Trust in Business Relationships

Mati MohammadiPurdue University’s 2018 National Conference for Food and Agribusiness was held November 6-7, 2018 with approximately 100 participants representing both crop and livestock industry sectors. All were eager to learn more about the role and importance of business relationships in the current agribusiness marketplace through a series of research studies on relational trust. Through these studies, three main reoccurring themes centered around building trust in business relationships emerged.

Transparency is Key
The first theme was transparency. Transparency, along with traceability and responsibility, are key building blocks of trust in a business relationship.

Nestle’s Global Vice President and Head of Commodities Patty Stroup served as an insightful speaker at the conference saying, “You have to put the fish on the table.” In other words, companies can strongly benefit from transparency with customers and putting what is appropriate “on the table” as this can build and preserve trust.

Transparency not only increases trust in the supply chain and improves company-customer relationships, but also improves relationships with other stakeholders such as regulators and stockholders. It’s important to consumers and shareholders to know where a product is coming from and how it was made. While the food and agriculture industry has made progress in this area, there is still room for improvement. Modern consumers are increasingly demanding more information about the environmental effects of food production—something food and agribusinesses have to consider if they want to remain successful.

Repairing Trust
Secondly, repairing trust is fundamental in business relationships. Most trust-impacting issues in the food and agribusiness industry stem from unfamiliarity of farmers and mistakes in contracts—especially when it comes to agricultural data. Surveys have proven trust is one of the biggest issues farmers have with agribusinesses, specifically with data collection, use and ownership.

Avoid rattling a chain of trust or repair a damaged chain by clearly defining what data will be collected and making the distinction between agricultural data and personal information. To help avoid these issues, agribusinesses may benefit from shifting away from excessive, complex agreements and instead leaning on contracts with simple and succinct language.

Clear, concise and fair contracts drafted with consideration of farmers’ views and priorities are key in establishing or repairing trust centered around data.

Value of Relationships
The third theme was being able to make the distinction between different types of relationships and understanding their value. Relationships can be divided into three different categories: personal, functional and strategic.

Personal relationships can help to enhance both personal and professional development, while functional relationships are mainly relevant to immediate tasks. Strategic relationships help to uncover future challenges and opportunities by building a strong network.

People are known for easily developing personal and functional relationships, but often neglect to develop strategic ones. Many understand the importance of each relationship type, but few embrace and leverage them in their career. Investing in strategic relationships and building a network can bring considerable value to those in the food and agribusiness industry. The diversity and quality of relationships and the investments we make in them can serve as the foundation of our professional success.

The 2018 National Conference provided participants with valuable skills and long-term insights for the future. Relationships in the current agribusiness marketplace are essential, and it is important to understand and utilize the correct tools to establish trust in them.

Save the Dates!
Mark your calendar for Purdue University’s 2019 National Conference for Food and Agribusiness on November 6-7, 2019.

Follow the Purdue University Center for Food and Agricultural Business on social media.

Trust in Business Relationships

Mati Mohammadi, a PhD student at Purdue University and graduate research assistant at Purdue's Center for Food and Agricultural Business, talks about the importance of trust in business relationships.

RELATED POSTS:

Transitioning to the Long Term

This paper, published in the 2019 Special Issue of the Economic Review, explores how the agricultural sector might bridge the gap between its current state, where commodity prices and revenue generally have been low, to a longer-term future with greater economic potential.

Understanding Farm Data Usage

There is a lot of talk about “big data” in agriculture these days. The farm of the future is said to use multispectral imagery, soil and micro-climate sensors, equipment telematics data, and GPS to drive yield enhancing decisions. The growth of ag-tech startups suggests investors are optimistic about this future. Investment in the ag-tech sector grew 43% in 2018 to nearly $17 billion according to AgFunder News. Though the amount of data being collected from farms is growing rapidly, little is known about how farmers leverage this data to make decisions. According the USDA’s Agricultural Resource Management Survey (ARMS), 61% of corn growers used a yield monitor in 2010 but only 34% used the data to generate a yield map, indicating a disconnect between data collection and data action.

Thriving in a Shifting Marketplace

Consolidation, tight margins, increasing consumer demand and price transparency are just a few of the challenges currently facing the agricultural retail supply chain, forcing leaders to adapt and adjust. These challenges have made continuous improvement in supply chain and operations management more important than ever before to maintain a competitive position.