Value’s’-added ag

By Dave Carter

Someone once described agriculture as “the last hand-shakin’ way of doing business in the country.”

It is an apt description. For years, millions of dollars of merchandise traded hands across rural America on the security of a firm handshake.

It worked. It worked because a relationship stood behind each handshake. A farmer and a local banker shaking hands over an operating line of credit knew that integrity and reputations were at stake. A rancher selling steers to a feedlot knew that his handshake represented a contract of trust.

Relationships don’t seem as important today. Contracts are written, reviewed, notarized and witnessed. Even then, they may be mediated, arbitrated, litigated and adjudicated. Somewhere along the way, the local bank was bought up by a Denver institution, which then sold out to a Minneapolis corporation, which was later purchased by a San Francisco financial conglomerate. Everything from loan applications to requests for donations to the local after-prom committee now has to clear corporate headquarters.

It does not even pay to try and remember the names of these corporations. The names seem to change with each merger, acquisition, joint venture and strategic alliance.

Professional sports even reflect the erosion of long-term relationships. Free agency has replaced long-term contracts to the point that only the avid fans today can name more than a handful of the roster of the hometown ball club. Youngsters following the pro athletes receive a message that it is more important to pursue the highest dollar contract than it is to put down roots in a local community.

So, where is the good news in all of this?

The good news is that a lot of folks are getting fed up with the loss of strong relationships. They are searching for something of more value than simply earning the highest dollar, or acquiring the most toys at the cheapest cost.

Young professional males responding to a recent survey overwhelmingly ranked family considerations above salary levels in determining their career goals. Urban planners are now replacing the traditional suburban subdivision with new community models designed to increase the interaction and neighborliness among residents.

In the marketplace, a growing number of consumers are demanding to know where their food comes from, what is in that food, and how it was raised. That is definitely good news for independent producers.

On April 25, the Fort Morgan Times highlighted the new interest among agricultural producers in value-added processing and marketing. Added value is nothing new. Large processors consistently acquire commodities at the cheapest price possible, add value to those commodities, and then sell the end product to the consumer at the highest possible price.

The new interest among farmers and ranchers, however, centers on the potential for a producer-owned value-added system. Many producers, in fact, talk about marketing values-added products. In other words, producers recognize that many consumers today are willing to pay a tangible premium for products consistent with their values of health, nutrition, food safety, and environmental stewardship.

Independent producers, working together through these new values-added cooperatives, have the competitive edge on this battlefield. The industrial food system is well equipped to mass-produce large quantities of uniformly consistent (bland) food products made from commodities grown who-knows-where and purchased at the lowest price from who-knows-whom.

Independent producers are best equipped to develop a relationship with their customers based on values like integrity, quality, stewardship and diversity. New cooperatives are sprouting across the countryside as producers begin to forge a new relationship-based market structure. The Rocky Mountain Farmers Union Cooperative Development Center is now working with organizers of 17 separate producer-owned start-up projects, through a partnership with the U.S.

Department of Agriculture’s Rural Development Agency. Our center is dedicated to working with independent producers throughout the region to explore the potential for new value-added co-ops.

It is an exciting development, and one that holds the promise for a return to profitability in American agriculture. It may even bring back a hand-shakin’ way of doing business with our customers.