This is not a commodity!I recently read an article from Ag Web titled "Make Yourself a Farmer of Choice."
When I saw the title I was intrigued as this particular website is focused on industrial agriculture and commodity products as far as I can tell.
I thought "this should be interesting, how do you become a farmer of choice with a product that is a commodity?"
The author started out saying "how you position yourself as a farmer will determine your success with suppliers and buyers."
Ah so we're talking about the relationship with our "suppliers and buyers."
What about customers?
Well as a commodity farmer you don't have customers. At least not a customer as the small farmer who sells direct has customers.
I mean you go down to negotiate your grain sales, how much negotiating power do you really have?
Or you take a load of cattle to the buyer, and you get what the market says you get. Many people don't realize it but almost all commodity cattle is bought "on the rail."
That means your cattle are slaughtered and hanging on the rail before a price is decided.
Um, what if you don't like the price? Do you load up your carcasses and take them elsewhere?
The author also said
- What do we do best?
- What is our target customer?
- What needs do we fulfill for them?
- Who is our competition?
- What makes us different from them?"
I'm certain you would have some impact but not nearly what the small farmer who is selling direct to consumers would.
The article went on to say “You need to know what sets you apart from your competitors. Your competition is anyone that farms around you.”
Maybe I'm misunderstanding the authors intent here, but how could you be in competition with your neighboring commodity farmer?
The very definition of commodity defies it.
Commodity - A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers.
I can't figure out how you make a commodity competitive. From where I sit the commodity farmer has the least control over his products value in the marketplace.
The local commodity buyer doesn't care about how you raised your cattle on grass and never gave them hormones etc. They want to look at carcass quality and that's the end of the story. They are looking to get the price down not find ways to pay you more.
And grain? What kind of story can you tell the grain elevator and get a better price? They look at a few factors of quality and test weight and it is what it is...take it or leave it.
The best advice I can think of for a commodity farmer is start transitioning away from commodity sales with the intention of moving as much of your products to direct sales as you can.
Until next time....
Posted by David @ 06:58 AM EST