Potato Grower

38 POTATO GROWER | DECEMBER 2020 The grower/ optimist anxiously establishes a working relationship with fellow growers. Why? Because that is where the money is! United Potato Growers of America By Buzz Shahan Chief Operating Officer OPTIMIST OR PESSIMIST Managing the supply chain to profit your business According to Winston Churchill, the pessimist sees difficulty in every opportunity, while the optimist sees opportunity in every difficulty. The pessimistic potato grower views fellow growers as competitors—a difficulty resulting in a constant fight for market share. The optimistic grower sees fellow growers as colleagues—an opportunity to work together to manage the supply chain such that the supply/demand balance yields dependable returns. The pessimistic view is a very expensive view to have because when the pessimistic grower meets a competing grower in the marketplace, he believes that to win the fight he must take business away from his competitor— and his weapon of choice is a lower price. Is getting a sale by lowering price really winning the fight, or does it just feel like winning the fight because the grower who lowered price gets to fill that particular order and his neighbor does not? The neighbor, then, must lower his price to get the next order, and thus begins a vicious, market-killing cycle. Those agreeing with the grower who lowers price to get business say, "Yes, the grower who lowered price to get business had to do it. That was his only option." Really? If lowering price to make a sale is the only option open to the seller, then the end result is a market always driven to its lowest level. Those who see the potato market this way refer to themselves as "realists," but they are not realists at all. More likely, they are simply not well-educated in market economics. Name an industry that operates without regard for the supply chain. If the automobile industry operated that way, automobile manufacturers would be unable to stay in business. The same holds true for every other industry. So, how do they do it? How do they stay in business without using price to make a sale? They establish actual as well as legally tacit agreements with others in the same business. Observe how gasoline stations raise price within minutes of each other and by the same amount. They do this by coordinating with their neighbors through "rack" pricing. Because the grower/optimist understands market economics, knowing that he cannot manage the supply chain alone, he anxiously establishes a working relationship with fellow growers. Why? Because that is where the money is! Members of any supply chain you can name will tell you that putting supply chain management first and foremost in market strategy produces more income than anything else they can do. The pessimistic grower calls this attitude naïve, but who is really naïve here? Naïve is the pessimist who uses price to move product. While moving product is important, moving product is not the primary goal of business. Moving product at a solid rate of return is the primary goal of business. Realistic is the optimist who wisely oversees the supply chain in collaboration with fellow growers to assure consistent and fair economic returns. Such occurs daily in potato-producing regions sophisticated enough in market economics to understand how this works and make it happen. Consistently healthy grower returns in those regions make the point. VANGUARD MONITORING SYSTEMS MONITOR STARTER FERTILIZER FLOW AND BLOCKAGE VANGUARD MONITORING MONITOR STARTER FERTILIZER CALL OR VISIT US ONLINE! NE 308.381.2905 IA 515.289.2746 IN 765.533.4809 AGEXPRESS.COM 4083-2AgExpressElectronics16h.indd 1 4083-2AgExpressElectronics16h.indd 1 10/15/20 10:43 AM 10/15/20 10:43 AM Naïve is the pessimist who uses price to move product. Realistic is the optimist who wisely oversees the supply chain in collaboration with fellow growers to assure consistent and fair economic returns.

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