Farm-to-market agreements a part of coming revolution

Saturday, April 27, 2002

JEFFERSON CITY, Mo. -- In addition to the economic impact of plantings so-called "farmaceutical" crops, the approaching agriculture revolution predicted for Missouri will enhance the ability of farmers to diversify their activities, thereby increasing income under less stressful conditions.

A major component of the new farm frontier is the production of farm-to-market products delivered directly to local and regional grocers. Perhaps the best example of this can be found in the United Kingdom.

One of that nation's leading food chains is Waitrose, which in the 1990s began offering its customers huge selections of organic, farm-fresh products. Most of these items are grown in the United Kingdom and supplied through direct agreements with farmers. Waitrose now sells more than 1,500 organic-food products, ranging from certified farm-fresh legs of lamb to "deep-strawed eggs."

Unknown in America

Farmer-to-grocer alliances are virtually unknown in the United States, especially in the Midwest, where commodity production remains dominant. However, crop producers within an easy drive to major cities have an opportunity to help grocers diversify their stock. The success of this strategy, as Waitrose demonstrates, depends on having enough growers to keep products consistently stocked, even for seasonal crops such as watermelons and peaches.

The need for partnering is, in fact, the other striking feature of the new frontier. Traditionally, farmers have been the embodiment of a highly independent business model. Looking ahead, however, a National Corn Growers study agreed that farmers must be willing to challenge their traditional comfort zone, exchanging independence for interdependence.

The key to interdependence is delivering products exactly suited to the needs of the consumer. Also, growers will need to foster close business relationships with firms that process the crops. Farmers will benefit from this shift in business model if they are able to help other partners manage risk while delivering high-quality products. Similarly, farm-to-grocer food products likely will be delivered under exacting standards, and farmers will have to partner with other farmers to deliver sufficient quantities to keep stores stocked.

A change in mind-set

The study contends Missouri's grain industry can have a bright future where there are new opportunities for quality-conscious growers of all sizes. However, this future requires a change in mind-set, the report warns. Government and private industry must enhance the climate for producers to participate in value-added ventures. Two shifts in public policy will be important in improving outcomes for producers and rural communities.

The first is a new emphasis on strategic investments in rural development. The second is new strategic investments in product agriculture.

The study notes that rural policy is a new frontier for both producers and government. It suggests three principles to guide the formulation of new rural programs: avoid one-size-fits-all policies, focus on encouraging clusters and networks among farmers and rural businesses, and concentrate on investing in new competitive advantages for rural regions.

Tapping technology

Helping rural businesses tap advanced technology is another important policy issue. In Minnesota, the state created a technology assistance group to help rural companies move up the high-tech ladder. It goes without saying that lifting rural quality life will be important in helping rural businesses attract and retain talented workers.

The report also points out the need for a comprehensive update of existing coop laws, which were passed for commodity agriculture. New provisions may also be required to promote value chains where all participants will be able to benefit. For example, the current patchwork of state coop laws makes it difficult for new generation groups to raise capital across state lines.

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