Issue link: http://read.uberflip.com/i/10959
UNITED STAND by Lee Frankel, President/CEO United Potato Growers of America Communication In Place Is someone renting market share with your equity? CLOSE COMMUNICATION AND A shared philosophy are critical elements in the relationship between a grower and his or her sales organization. If your sales organization spent most of the year being both long and short on product and not much time balanced, it is a good indication that communication needs to be improved. Sales organizations tend to be 50 cents below the market, at the market or about 50 cents above the market price at any given time. The common element for a group to be below the market is whether the sales desk has more potatoes than necessary to serve its core customers. If the sales team has potatoes beyond what it needs to service its core customer base, it must battle other sales groups for the same “price-first” marginal customer who will switch suppliers at a moment’s notice. Why was it so important to not be under the market this year? Marginal customers are marginal customers for a reason. They are more likely to demand an additional discount upon arrival for sales on consignment, any claims from customers and any build-up of inventories on the sales floor could avoid creating extra pressure for the sales organizations by instructing the shed to cull out all “Marginal customers are marginal customers for a reason. They are more likely to demand an additional discount upon arrival for quality claims and are generally slower to pay.” quality claims and are generally slower to pay. Ultimately, sales to most of these customers meant that your sales organization and packing shed sent a bill to you, the grower, for having supplied the potatoes for this transaction. Growers that communicated with their sales organization to see if there were any marginal and or excess potatoes. As prices dropped to levels well below break-even levels for growers, movement of fresh market potatoes increased. By springtime, many individual sales organizations could clearly see that they would not have enough potatoes from within their core grower group to last for their typical marketing season. These sales organizations ultimately had to purchase potatoes from other packers and growers to meet their true core customer needs. Did your sales organization resist raising prices and intentionally use your grower equity to maintain market share even though they ultimately needed to source potatoes from other growers? Or did you not communicate the true condition of your storage potatoes in a timely manner to allow them to increase your returns? Did you communicate with your sales and packing organizations to let them know that the return to the farming operation is even more critical for long- term sustainability than this year’s market- share battle? As you review your liquidation reports, which are also known as pack-outs, from this past season and consider who will be packing and marketing your crop for the coming season, carefully analyze if you truly have the communications in place with your sales and packing organizations to maximize your return. PG 28 Potato Grower | JUNE 2010