newsletter article, November 2003
Business development producer
Don Hofstrand, retired extension value added agriculture specialist, firstname.lastname@example.org
Producers are joining
together to focus on adding value to the crops and livestock they produce.
Rather than developing just one value-added business, some of these new alliances
are focusing on developing a variety of businesses by identifying new markets
and creating new business ventures to service these markets. In other words
they are in the business of creating value-added businesses.
Below are three examples
of these new producer alliances. Many more have either been formed or are
in various stages of formation. Although each alliance is unique, they all
share the basic mission of creating new value-added businesses.
Century Alliance - Kansas-based 21st Century Alliance was organized
in 1996. Its mission is to provide profitable agribusiness opportunities
for its members. The alliance has established seven value-added businesses
including flour milling, a dry bean company and dairy production. It has
about 700 members and has recently expanded in other states.
Ventures Alliance - This Iowa-based company was formed in 1998 and currently
has over 1,100 members. Its mission is to create and facilitate the development
of value-added businesses. Ag Ventures has created a corn ethanol business
and helped existing value-added businesses like Golden Oval Eggs expand.
Agdeavor - Based in Ohio, Heartland enhances farm income by providing
investment opportunities to its members in businesses that add value to agricultural
commodities. It serves as a clearinghouse for value added ideas, conducts
feasibility studies and prepares business plans.
These new alliances provide
advantages for producers involved in value-added business development that
are not available when working in isolation on a single project. Alliances
provide a unique form of business “incubator.” Not an incubator in terms of
physical space and equipment, but an incubator in terms of skills development,
leadership, idea sharing and access to resources.
- Developing business
skills - Instead of developing entrepreneurial and business skills to build
just one value-added business, these skills can be used over and over to
build several businesses. In the process, these skills are further developed
- Building leadership skills
- Critical to the success of developing value-added business are leaders.
These individuals are often called “champions” because they provide the drive
and momentum needed to take a business idea and create a viable business from
it. Alliances provide a forum for leaders to get together to learn and draw
strength from each other.
- Sharing idea - Alliances
bring together individuals from different backgrounds with different market
and business ideas. This allows for interaction and sharing of ideas that
would not occur in isolation.
- Building relationships
- Alliances provide a framework for building relationships with other organizations
and individuals such as researchers, financial providers, technology providers,
public sector providers and others who are critical to building viable value-added
- Accessing funds - Alliances
may provide “seed” capital for investigating potential business ideas. Alliance
members may be a source of equity for the capitalization of business ventures.
- Timing business - As
critical as “which” market or industry to enter is the question of “when”
to enter. Alliances provide the longevity and patience needed to wait until
the proper time to enter an industry or market with a new business.
Producers are attempting
to enhance the value-added business development process by creating these
entrepreneurial organizations. In the eyes of this observer, these alliances
are critical to the success of the value-added movement.
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