Speakers presented strategies, trends and foresight
Presenters at this year’s ARA conference and expo provided their insights into the conference’s theme of Play Like a Champion: Winning Strategies for Ag Retail. Each speaker had their own views and topics to round out the conference’s sessions. There were nine speakers and a panel of three, which was moderated by Dave Downey, Ph.D., Purdue University. Here are some of the highlights of each speaker’s presentation.
The keynote speaker that kicked off the general session Dec. 4 after Daren Coppock offered opening remarks was Bill Whitacre, president and CEO of J.R. Simplot Company. Whitacre started off by sharing the challenge ag retailers face of being either effective or having efficiency. He said a retailer needs to be able to be both to have a sustainable business. He told the audience that technology is changing everything quickly, and the industry is being pushed to move faster by factors including globalization, market and price volatility and advances in technology.
He said good retailers today have to be research oriented. With the internet and so much available data, Whitacre explained that consumers will often do research about a company’s product and services and know more than the sales person.
With new technologies comes the ability to become more economically efficient, he explained. New equipment and technologies allow retailers to load fertilizer in a matter of minutes in what used to take five days. Advancements will continue to raise the bar for the whole retail industry.
As technologies advance and generate tons of data, retailers are being challenged to manage “big data.” Whitacre said retailers need to turn big data into a value proposition so that retailers can help farmers. He admitted that retailers have not been very clear on how to do that, but they have to get their arms around it soon so that they stay relevant to their customers. He reminded retailers to ask themselves what the customer values, which will be different for each one. But understanding what they value will help build trust and a solid relationship in order to make the farmer’s life easier.
JOHNNY COUNCIL, BILLY PIRKLE, BART PESCIO
Following Whitacre and the announcement of some key ARA awards, the conference spotlighted a panel, moderated by Dave Downey, Ph.D., Purdue University, discussing ResponsibleAg. The panel included Johnny Council, president and CEO of Lyman/Tremont Group; Billy Pirkle, senior director at Crop Production Services; and Bart Pescio, president of Yara North America. The goal of the panel was to discuss what the ResponsibleAg initiative is and what some of the challenges are for this endeavor.
Pirkle started off by explaining that the public’s view of agriculture has changed since World War II when public opinion of ag was probably at its highest. He questioned if agriculture will be able to keep its social license to operate in the future or if public opinion will turn against agriculture and make producing food too challenging.
Council explained that the benefits of ResponsibleAg to the ag retailer industry far outweighed the drawbacks and that retailers need to get ahead of the curve of fluctuating public and regulatory opinions.
Pescio explained that he brought the perspective of someone who’s lived in Europe and experienced its regulations of the ag retail industry.
Pirkle then explained that ResponsibleAg took its cue from the 4R Nutrient Stewardship initiative about fertilizer rate, timing, source and placement. He said ResponsibleAg is more of a compliance program that goes a step beyond the 4Rs. He sees it as a way for the industry to be more transparent. Pescio admitted it could be a painful process.
Council pointed out that ARA was already working on a code of practice for the use of fertilizer before the West Fertilizer explosion happened, which brought the country’s attention to retailers. Since the explosion, pressure to develop a compliance program to oversee the industry has been increasing.
Pirkle said the mood in Washington, D.C., was that government agencies were looking to the fertilizer and retail industries to come up with guidelines. He stressed that giving the industry a chance is better than tough new regulations that could be difficult to deal with and could be costly and prohibitive to doing business.
Rounding out the morning sessions, Captain Mike Abrashoff, author of “It’s Your Ship,” shared his experiences of being the captain of one of the lowest ranking Navy ships and how he turned the crew’s attitudes around and helped them to become one of the highest ranked crews within two years.
Abrashoff explained that after he became the captain of the USS Benfold, he realized he needed to change his leadership style and find out why the crew wasn’t stepping up to their responsibilities. He decided to interview every crew member and get to know them, their dreams and desires. He looked into how he could help the crew make their personal goals happen. He realized many did not have access to adequate training, so he revamped the training program. He created a learning center so that crew who needed refresher courses in math and English could improve their skills. After implementing his changes, his crew was advanced and promoted at rate of 200 percent better.
All of the changes Abrashoff made were due to his own self evaluation and realization that empathic, compassionate leaders get results. Taking the time to get to know employees, their thoughts and dreams and helping them reach their goals can create an environment that rewards the whole team. This idea is gaining steam in business today, he said. He referred to a feature article discussing the rise of the compassionate leader in the Harvard Business Review and Fast Company magazine.
The days of the guy sitting in the captain’s chair (or boardroom chair) barking orders doesn’t work anymore.
MIKE SMITH AND MARK WASCHEK
The afternoon of Dec. 4 was broken into two breakout sessions. To provide a full spectrum of information about “Becoming a Destination Employer” two speakers from Ag1 Source—Mike Smith, president and CEO, and Mark Waschek, vice-president-agronomy—provided information during one breakout session.
The two spoke about the company’s three-legged stool of business style for a strong base, which is necessary for a company to have satisfied employees. It is a base of hiring, retention and engagement. The explanation is that it starts with putting a company’s best foot forward for hiring, requires attention to retention and a focus on engagement or employees wanting to help the company be a success.
Smith explained that the largest percentage of employees leave a company because of issues with their supervisor, nearly triple the number that leave because of low compensation.
Waschek also noted what is logical; the highly engaged employees are two times more likely to be top performers in a company. How to earn engagement is a big issue and must be a focus of a business.
LAUREN WILLIAMSON AND STEVE MITCHELL
In the breakout “Fertilizer Industry Macro Trends,” Lauren Williamson, editor of Argus FMB’s North American fertilizer report, and Stephen Mitchell, editor of Argus FMB’s global nitrogen fertilizer report, provided an overview of the past influences on the global fertilizer industry and provided a look at where the industry is today and where it might be headed in the near future.
As for nitrogen, Williamson said U.S. urea supply is highly import dependent and pricing is dictated offshore. Ammonia is also import dependent, but in UAN production and pricing, the U.S. leads the way. The U.S. is the second largest urea import market, but India is first.
Mitchell gave an overview of the global urea market. Although there has been a lot of talk about price volatility in the urea market, he showed that the price variations are still at the same level as they were in 2003.
In the potash industry, Williamson said the U.S. is not self-sufficient, but North America is. In the U.S., potash production is decreasing, recent DAP production has been decreasing relative to MAP, and MAP consumption has been increasing. The U.S. is a net importer of nitrogen fertilizer now that production has decreased because of the drop in natural gas pricing.
In looking ahead to the many of the proposed fertilizer production plants projected to be coming online in the next five to 10 years, both Williamson and Mitchell agreed that many won’t come to completion. They projected that those likely to succeed will be mostly brownfield expansions.
Mitchell projected that domestic expansions of NH3 production will pressure prices and the U.S. will see self sufficiency in UAN. He said the NH3 market is in transition now that a CF Industries and Mosaic deal was signed this fall. A new spot price market for the Americas may emerge, Mitchell speculated. He said urea imports were running 20 percent behind 2012-2013 levels through December 2013, which projects that prices would have to rise in first quarter of 2014.
Wrapping up their session, they said in the next three to five years, capacity expansions will likely upset the market and may lead to possible price wars.
We’ll have an upcoming decade of more rapid consolidation in the agricultural industry, including the ag retail business, than we’ve seen in the last seven to eight years, according to Allan Gray, Purdue Universty, Land O’Lakes chair of agribusiness.
Gray’s predication was part of his breakout session about the “Retail Outlook to 2025.” His presentation went in the order of using facts and figures to explore farm growth, an examination of market forces and a discussion of implications for retailers.
There has to be an impact on ag retailing as the segment of farmers with more than $2.5 million in sales is increasing, he said, and even today those 2 percent of the farms account for almost 35 percent of farm expenditures or purchases of goods and services.
Gray said surveys continue to show that most farmers are loyal to their local supplier, but those suppliers will have to be more business savvy than ever before for this loyalty to continue. He said farmers are having higher expectations of their retailers.
NEW TECHNOLOGY SESSION
In the other breakout session of Dec. 5, New Technology Session, attendees had the chance to listen representatives from Agrium and A.J. Sackett & Sons share the highlights of each product that was nominated for the AgGateway/ARA Technology Award. Agrium presented highlights of its ESN production. Ben Sakoura with Agrium explained that ESN is a polymer-coated nitrogen (N) fertilizer that improves N use efficiency in crops and reduces N lost to the environment. Therefore, ESN delivers N to growing crops throughout the season, not just when it’s applied. It is a granular fertilizer and blends well with other products. Todd Shearer from T.R. Shearer, a full-service ag retailer, explained how his operation used ESN and found many benefits such as its easy ability to be stored because it doesn’t draw water and doesn’t clump. Shearer claimed using the product had increased sales 21 percent and increased his bottom line because customers recognize the value of the product and service.
Second to present was A.J. Sackett explaining its H.I.M. mixer. The company contends this is the next generation of fertilizer blending. It features two counter-rotating paddles, has a fluidized movement and has a tight turn tolerance so that there are no dead zones in the mixer where product can get stuck. A video was shown demonstrating how the mixer works and showed its instant discharge for multiple small batches. Troy Pearl of J.B. Pearl, a retailer from St. Mary’s, Kan., shared this retailer’s experience of using the H.I.M. mixer. He explained that it increased the tons per hour mixed.
Attendees were then asked to vote for which product they through had the greatest level of innovation. A.J. Sackett’s H.I.M. Mixer won the vote.
The final speaker of the conference was Steve Garvey, president of Garvey Management Group, and a former major league baseball player who played for both the Dodgers and San Diego Padres.
Garvey shared his experiences about being a baseball player and how what he learned can be applied to business today. He said your business is only as good as your ability to grow together, and he said to keep refining your skills. He studied other pitchers to learn their techniques and compared that to retailers watching how others do business and to never stop learning throughout a career. Other advice he gave was try not to make the same mistake twice.
Feeding America is important and he wanted retailers to remember that they are important in reaching that goal.