Alliances between farmers and marketers are becoming increasingly important as the value of Canadian agricultural exports grow, says the head of the George Morris Centre in Guelph, Ont.
Larry Martin said much of this growth is driven by consumer-ready products, but while those markets hold opportunities for farmers, they are also more complex and risky than traditional markets, and require more resources.
Markets of the future will be developed by many small processors who have innovative, differentiated products and who look for niches, Martin said.
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They’ll add value by working with farmers to develop identity-preserved products based on unique characteristics or production techniques.
For example, he knows of one company developing a brand of pro-environmental pork. The company plans to recycle all manure from pigs sold to the operation, guaranteeing environmentally conscious consumers that no manure from the hogs will touch the ground.
A strategic alliance can be a way to build on a strength or overcome a weakness to accomplish goals. Alliance partners have to see the need for each other, Martin said. They must mutually control decisions and share the risks and benefits.
Farmers and businesses should never enter into an alliance when it’s not clear how the partnership contributes to the business’s vision, he said.
Alliances have their drawbacks, such as the loss of independence, or an inability to mesh personalities and business cultures.
“There’s a whole lot of parallels here to marriage.”
Partners replace market risk with relationship risk, he said.
Martin recommended farmers and businesses “date first” by exploring the idea in conversations and meetings. The next step is due diligence – making sure a prospective partner’s books are in order.
Alliances should start small in case the relationship fails, Martin said.
