Survey reveals key risks, opportunities in agribusiness

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Lathrop & Gage LLP reported the results of its 2013 Survey of Agribusiness Trends, which revealed key risks and opportunities for the agribusiness industry.

"As a law firm deeply rooted in agribusiness knowledge and experience, Lathrop & Gage is committed to identifying trends and issues that help our clients and the industry as a whole protect their freedom to operate and seize opportunities necessary for growth," said Jean Paul Bradshaw, Lathrop & Gage Partner and former United States Attorney. "Survey results revealed what many of our clients express on a regular basis, that the Agribusiness sector is a complex environment in which to conduct business."

The survey, which brings forth insights from senior legal decision makers in 40 agribusiness organizations, revealed the forces respondents believe pose the greatest risk to agribusiness' ability to operate in this changing landscape.

Top risks according to respondents include legislative risk (43%), political risk (34%) and environmental risk (27%). In order to respond the risks resulting from increased regulation, respondents anticipate an increased amount of work across all work types and practice groups. The largest predicted increases include work associated with:

• Federal regulations (80%)
• State regulations (61%)
• Environmental regulations (61%)

A breakdown of all anticipated work increases:

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"Forces such as operational interruptions, Congressional gridlock, increasing responsibilities for regulatory agencies, onerous local and state nuisance laws and labor issues make it more and more difficult for agribusiness organizations to operate," said Jay Felton, Lathrop & Gage Partner and fifth-generation farmer. "As a result, agribusiness organizations are forced to spend more time complying with regulations and less time serving their customers."

In addition to major risks in the industry, survey data also revealed key opportunities. When respondents were asked to identify the one or two forces that offer the greatest opportunities for the agribusiness industry, 39% identified technology and 23% identified access to social data. Survey insights reveal that:

• Technology allows agribusiness organizations to improve efficiency and accuracy, streamline production capabilities and innovate and improve product offerings

• Increased access to and analysis of social data helps organizations better understand and target their evolving customer bases, and help them respond to, or even predict, consumer demand and trends

"In an industry inundated with regulatory challenges, technology and social data present agribusiness organizations with the opportunity to not only become more efficient and effective, but also to adopt and maximize opportunities for innovation and growth," said Felton.

Survey results reveal that more than 50% of senior legal decision makers view economic forces as both an opportunity and a risk, as 57% of respondents identified the economy as an opportunity and 52% identified it as a risk.

Even small fluctuations in the economy or supply and demand can cause market dips that affect the entire industry. As a result, organizations are increasingly forced to resort to the following measures:

• Control costs
• Improve efficiency
• Cut overhead
• Minimize labor forces, including legal departments

In the face of economic struggles, agribusiness in the United States keeps moving forward - the world's food supply is at stake. A growing population and corresponding improvements in standard of living and wealth not only result in increased global demand for the production and sale of higher quality, more nutritious and better food, but also in equipment and pesticides need. The result is a significant economic opportunity for agribusiness organizations.

With great risks and opportunities come increased workloads and associated legal needs. Survey data shows that many agribusiness organizations have a very small or no legal department. Key insights from the 40 organizations surveyed include:

• 68% have three or less in-house lawyers, including 20% with zero and 25% with just one in-house lawyer
• While the average size of a U.S. legal department is 23 in-house lawyers, excluding outliers, survey results indicate that the agribusiness average is just 8, with a median of 2 in-house lawyers
• 66% of those surveyed reported having no legal specialist in their department

Along with comparatively small legal departments and limited access to legal specialists, the agribusiness industry invests in fewer legal resources. While the average legal spend across U.S. industries is $8.5 million, survey results reveal that the average legal spend in the agribusiness industry is just $2.7 million.

Given limited legal resources and increasing workloads, the greatest challenges for survey respondents are budget and value management (30%) and managing workload (16%).

In order to manage these risks and take advantage of new opportunities, respondents emphasize the need to ensure compliance, proactively prepare for new regulation and educate policy makers and the public on agribusiness needs.

"Our agribusiness industry group is made up of attorneys that grew up on and are still actively involved in production agriculture, so we know the ground to cover, speak the language and share perspective on the importance of agriculture," Felton said.

"As agribusiness organizations struggle to respond to the changing industry, Lathrop & Gage stands ready as a trusted legal partner with the technical expertise and deep agribusiness knowledge to help our clients quickly and effectively take advantage of key opportunities while minimizing risk and protecting their freedom to operate."

Lathrop & Gage LLP commissioned its 2013 Survey of Agribusiness Trends from Acritas, the world's leading provider of legal market research. Extensive research was conducted, including 44 in-depth telephone interviews with senior legal decision makers in agribusiness organizations, each with minimum revenue of $40 million.

Research spanned agribusiness industries, ranging from industries such as biotechnology to lending and finance to farming and beyond.


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michael    
kansas  |  December, 18, 2013 at 11:19 AM

Interesting report. It seems from this that our industries' biggest challenge and most important opponent is our own Government. Predicting an 80% INCREASE in cases/spending on legal battles over Federal Regulations alone doesn't bode well. Especially in light of other predictions of higher costs in almost every direct input, dramatic drops in commodity wholesale prices and increased international competition. It would be interesting to see a comparison to other industries outlooks and forecasts to see if they also expect to be increasing their battles with Government. Odd to think that we're now having to look at our Government Agencies as a Cost, not a Benefit.


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