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Abstract
Agriculture and rural communities are in a major period of transition created
by a confluence of major drivers of change seemingly happening all at the
same time. Major drivers include shifting from supply push to demand pull,
greater market volatility, farm/food industry restructuring and concentration,
biotechnology revolution, e-commerce, international trade policy, and
national policies of varying support for agriculture.
Continually decreasing margins across agricultural production accentuate the
drive to bigger size in an attempt to capture economies of scale to maintain
living standards. Concentration of farm output by the larger farms is evident
in the analysis of farm typology statistics for Alberta, Canada. Smaller farms
sustain living standards with significant off farm incomes. Responding to the
evolving situation, firms generally employ one of three strategies:
• attempt to be low cost producer of the commodity.
• attempt to employ a differentiation strategy
• a focus strategy directed to a narrow market may contain components of
either low cost or product differentiation
The ability to decide which of these themes to implement and then implement
successfully will be key to the viability of many businesses and farms in these
times of major change. We see the strategy in the retail markets as ‘big box’
or ‘boutique’ operations. Probably the toughest position to be in is to get
caught without striving toward any of the three options.