Producer Alliances and Value - Added Business Ventures

Producer Alliances and Value-Added Business Ventures . . . . . . . . . . . . . . . . 1 Soybean Production: Competitive Positions of the United States, Brazil, and Argentina . . . . . . . . . . . . . 4 Weather and Taxes . . . . . . . . . . . . . . 10 Farmland Lease Law Update . . . . . . 12 he food industry is undergoing significant structural changes, as the industrialization of agriculture continues and there is increased consolidation and concentration of agribusiness firms. In a drive to increase efficiencies, businesses in the agrifood sector are developing closer connections with firms at adjacent stages along the supply chain to relay information and take redundant costs out of the system. In addition, a drive to achieve economies of scale has resulted in fewer and larger agribusinesses. These changes have resulted in farmers facing a more competitive business environment and examining ways to improve the returns from their farm operations. One response by farmers is to form producer alliances, often structured as new generation cooperatives. In some cases, the driving force behind the formation of the producer alliance is farmers’desire to move along the value chain and capture profits from other stages. In other situations, producers find themselves without a marketing or processing plant when agribusiness firms consolidate and close local facilities. Iowa turkey farmers are one example. When Oscar Mayer was closing a processing plant and feed mill, the producers formed Iowa Turkey Growers Cooperative and purchased the facility (Perkins). These producer alliances have the common objectives of producers working together to achieve/reach common business goals and capture additional value from the commodities they produce. The forms that an alliance can take include: new generation cooperative (NGC), limited liability company (LLC), partnership, corporation, buying or marketing group, joint venture, strategic alliance, as well as unique ownership arrangements with a regional cooperative. The success of producer alliances often depends upon the answers to three important questions: