Essay:

Essay details:

  • Subject area(s): Marketing
  • Price: Free download
  • Published on: 14th September 2019
  • File format: Text
  • Number of pages: 2

Text preview of this essay:

This page is a preview - download the full version of this essay above.

TREND ANALYSIS

Agriculture is a dynamic sector that continues to evolve and is confronting trends in every area of this large industry. As an employee of the USDA, this writer's NAICS for analysis is 11 Agriculture, Forestry, Fishing, Hunting. Because this is such a broad industry, more specific NACIS codes will better focus attention: 1114 Wheat Farming; 112111 Beef Cattle Ranching /Farming; 112210 Hog/Pig Farming; 115112 Soil Prep, Planting, Cultivating; 111219 Other Vegetable Farming.1 To analyze an industry is difficult as the number of trends seems to be growing exponentially and, with a few exceptions, possible responses to these trends is seldom in the hands of owners and managers of agricultural operations.

One important trend is the shift to a vertical integration structure in which one company owns and controls a commodity across most, if not all, stages of its production.2  This trend is becoming so prevalent that 5.7% of all US farms account for 75% of total agricultural sales.3 The area most affected is meat production where three processers, Tyson Foods, Smithfield Foods and JBS USA, own and process 83% of all pork and poultry in the US.4 Similarly, Tyson, JBS, Cargill and National process more than 75% of all beef.5 The greatest effect of this trend is already seen in the loss of smaller producers.6 These are long-term effects since small farming operations in the US do not have the financial backing to reverse this trend.

Another trend that will dramatically affect agriculture is the preponderance of political instability in Washington, DC. This rambunctious trend could disrupt trade agreements (NAFTA), farm subsidies (2019 Farm Policy), commodity price supports (Congress) and other agricultural situations such as specific USDA regulations for production. Canada and Mexico are the largest receivers of American agricultural exports.7 To delete their preferential market access could seriously decrease the rates of US export growth. The potential to locate new or enlarged export sources for grains will be jeopardized by their action and/or inaction. Withdrawing from NAFTA means that tariffs will be re-imposed on items from Mexico and Canada, thus likely to depress the grains and meats markets initially. The ambiguity of the White House and Congress will affect most aspects of agriculture as producers in NACIS 11 are closely entwined with the federal government and greatly dependent on it actions.

A third industrial trend is the meteoric pace of new technology. One of the leaders in this trend is Deere & Co with their precision ag technology which held a 49.09% share of the agricultural technology market in 2016.8 The newest phase in agricultural technology is biologics. Bayer is using molecular biology to create a seed treatment that will grow its own barrier around a plant's roots to protect damage.9 Other biologic endeavors are developing plants to better handle the effects of global warming such as higher temperatures in their traditional growing environment.10 Manufacturers of chemicals, breeding innovators and lending institutions are transforming the traditional concept of farming and ranching. These technological trends have the potential to increase the number of innovations food producers/ processors will have available. They also have potential to force ag chemical producers to re-direct current R&D toward other areas. The greatest challenge with this trend, which is definitely long-term, is to keep apace of new innovations in a timely fashion.

The second focus of this paper involves trends driven by the consumers themselves. Consumer habits directly influence the agriculture sector, as seen in the demand for organic food products. Americans are more aware of health issues and how their food is grown and processed and expect marketers to provide foods that have not been subjected to chemicals in any form. Organic food sales have recently grown by greater percentages than in the past.11 From Spring 2016 to Spring 2017, $54.83 billion was spent on organic foods.12 These purchases reflect a decision to “go organic” by 51.56 million shoppers in the US.13 Initially, corporate food providers were slow to include these products in their stores. One of the first corporate marketers was Wal-MART, the current leading vendor for these products.14 As this consumer segment grows, it will be a challenge for producers to meet their needs.

The second consumer-driven trend in 2017 is the heightened call for food production transparency, that is, the tracking and tracing of all food products. Greater awareness of health and environmental issues has led to demands for information as to where food comes from and how it has been handled.15 Rhode Island, Vermont and Maine have GMO legislation on their state agendas, which shows that consumers in at least three states have made their point about the foods they are buying.16 This trend has the potential to affect producers for the long term in that, once implemented, it could require tracking the growth and movement of all agricultural products from germination to the consumer's hands.

An emerging agricultural trend that is motivated by its consumers is a demand that agricultural producers of all types of products—food and non-food—increase their awareness of environmental issues. The message is that agriculturalists project a “green” decision about “consuming today versus consuming in the future.”17 Overriding the need for these products is the consumer demand that agricultural producers be at the forefront of a “green” decision with their products. With food production safety and transparency quickly achieving more attention, the agriculture industry has no choice but to listen and respond to this consumer-driven message. Customers are more than willing to show their demands by how often they purchase specific products. These consumers will constitute a substantial customer segment.

It is imperative that the agricultural industry acknowledge these six trends in a proactive way. To hope that any of these trends is merely a fad is to ignore the potential for innovation and, ultimately, profitability. Because the first industrial trend, a vertical integration structure, is already entrenched in specific areas of the agricultural industry, the entire agricultural industry needs to continue adapting to that style of operation. These large corporations already are so highly structured that to further improve profits, they should employ the Innovation Radar and its ability to identify specific areas.18 Such an exploration will most likely direct their attention to the areas of Supply Chain, Presence, Customers and Brand. However, small meat producers also can and should respond to this trend by employing a strategy of Counteract and Reaffirm, since they have an opportunity to “emphasize the values traditionally associated” with farming.19 One of the strongest possibilities for them is to focus on the Dimension of Networking to integrate their offerings with other unmet market segments.

The unstable political arena is the most difficult trend to respond to. The unwillingness of Congress to educate themselves about agriculture and take responsible action as well as a myopic view from the Oval Office, make it very difficult to plan strategically for the future of the agriculture industry. The best that individual aspects of this industry can do is to adopt Amazon's successful strategy of focusing on business aspects that will not change for the immediate term. Jeff Bezos explains, “We try figure that [what is not going to change immediately] out; you can spin about those things. The energy you invest in them today will still be paying you dividends ten years from now.”20 As negotiations on NAFTA will likely take many months or more, producers and processors at all levels should focus on further improving their basic operations. They could use Ofek and Wathieu's process and identify the trends where improvement would benefit their operations. They might determine the Impact, Scope and Endurance of a trend that may be in a peripheral relationship to their current operations.21 This does not imply “doing business as usual” should prevent their identification of innovation possibilities outside their immediate interests.

The ag technology trend has already energized the entire industry, but because of its very nature as a rapid innovator, future technology will present itself even more expeditiously. The players in this category are already successful in many of the 12 Dimensions. They must continue to focus on Customers and Customer Experience, especially since their innovations are doomed if they have not developed positive relationships with their consumers. By further involving the Solutions dimension in their operations, they intrinsically integrate all aspects of their operations.22

In the organic food trend, major outlets are playing “catch-up” with both the customer segment and Wal-Mart.23 Wal-Mart will need to consider their Supply Chain and their Customer Experience dimensions to continue to remain the leader of this market segment.24 Smaller organic producers should consider a strategy of Combine and Transcend to attract new consumers.25 For all organic producers, the greatest challenge will be to maintain their standards in the face of mainstream corporate retailers' quest for sufficient supplies from corporate farming entities. Perhaps the greatest issue these retailers have is to overcome the suspicion of consumers that they are no longer receiving truly organic products.

Even though a segment of the American consumer pool rejects the notion of global warming and are not focused on environmental degradation, this issue is a rising concern for a large element of consumers. Therefore, producers and retailers need to develop business strategies that reflect these customer beliefs. For example, IntelliFarms has responded to these concerns with SureTrack Platform that connects data from each stage in the food production process so farmers and processors can track the growth and movement of grain from seed to the point it is sold.26 In this sense, the Processes and Supply Chain dimensions are of primary concern and must be evaluated continually and transparently.27 This will allow marketers of designated products to adopt a strategy of Infuse and Augment, thereby attracting a newer and larger customer base. Such attention will enable processers to capitalize on the Brand dimension which will enable them to become leaders in a burgeoning new area of marketing.28

Conceivably, every new trend in the United States has the potential to shape consumer perceptions about products from the agriculture industry. These ever-evolving perceptions will present unique opportunities for innovation and growth-but, only if entrepreneurial decision-makers are pro-active, strategically-oriented managers and owners who are willing to adapt and modify their processes and innovation culture.

NOTES

1. US Census Bureau, North American Industry Classsification System, 2017, accessed 12

October 2017 <https://www.naics.com/search/>.

2. North Dakota State University, “Trends in Agriculture,” Agriculture Law and

Management, 2017, accessed 14 October 2017 <https://www.ag.ndsu.edu/

aglawandmanagement/agmgmt/coursematerials/agtrends>.

3. Cherry, Paul, “Top Six Agriculture Sales Trends that can Affect Your Business,”

Performace Based Results June 2017, accessed 17 October 2017 <http://www. pbresults.com/Sales-Blog/top-6-ag-sales-trends-2017/>.

4. NFFC, Food, Inc. and Fresh 2012, accessed 17 October 2017 <http://nffc.net/

Learn/Fact% 20Sheets/food>.

5. NFFC.

6. North Dakota State University.

7. Chris Clayton, “NAFTA Angst,” Progressive Farmer October 2017: 20.

  8. Transparency Market Research, Smart Agriculture Market 23 March 2017, accessed

17 October 2017 <https://www.transparencymarketresearch.com/smart-agricul

ture-market.html>.

9. Gil Gullickson, “9 Trends You'll See in Agriculture,” Agriculture.Com 27 February 2013,

accessed 15 October 2017 < http://www.agriculture.com/crops/corn/product

ion/9- trends-youll-see-in-agriculture_137-ar30128>.

10. Gullickson.

11. David Oppedahl, “Agricultural Trends and Paths toward the Future,” The Chicago

Fed Newsletter  271a, February 2010: 1.

12. The Statistics Portal, “Number of People Who Bought Organic Food”, Statista 2017,

Accessed 12 October 2017 <https://www.statista.com/statistics/228377/people-

who-buy-organic-food/>.

13. The Statistics Portal.

14. Julia Johnson, “The Wal-Mark Effect on Organics,” Duke Environmental Law & Policy

Forum (2013): 241.

15. Gullickson.

16.  Intellifarms. Agriculture Trends We're Watching in 2017 Jan 2017, accessed 17

October 2017 <http://info.intellifarms.com/agriculture-trends-were-watching-in-

2017>.

17.  North Dakota University.

18. Mohanbir Sawhney, Robert Wolcott, and Inigo Arroniz, “The 12 Different Ways for

Companies to Innovate,” MIT Sloan Management Review (Spring 2006): 75-81.

19. Elie Ofek and Luc Wathieu, “Are You Ignoring Trends that Could Shake Up Your

Business?” Harvard Business Review (July-August 2010).

20.  Julia Kirby and Thomas Stewart, “The Institutional Yes,” Harvard Business Review

(October 2007).

21. Ofak and Wathieu.

22. Sawhney, Wolcott and Arroniz.

23. Johnson.

24. Sawhney, Wolcott and Arroniz.

25. Ofek and Wathieu.

26. IntelliFarms.

27. Sawhney, Wolcott and Arroniz.

28. Ofek and Wathieu.

...(download the rest of the essay above)

About this essay:

This essay was submitted to us by a student in order to help you with your studies.

If you use part of this page in your own work, you need to provide a citation, as follows:

Essay Sauce, . Available from:< https://www.essaysauce.com/essays/marketing/2017-10-18-1508350266.php > [Accessed 22.10.19].