Multidimensional changes are happening in agriculture. He believes that agriculture is moving from a commodity industry to one with differentiated products. “The produce-and-then-sell mentality of the commodity business is being replaced by the strategy of first asking consumers what attributes they want in their food products, and then creating or manufacturing those attributes in the products,” Dr. Boehlje says.
“Development of a contract market is one example of a new business model,” says Dr. Boehlje. “Contractual arrangements like these have become increasingly popular throughout the United States.”
In Canada, the agriculture industry continues to change at a dramatic pace. Technology is used throughout Canada’s food production system to increase efficiency, improve quality, conserve energy and protect soil and groundwater. Food safety and quality systems, farm and ranch management software and crop and soil monitoring systems have been used on farms for years.
Dr. Boehlje suggests that there are four possible drivers for the rapid consolidation and coordination of the agricultural industry. These include: 1) efficiency gains; 2) risk management; 3) traceability; and 4) response to consumer needs and trends.
He notes that improved information-sharing, trust along the entire chain, the need to understand customers and responsiveness to consumer trends have become quite important.
“We’re seeing lifetime customer valuation, where the buyer and producer maintain a relationship,” says Dr. Boehlje. “A key issue in agribusiness is, how do I develop a relationship, and how do I create value for my customer?”
Dr. Boehlje’s research interests include: alternative systems of coordination of the food and industrial product chain; the industrialization of agriculture; and alternative financial and organizational structures for farm and agribusiness firms.
(To read the article in detail on AgChoices (www1.agric.gov.ab.ca) and download his presentation, please click here)
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