: Farmers have comparable income to others OLD: Farm income measures economic well-being NEW: Farm household income measures economic well-being OLD: Farm program payments are an entitlement NEW: Program payments are conditional and should meet "needs" tests OLD: Operating farmers own most of the farmland NEW: Increased farmland owned by nonoperators OLD: The public trusts farmers as stewards of resources NEW: The public questions farmers as stewards of resouces OLD: Conservation of resources to maintain/increase productivity NEW: Environmentally sound use of resources to reduce pollution OLD: Efficiency NEW: Ecology OLD: Private property rights are sacred NEW: Society is reserving more property rights for the public and reducing private property rights OLD: Farmers have higher moral standards, a strong work ethic and higher values NEW: Farmers are no different in terms of values, work ethic, or moral standards than the rest of society OLD: Economic well-being of rural communities depends upon farming NEW: Economic well-being of rural communities depends more on nonfarm activity OLD: Rural areas have a higher quality of life compared to urban areas NEW: Rural areas have a lower or at best the same quality of life as urban areas
Copyright Prairie Grains Magazine April 1997