ARA Conference Highlights: Presenters showcase top ideas
The theme of the 2012 ARA conference and expo was Ag Retail Top Guns: Preparing Your Business for the Future, and presenters shared their unique views on how to better fit that model. This year’s conference featured nine speakers over the two-day conference. Here are some highlights of each speaker’s presentation.
After opening remarks from Daren Coppock, the conference began with Carl Casale, president and CEO of CHS Inc. His presentation, “Navigating a Dynamic World,” offered his perspective on multiple issues impacting the ag retailer today. One of the main drivers influencing agriculture around the world, Casale said, was energy. Gasoline demand is expected to peak in the United States in 2015. Domestic exploration of energy resources in the U.S. will continue to increase and the U.S. may become an exporter of fuels. The U.S. is becoming more energy self-sufficient, but the world is thirsty for fuel especially as the middle class in China is increasing.
Carl Casale Attendees were reminded about the need to nearly double the world’s food supply by 2050 to meet the increasing population. In light of this demand, Casale provided outlooks on corn, soybeans and wheat. He projected that the U.S. share of the global corn market will decline. However, where corn is grown within the U.S. will shift. He cited North Dakota as an example. He said it was possible within five years that North Dakota could grow more corn than wheat.
In soybeans, he said China would drive global soybean demand and it will be for the actual soybeans and not the oil. In the wheat market, Casale said Russia would be the big player in the world. He said Russia and areas around the Black Sea will lead wheat exports, which will also lead to increased volatility in this market.
The key point of Casale’s presentation was getting retailers to see their businesses as relevant. “You can either be respected or liked; relevant or independent,” he said. He explained that being relevant is more important by sharing the example of K-Mart. Nearly everyone recognizes the name, but not many would probably care if it went away. That lack of caring shows that K-Mart is no longer relevant. He said ag retailers need to evaluate if they are relevant to their customers. He told retailers to ask themselves these questions.
- Do they have the right people in place selling the right products?
- Does their competitor have an edge over them?
- Do you add value?
- Do customers have more technology than you?
- Are you relevant to bankers?
Following Casale’s overview of global factors and issues impacting ag retailers, Charlie Stenholm, former Texas congressman and senior policy adviser with OFW Law, shared his views on the state of agriculture. In his presentation, “Post-Election Analysis and the Impact on Agriculture,” he started with concerns about the fiscal cliff. He told the audience that he thought the country would go over the cliff and that both political parties were ignoring the real problems. He said that despite going over the cliff, the country would survive and the plunge wouldn’t be fatal.
He stressed that the political parties are becoming more polarized and that he wouldn’t be surprised to see our two-party political system turn into a three- or four-party political system.
He mentioned that 20 of the 46 members on the House Agriculture Committee will be new starting in 2013 and they don’t know ag. Stenholm called upon ag retailers to reach out to their representatives, especially the new ones that need to understand agriculture’s issues.
He called attention to the Renewable Fuel Standard and reminded the industry that it cannot produce food, feed and fiber without gasoline. The RFS needs to be improved, not eliminated, he said. From his experience in Texas and working with Big Oil, Stenholm said he thought Big Ag and Big Oil need to work together more since they both depend upon each other now. He criticized using the words “alternative energy.” Instead, he suggested replacing those words with “supplemental energy” since more energy is being produced in different ways.
In the GMO vs. organic debate, he sides with whatever means feeds people because, “Hungry people don’t stay peaceful.”
Stenholm commented on immigration, saying the United States need to develop a working policy that is relevant across the border with both Canada and Mexico.
Wrapping up the Wednesday morning session, John Foley, former Blue Angel pilot, spoke to the group about his experience becoming the lead solo of the Blue Angels. He shared multiple videos showing just how close Blue Angel planes fly next to each other and that the pilots must have discipline, trust and focus. He discussed how the Blue Angels have a culture of excellence that the agriculture industry could also aim to have.
What he learned becoming a Blue Angel was that the top 1 percent all do things similarly. By understanding what they do, we can all learn. According to Foley, this 1 percent has regular meetings for education and networking, provides training and education and has deep celebration.
Getting people to buy into the same idea requires commitment. He said people perform to their own belief level, which means that in order to improve their performance, they have to elevate their own beliefs. What holds people back are their limiting beliefs. He suggested that these limiting beliefs become liberating beliefs.
One of the videos Foley shared was a glimpse inside the briefing room of the Blue Angels before they gave a performance. The video showed how all of the team members took the time to visualize their performance before they ever stepped into the plane. He explained the phrase, “Glad to be here,” as something all of the team members said in their meetings to remind them of being grateful even after evaluating and critiquing a performance.
Foley shared his experience in 1992 of meeting a Russian team of pilots. Despite their attempts to outdo each other while flying, in the end Foley remembered that everything is based on relationships. After taking Foley in his jet, the lead Russian pilot ended their visit by giving Foley a picture of his family. In that moment, Foley said it reminded him that people are the same everywhere. They want relationships built on trust.
Foley used that experience to explain to retailers that they need to remember that their business is based on building relationships that are based in trust. Verbal contracts reinforce that trust and show that you will do what you say you will. Then deliver on your promise, he said. Parting words of advice he gave included: Remain open to criticism, recognize your mistakes and always look to improve.
In one of the afternoon breakout sessions Nov. 28, Karen Grabow, senior vice president of business development services at Land O’Lakes Inc., presented “Developing Your Flight Crew,” which was about recruiting and retaining good employees. She explained the human resources maturity model and how the role and function of HR departments has been growing and changing over the past several decades.
Grabow asked participants to identify three key roles within the company that were the most important. She provided the example of Disney World. Of all of the employees that work there, the sweepers have the most accessible role and one of the most important roles in the company because they interact most with the customers and often provide the most important information and help take care of people. Disney provides these workers with the most training of all of the company’s employees.
Attendees were asked to identify what positions within their own companies held similar key roles. Top answers included the receptionist, sales people, bookkeeper, manager, applicator and feed truck driver.
Posting a job has become more of an outmoded way to hire someone, Grabow said. She said networking through social media is becoming more relevant in the job hunt today than ever before. She recommended cultivating relationships outside of the industry. She said retailers need to be constantly meeting people and evaluating if they could be potential candidates to be hired.
Other highlights of the breakout session included standardizing the selection and interview process for potential employees, considering a more diverse workplace, performance management accountability and best practices and managing poor performers.
Bill Keogh, AgKnowlogy, during the other breakout session talked about “how do we achieve sustainable growth” by an ag retailer. His point was to understand the customer and do what will build on customer satisfaction. “We know a lot more about the acre than the man,” he said referring to farmers and their land. There is a huge focus on being technical in this age of precision ag rather than understanding the customer more deeply.
Companies have to have a strategic focus to visualize how service is delivered now and look at what the customer is doing that the ag retailer could support. There has to be a key customer account plan, Keogh said. Share of business is driven by customer experience. “Share of business is a report card on how well you meet needs,” he added.
Also during this session, the R-7 Tool precision data tool from Winfield Solutions was explained. This was a complete switch from the man to the acre topic in the afternoon. The R-7 refers to explaining the value and use of data about right genetics, right soil type, right plant population, right cropping system, right traits, right plant nutrition and right crop production.
The R-7 Tool takes Answer Plots data and cuts, slices and dices it for use by ag retail agronomists salespersons and farmers. Additional data such as soil maps, yield maps and satellite imagery are added into the tool.
One of the morning speakers of Nov. 29, included John May, president of agricultural solutions and chief information officer with John Deere. In his presentation, “Agriculture Industry Trends and Developments,” May offered insight into the ag industry’s fundamentals. He said global grain production and consumption will continue to increase steadily. The U.S. farm balance sheet is expected to remain very positive and strong, but the business climate will be complex and dynamic as the macroeconomic outlook is fragile due to EU debt, the U.S. fiscal situation and China and Brazil. In addition, increasingly interrelated markets will continue to lead to market volatility and concerns over food security.
Macro trends that May said the industry needed to watch included the global food demand challenge as the world’s population continues to rise, increasingly sophisticated management expectations and the acceleration of technology advancement in agriculture. He acknowledged that technology has helped producers manage the cycle of farming better than ever before.
May shared the concept behind John Deere’s FarmSight, which combines machine optimization, logistics optimization and ag decision support. The concept is an overarching idea that encompasses all capable precision technology being combined to offer an ag professional a wide platform for managing his farm. May showed a video that demonstrated John Deere’s vision of the FarmSight concept. He stressed that FarmSight is not a suite of products but a strategy for the company to build its products around in the coming years.
In the late-morning breakout on Nov. 29, David Asbridge, president and senior economist with NPK Fertilizer Advisory Service, provided an outlook for crop production in 2013 and the likely demand of fertilizer based on acres and nutrients withdrawn during last year’s drought. He said he sees a “continuation of what we saw this year” in terms of different crop planted acres but there are a “lot of caveats” to consider before seed will be in the ground.
Nitrogen supply was a main emphasis of a large portion of his presentation. Fall anhydrous ammonia sales were less than other years because of dry soils. The outlook is for “price strength” of ammonia in the spring. First quarter 2013 imports of urea could be a record. UAN availability should be good because of imports, too. The top five companies involved in nitrogen fertilizer manufacturing and distribution controlled about 77 percent of all sales in 2012.
Alexey Pally, fertilizer derivatives broker with FIS Fertilizer Swaps Desk in the U.S., explained the swaps system for use by ag retailers in fertilizer purchases and providing risk management for pricing.
SUSAN SUMMERS AND KELLY FARRELL
The other conference-ending breakout option was titled “Making Your Ship Battle-Ready.” Presenters were Susan Summers and Kelly Farrell with Farrell Growth Group. Their human resources focus is to benchmark to determine how a company stacks up to peer companies and industry averages. They shared that although benchmarking can seem intimidating, it’s a good tool for retailers to use as a scorecard to compare themselves against the rest of the industry.
During this breakout session, Summers and Farrell demonstrated benchmarking by examining the financials of two fictitious retail companies. The two companies represented a high market share company where customers paid a premium and a low market share company that had an aggressive broker competitor.
Key takeaways Summer and Farrell shared included: a company can have low margins but still be very profitable, profit depends on how you spend gross margin dollars and the real value is looking at trends over a number of years. In addition, interpreting the data is key because generalizing often does not provide a clear picture of comparison between companies and the industry.
During the session, attendees were asked to determine what costs they might be able to manage better. Answers shared included the cost of interest paid, advertising, compliance, fixed assets, consulting fees and commercial insurance, among others.
In wrapping up their session, Summer and Farrell said storm clouds would remain on the ag retail industry’s horizon. Volatility will remain, interest rates will eventually have to increase, inflation is probably going to rise eventually and planning will be essential to ag retailers’ success.