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Volatility in the Animal Ag Sector

Summer 2015

As in other agriculture pursuits, volatility has become a constant in the animal agriculture and poultry industries. From weather volatility that whipsaws grain/feed costs to the volatility caused by disease outbreaks, and including the volatility of the marketplace, these conditions are imposing production and business adaptation along the animal agriculture value chain. Gradual adaptation is no longer an option. Production, processing and allied businesses must be quick, efficient and strategic.

When businesses respond to the forces causing volatility, it is
 crucial that they assess the effects on their operation
 accurately, and then, strategically develop plans and methods that will turn negative projections into positive results.
 Uninformed, knee-jerk reactions will only accelerate problems.
 For example, responding to high feed costs by replacing ingredients with lower-cost substitutes may save money in the
 short run but lead to longer grow-outs, increasing costs on the facility, labor and management side of the balance sheet. Jumping on a societal ‘bandwagon’ created by activists and adopted by a business’s competitors may prevent executive headaches, but a more creative reaction may lead to competitive advantages unseen at first examination.

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The great hope of China, a society that appreciates pork and poultry and an economy that seemed to be growing to absorb the United States’ best production, recently added to the volatility of the animal agriculture and poultry business climate. In future issues, we will delve into China’s and other markets that are developing at varying rates, but also look at both the advantages of and concerns about international trade. We’ll look at other factors driving the animal agriculture industries in the US, many of which are also impacting commodity crop and specialty agriculture while spilling into the world of livestock and poultry protein production.

For years, The Context Network has been helping agribusinesses and organizations project the effects of volatility in their industry, analyze them carefully and strategically plan to capitalize on the differentiation that volatility creates. With our recent acquisition of expertise and experience in animal agriculture, we provide the same world class essential management consulting services to meat, livestock, poultry, companion animal and allied businesses as we have been providing crop agriculture and food sectors for over twenty years. 

For more information, contact Context Senior Associate, Becky Doyle at becky.doyle@contextnet.com.