The market will change
We spent the last week of February conducting district delegate meetings. These meetings are the mechanism for you, the MFA membership, to elect our corporate board of directors. We’ll introduce the new board members to you in a future issue of Today’s Farmer. The elections occurred just at the time we produced this magazine.
One topic we talked about at these meetings was MFA’s financial performance. From a cash-flow perspective, MFA joins you in dealing with what the weather and markets have provided, which is not quite what we would have liked. Just as you must navigate the aftermath of 2019, MFA, too, must build from a disappointing year. We can’t rely on any one area of the business to reach profitability goals. It will take solid performance from our grain, livestock, farm supply and crop input operations. We have a plan in place to do just that.
Regardless of what caused difficult times for agriculture over the past 24 months, there have been some encouraging factors. On the trade front, we have movement on the USMCA, agricultural trade with Japan, and a thaw in the tariff skirmish with China. All of these factors could potentially align for more favorable international sales.
Meanwhile, even with last year’s challenges, average net income on the farm was stable to slightly higher. Of course, as much as a third of that came in the form of Market Facilitation Program and other payments. That might not be the way we’d like to see profitability, but it is a reality that had to be factored into decision making.
It’s too soon to tell the fate of such programs, but we can be certain outside forces will continue to affect our business approach.
One such factor—one that we sometimes disregard because of more pressing demands—is consumer influence. In final analysis, agriculture always answers to a consumer at the end of the supply chain. That’s one thing if you are growing corn for biofuels. It’s something else if you are raising pork or beef or grain commodities for the consumer food market.
Consumers look to flex their influence in those markets. They are succeeding. What’s difficult for suppliers is that consumers have a variety of perspectives and reasons for trying to exert market influence. Some of them are trying to affect issues as massive as the earth’s climate. Some of them might have animal welfare in mind. Regardless of their reason for choosing what they will and won’t buy, consumers have had a taste of their influence on the supply chain. Expect more.
The good news from our perspective is that MFA has been focused on stewardship and will continue to be going forward.
As I look across our portfolio of products and services, I will tell you that MFA is geared to help you meet demands of the marketplace, whatever the consumer-level asks.
If it’s soil and water stewardship, MFA’s precision-based Nutri-Track program delivers results. You can collect the data you need to show you are making sound decisions. MFA feed products with Shield Technology as well as PowerCalf have allowed producers to answer consumer demand with efficient results while leading the way to employ the kind of data the supply chain demands and improve herds at the same time.
Our conservation partnership with MDC and NRCS has developed staff at MFA to help you navigate conservation programs and find ways to profitably employ federally supported and private management techniques.
All of these efforts fit MFA’s philosophy of customer partnering. We seek what’s right for each acre, each animal and the environment.
That’s why we put so much emphasis on the relationships we build with you. We know that agricultural markets will change. There will be new avenues to explore. Some may be mandated. Some will be optional, but each will require the right tools and expertise. Could “carbon farming” or compensation for carbon sequestration be on the horizon? Will processors require more information about how animals or crops were produced? Will consumer demand reveal new crops and production methods?
Stick around long enough, and the answer to each of those is likely to be affirmative.
Regardless, you will need a partner in the retail business. MFA continues to focus on how we can successfully deliver our side of the bargain and help farmers and ranchers navigate whatever demands the market sends.
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