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The Rural Voice, 2006-05, Page 30Wnth prices for many farm commodities so low there's no profit in producing them and government support reluctant, at best, many farmers are looking for alternatives that can pay the bills. Recently. Growing Your Opportunities conferences across the province gave farmers and small scale food processors a chance to hear from others who have been successful and those with information to pass on. Keynote speaker at the nearest Conference, in Seaforth, March 21, Gary Morton, outlined exactly the issues for farmers looking for profitable alternatives. While world trade in farm commodities has been booming, prices have been dropping and margins have decreased to the point of evaporating. The number of wholesalers and retailers has declined, reducing competition for these products. The result is'the number of farmers has been decreasing. Meanwhile farm input costs have gone up, as have the size of farms, and regulations and food safety requirements have increased. On the other hand, Morton said, consumer interest in where food comes from has increased the market for value-added, organic and alternative consumer products. Morton quoted Harvard professor Theodore Levitt on the subject of market myopia which he termed as "the failure to see 'down the road' and make the change necessary to adapt to future markets." Producers need to explore new profit opportunities from value-added and diversification, Morton said. Commodity production means everyone makes the same products. Value -adding .creates unique products. Producers tend to focus on what they know today. Value -adders focus on the opportunities others miss. Many people create reasons why something can't be done instead of asking how it can be done, he said. Re -inventing the farm Producers need to explore new profit opportunities from value -adding and diversification, a Nova Scotia farmer/consultant tells Ontario producers Story by Keith Roulston Farmers' markets can provide a testing ground for those wanting to add value or create new products. Traditionally, agriculture has been rural in nature and involved in primary production while processing and manufacturing has been urban. Morton sees farmers' future in what he calls the "value-added zone", an interface between the two isolated traditions. Most of agriculture is focussed on "mature" markets that have little opportunity for growth, Morton said. "You have to look at reinventing what you do." Even best-sellers, such as Tide laundry detergent are always reinventing themselves with a new scent or miracle cleaning ingredient. How do you reinvent what you do? Your options can include getting out of farming altogether and taking on something with more future or shrinking your business, which might actually create more profit in some cases than trying to carry on at too - large a scale. You can value -add, which means moving up the market chain toward the consumer. You can diversify by adding more crops or 26 THE RURAL VOICE other enterprises to your operation. Value-added doesn't need to be a complicated new process, Morton said. If you have expertise in something, for instance, you can offer consulting services (Morton has done just that, by using his own experience with his brother, adding value at Morton Horticultural Associates in Colbrook, Nova Scotia to counsel others in how to add value to their enterprises.) Start by understanding the definition of "value". Morton suggested: the ratio of utility (usefulness) to price. To add value, increase the value ratio; offer sbme new, unexpected value or create new market opportunities. It might not be necessary to build a new enterprise that is profitable enough to stand on its own. Morton reminded the audience of the days when many farm wives had a flock of hens that provided "chicken " money" — that additional money that eased the farm monetary pinch. In looking for value-added opportunities, build on your successes, he suggested. Don't think of adding value as a quick fix because a strong business is built one block at a time. Remember to make sure what you're going to do is profitable. Between the traditional commodity producer and the consumer is a whole chain of people creating their own profit centres from your product: packers, processors, brokers, wholesalers, distributors and retailers, Morton said. Take the apple distribution channel, for instance. The consumer pays 93 cents a pound of which producer gets 12.85 cents a pound at the farm gate, about 13.8 per cent of the consumer dollar. The packer, processor and distributor get 35.15 cents, a pound, or 37.8 per cent of what the consumer spends. The wholesaler gets seven cents, or 7.5 per cent of the final price. The retailer gets 38 cents, or 40.9 per cent lof the consumer's expenditure.