As an editor of a publication covering an industry, I try hard to reflect the demeanor of our constituent readers in the tone of stories and graphics that we present. I learned early in my experience here that retail managers are both very intense but cool and calm under pressure, and that’s always affected our approach to the editorial plan here.
For example, virtually every year leading into spring, there’s some prediction about the convergence of weather, grower demands and product shortage that conclude with the statement, “Well, I’m not sure how retailers are going to get it all done this year.” And despite the dire predictions, in general you folks get the work done. When it’s your full-time job, and you’ve done it year after year, you simply find a way.
So while we do try to provide an early alert, you won’t find a lot of hand-wringing in our pages.
I got to thinking about this during the course of our 16th annual PACE Advisory Council meeting last month, in which more than 20 individuals from across the spectrum of agriculture businesses sat with us to discuss the key issues of the day — and more importantly what they mean for retailers. During the course of the meeting the topic of the recent phosphate shortage came up. Members discussed the reason for the shortage, and retailers talked about how they were working to deal with it.
This led to a brief revisit to 2008, and how no one wants retailers to get upside-down like that on fertilizer again. Of course, this eventually led someone to ask the question, is there anything the industry can do to reduce the volatility and market risk that exists in agriculture today? If we’d had access to sound effects, we would have cued the audio of crickets chirping.
That’s not to say that ag businesses aren’t trying to even out the volatility we’ve experienced. It’s just that so little can actually be affected by what they do.
Leading the list of challenges is the fact that the United States is no longer the leading consumer of fertilizer, and that countries now at the head of the line (India and China) have ag policies that are directed by their respective governments. The best laid, market-based plan can be laid to waste by the actions of a government agency half-way around the world.
Crop price volatility won’t be going away anytime soon either. Wall Street has amped up its play on commodities in search of a quick buck, investing in corn, soybeans, and wheat for reasons that have little more to do with agriculture than the notion that “people gotta eat.” Recent blog posts from investment funds feature headlines such as “Profit From Rising Food Prices With ETFs.”
Eventually, you know that some piece of news will start a selloff — China stops importing corn, or a bumper soybean crop in Brazil — everyone on the Street will be looking for a reason to pull the trigger and cash in.
It’s going to be ever more challenging for you to manage your business, but it also presents opportunities for you to help growers to better manage their increasing risks as the market globalizes and consolidates. In an increasingly stormy sea, growers need all the partners they can gather. As their trusted advisor and master of risk mitigation, you can play a key role in helping them negotiate the volatile waters.
