Healthy soil and sustainable growing

["TradingPostPaul" <tradingpost@riseup.net>]

IN THE TRENCHES: Factors to watch in the days ahead
http://www.theproducenews.com/StoryNews.cfm?ID=7511
01/22/2008

As the U.S. presidential primary races continue, one of the debate topics
has been "change." The candidates are being challenged with questions about
change. But how will any changes influence business, especially the food
industry?

What will happen in produce? Do growers, shippers and retailers have any
idea of what lies ahead? Is change expected to have an impact on today's
management, or will it be business as usual?

A year from now, some companies will be looking back at 2008 and wondering
why they didn't see certain challenges coming at them with those changes.
Many will be spinning their wheels as a result of getting caught in the
same old operating rut. These particular companies will struggle, and some
may even fail completely.

Whether the country falls into a recession as some predict, and whether
that results in profits collapsing, the housing industry weakening further
and oil prices shooting up to $150 per barrel, change will take place and
will affect the way consumers spend money. Business is headed into a
double-trouble zone of how to capture consumer dollars and how to control
the cost of operations at the same time.

The food industry will encounter some major demands that will compel
companies to keep pace with the transformations around them. Consumers will
become frustrated over increases in the cost of living, which will likely
force them to put the brakes on spending for certain products and services.
Rather than paying a premium price for filet mignon, lobster, asparagus or
strawberries, they may have to spend it on gasoline and settle for stew
meat instead.

How consumers spend their money in the future will be crucial to the
produce industry. Shoppers are already feeling uneasy about news reports of
the tough times that lie ahead. The soaring oil prices alone are enough to
diminish spending and freeze any investment savings consumers may have.

One recent Internet business news report I read stated: "Wall Street
plunged again amid renewed fears that the financial sector's troubles with
bad credit won't soon end and that some consumers are buckling under the
effects of a slowing economy. The arrival of earnings season has investors
worried about how banks and brokerages have fared after suffering losses in
the collapse of the subprime mortgage market."

With the unpredictable economy closing in and a definite slowing period
developing, there is no guarantee that sales and profit commitments will be
a cakewalk this year. However, there are certainly ways to prevent business
operations from totally collapsing.

This is going to be a very perplexing year of not-so-pleasant events
combined with many unknowns. Let's consider a few factors that will involve
the food and produce industries based on "change." Some will play vital
roles in making the bottom-line profit somewhat of a tough go.

* Business as usual: Using the same old methods of advertising, marketing
gimmicks, merchandising strategies and clock in-clock out attitudes are
just not going to work this time around. Companies will need to regroup and
simply operate much differently in all areas. Know what the consumers are
thinking and adjust to their needs. Lean toward the customer. Tweak
something, anything.

* Increasing gross margins (again): Whom are you kidding? It's not going to
work this year. If raising prices is where you think it's going to come
from, forget it. You're in Bizzaro World.

* Crude oil prices: $100 per barrel? Try $150. Oil prices will increase the
cost up and down the line on not only fuel and utility expenses but also as
an ingredient in plastic materials, construction, roads, automobiles and
even packaging supplies.

* Mega-size superstructures: Are you still thinking bigger? All those huge
packinghouses, warehouses and supermarkets will see the cost per square
foot skyrocket in order to operate. If you're going to build new gigantic
complexes, be ready to pay gigantic money to operate them. Supermarkets of
tomorrow will be smaller.

* Luxury upscale pricing: Before the economic problems began, many
retailers moved to the premium upscale merchandising theme. Now, consumers
may back off from those uneconomical ritzy retails. Think hard if you are
considering this. You may end up chasing your customers away.

Nobody can anticipate what really lies ahead for business 10 days or 10
years from now. The only thing we all know for sure is that it is going to
change and change will play a big role in our food business. Try to focus
on at least these five areas in order to stay in the game: change something
-- anything, market differently, keep current customers satisfied, watch
every penny like an armed guard and be price-friendly.

Most importantly, understand how new changing demands will affect your
business. Differentiate yourself from your competitors by preparing for it
right now.