From Manitoba’s Red River Valley to the
Peace Country of Alberta and B.C., agriculture
on the Canadian Prairies has been
through the wringer in recent years.
The region’s headline-making setbacks
included 26 months of non-existent
beef exports due to BSE, and weather
that’s gone from drought to flood and
back again.
Behind the scenes, though, farmers have
been quietly going about their business
and finding new ways to succeed. That’s
the view of Earl Smith, RBC Royal Bank’s
manager of agriculture and agribusiness
for the Prairies. In his analysis, the key
to what farmers have been doing and why
can be found in a series of broad trends
now visible in the industry. In one way
or another, all reflect an evolution of the
Canadian farmer from passive price-taker
to self-determining business person.
From producer to manager
It’s no longer enough to be a top-volume
producer. Farmers and ranchers are
increasingly required to do much
more. “This isn’t new, of course, but it’s
happening to a much greater degree
than ever,” says Smith. “Leading farmers
have production down cold. Their
emphasis now is to know their cost of
production, and to spend more time
on management than they do farming.”
From farm to brand
U-picks and farmers’ markets don’t begin
to describe the many ways that producers
of farm products are connecting with
consumers. More people are keenly
aware that lasting value resides not with
the producer of a commodity, but with
the custodian of a brand.
“For example, we have beef clients who
are opening storefronts where they can
sell beef to the public,” says Smith. By
nurturing those all-important consumer
relationships, these farmers can price
their goods more profitably, and help
to create fresh demand.
From specialist to diversified business
Smith believes one reason prairie farmers
have proven so resilient in recent years is
that many have diversified their business
interests to create another source of
income for the farm or the family.
“Many of the large commercial farmers
we deal with are involved in something
outside primary agriculture,” he says.
“They might have a value-added venture
on the farm or perhaps have a business
that’s unrelated to agriculture.”
From independent to inter-dependent
The go-it-alone spirit still burns brightly
in many producers. But some have found
that working in partnership with others
can reduce their risk and bring new
opportunity. This includes families sharing
farming resources, as well as producers
linking with others along the value chain.
“People are working together on joint
ventures to produce higher-value products
that meet buyers’ demands in a very
specific way,” says Smith. “That's where
the hog industry has been for a long time,
in terms of genetics and production, and
this approach is moving to other sectors.”
The next frontier
These transformational trends are good
news for prairie agriculture, according
to Smith. Still, he sees that two crucial
ingredients are in relatively short supply.
The first concerns the attitude of
Canadian farmers to profit.
For much of the 1990s, Smith ran
a company that developed online
commerce and training solutions. With
most of his client base in the U.S., he saw
many differences between U.S. and
Canadian business cultures.
In Smith’s view, a Canadian is likely to
view a business transaction as a zero-sum
proposition. In other words, if one party
wins, the other party must lose. Smith
greatly preferred the American approach,
and sees it as a model for how Canadian
agriculture and agribusiness can move
forward.
“In the U.S., there is more of an attitude
of doing business together in ways that
ensure both parties benefit and make
a profit. As an industry, we can learn
from that.”
Smith’s second priority is to nurture
business people with the leadership skills
to transform the rules of the game.
“The next step for Canadian agriculture
is for more people to make the transition
from being a manager to being a leader.
While a manager responds to changing
conditions, a leader can actually influence
what those conditions are. We're getting
to the stage where we have lots of excellent
managers, but relatively few leaders.”
Looking ahead to 2007, Smith expects
a big year for prairie agriculture, in
which the turmoil of the past few years
continues to fade from view. He believes
conditions are ripe for the industry to
make substantial progress.
“If there’s one area to keep an eye on in
2007, it will be biofuels such as ethanol
and biodiesel and the impact they will
have on demand and price for grain and
oilseeds,” he says. “After some challenging
times, and with new approaches to
business and management, this could
be just what the doctor ordered.”
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