Alico Competition
Now Viewing Alico's competition in: Agriculture Crop Production (primary)
Call Preparation Questions
Customers, Marketing, Pricing, Competition
Who are the farm's customers? - Key customers include grain elevator operators and cooperatives, oilseed processors, food distributors, and food processors.
How satisfied is the farm with its cooperative? - Many farms are members of cooperatives to increase leverage when selling products or buying supplies.
How does the farm market itself? - Larger operations and cooperatives advertise through TV, radio, national newspapers, and magazines. Small farms limit marketing to word-of-mouth, magazine, or newspaper advertising.
How important is the Internet for farm sales? - Internet sales are rare, though the USDA posted county price (PCP) and open market rates are readily available online.
How much of the farm's crop is under contract? - About 20 percent of cropland is grown under production contracts. Extreme price volatility for many crops limits the number of fixed-price production contracts.
What are the farm's storage costs? - Some crops can be stored during period of low demand. Storage costs can total 5 to 10 cents per bushel for grain and oilseed farms that own an elevator warehouse or have unsold inventory.
How do competing crops impact the farm's planting choices? - Grain, oilseed, and vegetable farms often compete for farm acreage, since farmers tend to plant crops with the highest yield and payout.
How satisfied is the farm with its checkoff programs? - Some farms must pay a per-bushel or per-cwt fee to a national or state board for research and promotional programs. Some boards request voluntary contributions.
Competitive Landscape
Demand is driven by federal agricultural policy programs, food consumption trends, and the grain and oilseed export market. The profitability of individual companies depends on maximizing crop yield and minimizing disease risk. Large companies have advantages in highly automated technologies and access to the latest in seed and crop technologies. Small operations can compete effectively by harvesting heirloom, non-genetically modified (GM), or specialty products. The industry is labor-intensive: average annual revenue per employee (operator and hired laborers) is $100,000.
Business Challenges
CRITICAL ISSUES
Highly Volatile Crop Prices - Crop prices can vary sharply due to demand, number of acres planted, resulting yield, and inventory levels. The price of corn, soybeans, and many vegetables has fluctuated considerably in recent years, sometimes swinging 10 percent or more in a single month. To reduce exposure to price volatility, many farms rely on futures contracts.
Dependence on Government Regulations - The federal government supports crop production through numerous pricing, conservation, marketing, credit, development, and research programs. Government subsidy programs total around $15 billion annually, with $5 billion in direct payments to farmers. The top 10 percent of crop subsidy recipients accounts for two-thirds of total government payouts. Every five years, the federal Farm Bill determines any revisions, updates, or renewals in financial support to farmers; major changes can significantly impact operations.
Industries Where Alico Competes
- Agriculture
- Crop Production
- Fresh Fruit & Vegetable Production(primary)
- Crop Production
- Financial Services
- Food
- Real Estate
