Small players exhibit entrepreneurial spirit

All over the world there is a trend toward bigness. There is also a trend toward smallness. Companies are consolidating. Royal Ahold of the Netherlands has become a worldwide food retailer. Suppliers are grouping together to deal with the giants. Nations are banding together into huge trading blocs. Nations and organizations are merging to create vast new entities with money and power.

At the same time the world is also fragmenting. The old Soviet Union split into a dozen nations. Yugoslavia split into half a dozen pieces. Thousands of new w Internet companies have sprung up. There are more than two dozen Internet companies competing for some

segment of the produce business. This number is bound to shrink, but some new companies will remain and should prosper. It seems as if everybody and his cousin have a dot.com business in the works.

Growing for the Commodity Market
At a time of unparalleled consolidation it would seem to be an unpromising time to start a new business. Why become a seller in a market dominated by a handful of giant buyers? Why pay huge fees just to get a product on a shelf? And why would anyone in his or her right mind start growing fruits and vegetables?

Typically, a farm commodity commands only 20% of the retail price. If a kumquat costs a dollar at retail, the grower gets 20 cents. The middlemen and the retailer get the 80 cents. Who runs the risk of crop failure, disease, pests, hail and frost? Who faces a huge labor shortage and increasing food safety pressures? The grower.

The grower also must produce a perfect crop that eyeballs well and that is clean. The grower has to hope that trucks will be available to move the crop and that government inspectors aren't in the pay of receivers. The grower or packer also has to hope the price doesn't drop or that the shipment doesn't suddenly develop mysterious quality problems in a changing market. These are huge disincentives to becoming a grower.

A Change in the Works?
Yet an article in the Oct. 14 New York Times points out that new organic growers and specialty fruit and vegetable growers are helping to revitalize farming in the Northeast states from New Jersey to Maine. This new wave of adventuresome folks is producing high-value crops that can be sold as organic produce or as locally grown produce. They are selling to restaurants, to shops, stores, at farmers markets and at any and all possible outlets. Some are selling on the Internet. Some run their own retail stands. Some operate pick-your-own. The article states, "These unseasoned farmers are hoping that a renewed interest in organic foods and locally grown produce will make their dream of running a farm of their own a reality."

Of course, this trend is not confined to the Northeast. It has spread all over the country, from Florida to California. Instead of thinking big, these new entrepreneurs are thinking small. They are looking for niche markets. Some are looking at the desire of people for freshness, taste, quality, the natural and the local. People will pay the price. A new study indicates that fine dining and eating out will thrive in the next decade and may even surpass retail food sales. That opens up a market for foodservice sales.

These new growers are more professional than were small farmers in the past. These are not hippies running barefoot through the communal farm. They aren't dancing in the morning mists. They are leaning, studying, not only how to grow but how to market, sell and balance the books. They are learning that by direct marketing and niche marketing they can keep most of the price of their produce, not just 20%. That's the key to success – make more and keep more.

For example, a berry and fruit farm in northern Virginia, run by a married couple, sells to restaurants, terminal market wholesalers, specialty stores, supermarkets and farmers markets. The farm operates a you-pick operation, a retail store, and a small restaurant. The farm sells mail-order gift packs and is looking for other outlets. The owners studied agriculture and have a background in production. This is their profession, not a hobby.

These new entrepreneurial farms are not going to feed the world. The mass market is no niche market. But these new entrants are not trying to feed the world. They are just trying to feed the few.

Change Can Happen
In the past this kind of agriculture was viewed with some skepticism by the larger produce industry. But that has changed. The new folks are welcome. They serve a useful purpose. They give us hope that there is room for the newcomer, the smaller producer and the independent. These folks also may help preserve rural America and a way of life now under threat of global homogenization.

That is important to society and the economy. Large organizations tend to become bureaucratic, secretive, slow to react, defensive and cautious. They become afraid of almost everything- the press, consumer groups and government. They look for ways to exert their power and please their shareholders at the expense of their suppliers and even their customers. Thus are born slotting fees and a host of unproductive fees and charges designed to "game" the system, not to sell product.

Yes, there are good retailers, even wonderful retailers. But bigness can be a curse as well as a blessing. And one can bet that in two decades or less some of today's biggest companies will be gone, broken up and faded. Whatever became of Pan-Am, American Motors and Standard Oil? It should be no surprise that a big retailer turned down the fellow who brought them the idea for the first self-service food store: the first supermarket; or that IBM turned away Bill Gates and his software ideas.

One other point. As a journalist, I've found that independents, entrepreneurs, innovators and risk-takers are vastly more interesting and exciting than the giant corporate entities that seek to control everything, including information, and that make their employers and managers afraid of their own shadows.