AGFINANCE
THE WESTERN PRODUCER | WWW.PRODUCER.COM | JULY 25, 2013
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GRAIN PROCESSING | NEW MILLING COMPANY
Milling venture announces head office Ardent Milling | New company plans to open its headquarters in Denver next year BY BRIAN CROSS SASKATOON NEWSROOM
If all goes as planned, North America’s largest grain miller will set up headquarters in Denver, Colorado, pending approval of certain conditions. Ardent Mills, a joint venture of ConAgra Foods, Cargill and CHS, announced July 15 that it plans to set up a head office in Denver beginning next year. Satellite offices will be located in Omaha, Nebraska, and Minneapolis, Minnesota. Ardent Mills was formed earlier this
year as a joint venture involving two of North America’s largest milling companies: ConAgra Milling and Horizon Milling. Horizon, which includes Canadian mills and mixing facilities in Saskatoon, Burlington, Ont., and Montreal, was a joint venture involving Cargill and CHS. Under the new venture, Cargill and ConAgra Foods will each hold a 44 percent stake in Ardent Mills, while CHS will control a 12 percent interest. A group of wheat growing states and the U.S. Justice Department are investigating the proposed joint ven-
CARGILL AND CONAGRA EACH HOLD A
44 % SHARE IN ARDENT ture to determine if it contravenes U.S. anti trust laws, potentially affecting prices paid to farmers and costs paid by consumers. Ardent’s operations consist of 44
flour mills, three bakery mixing facilities and a specialty bakery. It would control about one third of U.S. milling capacity. In a news release, Ardent said the new venture will combine the assets, capabilities and experience of three established companies to bring innovative products, services and solutions to the marketplace. Suppliers that currently provide wheat to ConAgra and Horizon mills in Canada and the United States will benefit from additional sourcing opportunities and industry connections, the news release said.
The Robin Hood flour mill in Saskatoon will be part of the new venture. | FILE PHOTO
CONFERENCE BOARD OF CANADA REPORT | SUCCESSFUL FARMS
Marketing savvy, partnerships factors in farm success: report Marketing management
PERSPECTIVES ON MANAGEMENT
TERRY BETKER
T
he Conference Board of Canada’s Centre for Food in Canada recently released the report Seeds for Success: Enhancing Canada’s Farming Enterprises. The report, which looks at farming in Canada, confirms previously held observations about farm management and offers new insights on specific questions: • What are the business characteristics of farms? • What is the structure of farming enterprise value? • What are the profitability dynamics in the farming sector? • What managerial factors help explain profitability performance? • What needs to happen to enhance farming enterprises in Canada? The report suggests that farms have differing and specific strategies and acknowledges that there can be regional and sector-driven variability. It identifies four key areas that demand increasing levels of managerial focus and skill. Capital management Observations in the report on capital management reinforce a lot of what I think farmers have been trying to manage for a few years now. Capital investment is more intensive than ever and farmers should analyze options such as leasing or owning. Investment is separated into asset ownership and operating capital, with the question being, where is a farm’s available capital best employed? “Many farming businesses are finding operational success without owning large amounts of assets, focusing instead on the development of core managerial and operational competencies to improve their margins,” the report said.
The report says this area of management is more important than ever and suggests that farmers should actively think about the needs of the consumer and adjust management practices accordingly. It says farmers have the opportunity to be price makers as opposed to price takers. People management I found this part of the report most interesting. “It is hard for farm managers to pay adequate attention to managing capital and marketing if they are also responsible for tending to all the other functions on the farm. Managerial specialization is key to business growth, but its development is often hindered by a farm operator’s unwillingness or inability to delegate and manage. Some farmers operate on the idea that the more they do themselves, the better it is for their bottom line. “Many operators also report significant trouble finding the people they need — particularly where there is competition from other sectors such as oil and gas for the same skill sets. “Both of these issues speak to the need for farm managers, themselves, to undergo more training in management and leadership, and to implement the workplace standards and practices that will help attract a new generation of smart, ambitious and enterprising Canadians to farming.” Relationship management New areas of management will warrant attention as the industry changes. The report identifies relationship management as one of them. “Farming today also requires a greater ability to manage relationships. To overcome common challenges and achieve a variety of objectives, many farming operations are collaborating through partnerships, co-operatives and joint ventures. “Each of these can offer farms the ability to combine resources and achieve many of the benefits of scale, vertical integration or expanded
business lines. “Organized networks are supplementing the local coffee shops as forums for knowledge and best practice sharing and reflect the increasing business complexity in the sector. “Indeed, improved interpersonal and relationship management skills are important to overcoming many
of the challenges of managing capital, marketing and people. The image of the farmer as an independent and solitary figure is increasingly at odds with the realities of successful farming business.” The report, which was written and researched by James Stuckey and Erin Butler, can be downloaded at www.conferenceboard.ca.
I suggest that you take the time to read it in its entirety. It will reinforce some of your beliefs and likely challenge you to some new thinking. Both are good outcomes. Terry Betker is a farm management consultant based in Winnipeg, Manitoba. He can be reached at 204.782.8200 or terry.betker@ backswath.com.