by: Eric Gerbrandt, Pacific Berry Resource Centre
As a university-based agricultural researcher, I have the opportunity to observe the industry from the periphery, not quite as a by-stander, but with more distance than the producers themselves. I should start by saying that I don’t believe my observations are unique or revolutionary. I will describe them, nonetheless, because I think they are currently relevant to the agricultural industry in the Fraser Valley. My experience being primarily in the Fraser Valley berry industry, I will provide examples from this sector, but I believe these observations can be applied to other sectors and regions. Moreover, I think that this perspective should provide motivation for the work agricultural researchers like me endeavour to undertake, and the outcomes we aim to achieve, in collaboration with our industry partners.
As any process-market cranberry, raspberry or blueberry producer can tell you, watching fluctuating prices in agricultural commodities can be scary. The ability to pay for the cost of production, let alone the home mortgage, is a seemingly constant source of stress. Compounding the issue, there is no single crop or product that will perpetually provide sufficient returns on investment in any particular production region. As a result, agriculture is always changing, as is the producer.
The trend toward globalization continues at an unrelenting pace, and the commoditization of agricultural products places greater and greater strain on the viability of Canadian agricultural production. In response to the pressures of decreasing margins in the face of increased competition and financial risk, producers are faced with a paradox. This paradox in agri-business is that there is an economic incentive to specialize and continually grow in size, but stability of income, and the ability to weather the rolling sea of agricultural commodity prices, is founded upon diversification. In other words, to be profitable, farm businesses tend to focus on doing one thing and “going big”, which exposes them to the greater degree of risk that comes with large-scale investment in a relatively undiversified system of production. This principle seems to apply equally to individual agri-businesses and whole production regions.
As in the finance world, diversification is understood as a way to “hedge one’s bets” and obtain a consistent, long-term return on investment. Conversely, speculating on future prices by investing heavily in a single commodity has the potential for either massive profits or devastating losses. In looking to the future, the wise entrepreneur tries to choose a set of investments that will bear an acceptable blend of stability and the potential to provide a significant return. Understanding risk as both a phenomenon of short-term volatility as well as the chance of reaching one’s goals over the long-term provides a fundamental piece of input for the decision-making process. In this light, I propose that developing different production “options” is a key to fostering a robust agricultural economy, providing a solution to the paradox of specialization versus diversification. These options could include using a range of crops or perhaps just several varieties of the same crop. For example, raspberry producers can extend their season by growing several different June-bearing varieties followed by fall-bearing varieties that capture higher prices. Likewise, a process-market blueberry producer may consider planting a less-known crop, such as black currants or goji berry to investigate future market opportunities. Or, these options could mean employing unique production methods or diversifying marketing opportunities through fresh, processed or value-added products. High-tunnel production of a wide range of crops is a prime example of the advanced horticultural techniques available to the grower, making it possible to take advantage of earlier or later product of superior quality in some cases. Another common illustration is provided by the farmer’s market approach to mixed agricultural production, where a variety of fruits and vegetables, as well as value-added products, are made and sold at one location.
No one can consistently predict the future, but I believe that one can be prepared for the future through investment in production options. I think these options should be the focus for researchers and their industry partners: novel crops, different varieties, superior management strategies and new marketing opportunities. Rarely are these options developed over a short time frame, and most require years of investigation. This investigation starts by asking questions, trying out new ideas, tinkering with standard methods and improving upon the status quo. Though the degree of specialization and size of agri-businesses will continue to increase, developing diversity through creation of production options is an important long-term investment.
To all of the producers currently working with us towards this goal, thank you!