About LCP Signals
A blog series from Purdue University’s Center for Food and Agricultural Business exploring early insights from the Large Commercial Producer Survey
As part of the release of the Large Commercial Producer (LCP) Survey, this blog series highlights a set of early signals emerging from the data. Rather than presenting full findings, each piece focuses on a specific question, tension or pattern and offers perspective on what it may mean for producers and the broader agribusiness industry.
These short, insight-oriented posts are designed to spark curiosity, raise new questions and begin the conversation ahead of the full themes report.
Where producers see opportunity – and risk
What are the most important opportunities in front of large commercial producers? What are the biggest threats to their farm businesses? And, how confident are these producers in their ability to respond?
Crop and livestock producers share a surprisingly consistent view of their opportunities. Both groups see improving efficiency or lowering cost, better managing risk and expanding their current operations as their most important opportunities. Interestingly, these opportunities are also the areas where large commercial crop and livestock producers express the most confidence in their ability to capitalize. At the other end of the spectrum? Expanding into new types of production or non-agricultural enterprises ranks low for both crop and livestock producers – both in perceived opportunity and in confidence to manage.
A similar pattern emerges when large commercial crop and livestock producers identify threats. Market/price risk, regulations/policies and inflation rise to the top for both. But of these, market/price risk is the only one that producers feel best positioned to manage (access to capital and resource scarcity are the other two).
So what’s going on here?
A subtle but important tension
One of the most interesting signals in these findings is the relationship between perceived importance and perceived ability to manage. When it comes to opportunities, producers tend to see the most promise in areas where they feel confident in their management abilities. Improving efficiency and lowering costs, for example, is both familiar and within their control, so it rises to the top.
But the reverse also seems to hold: when confidence is low, perceived opportunity is as well. Expanding into new enterprises brings a lot of uncertainty, and is less likely to be seen as a meaningful path forward.
Threats tell a slightly different story. Two of the top three threats identified by both crop and livestock producers are regulations/policy and inflation. These threats are certainly beyond the direct influence of producers, and this shows up in lower ratings of a producer’s ability to manage them. Producers have more confidence in their ability to manage access to capital and resource scarcity and see these threats as less important.
The general message for threats is: the more confidence producers have in their ability to manage a threat, the less importance the threat.
Implications for agribusinesses
Clearly, input suppliers, first-handlers, processors and policy makers – anyone focused on the success of large commercial producers – should be concerned with the opportunities and threats producers see in front of them. Both crop and livestock producers see opportunity in improving efficiency and lowering costs, better managing risk and expanding operations by doing more of what they are already doing. With respect to areas they are worried about, market/price risk, regulations/policies and inflation rise to the top.
The deeper insight here is how the producer’s perceived ability to capitalize on an opportunity or manage a threat may be impacting the areas they flag as most important.
Doing more of what you’re good at is logical. But it may also mean overlooking opportunities that require new capabilities, new partnerships or a different appetite for uncertainty.
For threats, the more confident the producer is in their ability to manage a threat, the lower they tend to rate its importance. That said, producers need to be as objective as possible in assessing their capabilities and look for ways to ensure they are as good as they believe they are. Those supporting the success of large commercial producers need to be focused on threats that producers have little direct influence over – and the steps they can take to help producers better manage them.
All of this raises some interesting questions for input suppliers. Helping producers deepen capabilities they already view as strengths is an obvious point of focus, as these are the areas where producers see their biggest opportunities. Suppliers should be thinking about how to best assist producers in assessing their skills and capabilities, helping them stay sharp and bringing the best thinking to their farm businesses. The current operating environment won’t allow for complacency.
Perhaps a more intriguing question is how can input suppliers help producers stretch their thinking in areas where they are less comfortable, and build the skills and confidence needed to investigate opportunities outside their comfort zone or current focus?
With respect to threats, input suppliers should be asking how they can best support producers in dealing with external pressures such as regulation, policy shifts and inflation – areas where producers feel less confident in their ability to manage. Producers have questions here, and suppliers with products, programs, services and information that address those questions will likely find a receptive audience.
Understanding how commercial producers see their future is important to helping them manage that future and in creating value. That said, understanding how a producer’s beliefs about their own capabilities shape their view of opportunities and threats can put an input supplier in a much stronger position to help stretch that thinking. Such insight equips suppliers to help producers build the capabilities needed to evaluate and pursue opportunities – and manage threats – that may not currently be top of mind, but perhaps should be.
These dynamics are explored more fully in the upcoming LCP results report.
