Production dynamics are still tough. Low prices, quite tight margins, political and regulatory uncertainty, atomisation, low negotiation power, etc. Here we are, nevertheless, having a stark competition against each other.
‘Farmers from a same tiny village in Spain (just to give an example), growing their produce for two or three different agri-food companies to commercialise them in the same market.’
But the world is changing and will force us to change with it. There is a growing understanding that one can get greater commercial success with the participation of a strategically alienated supply chain.
Innovating as a supply chain does not only results in market-oriented products and services but also gets to simplify internal and external operations, which in turn means higher efficiency. This model also creates competitive advantages hardly matched by competitors.
Nothing really new. It already happened to global industries like the automotive. And it is happening to ours just before our eyes, but we can’t see it. The former model of independent companies competing against each other is being gradually replaced by another in which it’s distribution chains fighting to dominate the market.
However, agri-food companies operate under pretty different cost structures, not complying with joint productive standards, with actions uncoordinated with key suppliers, and not sharing experiences. The necessary capabilities to innovate in line with the market’s demands require skills, human and financial resources, and marketing that are not usually linked to agri-food companies.
All the aforementioned generated higher costs, inefficiencies, and the inability to face the complexity and uncertainty brought by competitors, environmental challenges, and the constant evolution of consumers’ needs.
The new competition model between global supply chains entails that we will have to chose and join one of these supply chains, led by a modern, global distribution chain (the same as car parts producers did with big car manufacturers).
In the future, we will collaborate with companies in our immediate environment (and other, farther ones), we will share information and develop products jointly in order to serve the interests of every player in the supply chain, but absolutely coordinated with supermarkets’ strategies. Choosing won’t be easy. We will have to choose the supply chain that granted us growth and innovation, and that was genuinely concern about our survival as members of their base producers.
Whether we like it or not, this is the future coming. We will collaborate with each other (and with key suppliers like biotechnology companies) or we will be forced to do so. As for me, I decided to play an active role in this new world, hoping that we will achieve to generate a healthy business, based on open, sincere collaboration.