July 10, 2014 / Week N° 28

Opinion: ag leaders must innovate or die

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April 29th, 2013

By Visión y Servicios president Eric Viramontes

Eric-Viramontes-292x300In one of my most recent trips, I found an interesting book in the airport by Reid Hoffman, co-founder and president of LinkedIn.

The book’s introduction caught my attention. It tells the story of the great fallen Detroit empire in the 50s and 60s. Three large companies made way for this metropolis to become a top player, positioned as the number four city in the American union.

The automobile industry generated two million jobs, creating a micro economy exclusive to the city where hundreds of businesses were opened to serve the needs of car makers.

In 1955, General Motors came to be the first corporation to reach US$1 billion in value.

The empire did not last, however. These corporations came to the point of near extinction, closing plants and losing thousands of jobs that killed the micro economy and impacted the nation’s macro economy. The situation remained this way until President Barack Obama bailed them out in 2009.

The authored explained that the failure to innovate and the poor response to new needs are what almost extinguished these dinosaurs from the American automobile industry.

While new brands manufactured compact, economical and practical cars, Americans remained anchored to the idea of solid and powerful vehicles with big motors and classic lines at uncompetitive prices.

No one believed that North Americans would soon prefer Japanese, Korean and European cars over brands that had formed a national identity. But it happened.

As you may imagine, I am proudly Mexican and in my country I have witnessed the birth of an industry that emerged at the same time as my professional life. We are the same age, in fact.

The greenhouse industry arrived to my country in the 70s, was consolidated in the late 90s and reached its splendor at the end of the last decade.

It is an industry that now exceeds 22,000 hectares and has an infrastructure value of US$7 billion dollars. This means an annual sales value of almost US$3 billion in exports.

In 12 years, the industry has given life to 600 new businesses and close to one million jobs. One would think that the industry had reached its peak.

However, I must say that from reading the Detroit case, I get the following thought: “reinvent and innovate or die.”

During the meetings I have had with farmers in different parts of the world, I always hear the same: their competitive advantage is to have the best land, climate and knowledge of their crop. I have even heard myself speak about the climate in Mexico, the privileged land and the agricultural tradition as competitive advantages. Except in my case, what I’m saying is true. I swear …

I also have the mistaken attachment to doing what the neighboring producer does, without wanting to leave the comfort zone – in other words, produce what everyone produces, sell fresh produce on the same markets as everyone else, using the same distribution scheme that generates over saturation and price drops.

It is assumed that the competitive person definitively talks about being productive, efficient and having the necessary quality. However, the key word in the definition of competitiveness is “different.” That is to say, you offer something different than the others.

I agree we should convey that we are excellent farmers. Quality, safety and security put us in a leadership position. I know this because I dedicated six years of my life to making sure the world would see this and no doubt, you have to invest in spreading such information.

Perhaps my biggest frustration is the perception that many segments of the agriculture industry do not believe in conversion. The very leaders look at projects into prospective markets as a waste of resources, arguing for the need to focus on the American union as a natural market.

It would seem that farmers base their commercial strategy on the theory that people eat tomatoes and there are a lot people on the continent, so the market needs a lot of tomatoes. Or the other typical stance is that if my neighbor produces product “X,” I should do the same.

Mexico invests an annual budget of about US$35 million in commercial promotion and increased exports, while the value of agricultural exports is about US$19 billion. It goes without saying that this is far from sufficient.

All great world industries invest strong percentages of their incomes in innovation. The world has generated all technological advances that we rely on thanks to a culture of failure. To tell the truth, great companies arise from failure. An example is the business Apple, who achieved technological success after hundreds of failures and a culture to continue on until reaching success.

It is also safe to say that all industry invests extensively in research, exploration and market studies to understand consumer needs and look for satisfying innovations for clients.

If it is true that field work is the basis of any nation’s economy, then technological, commercial and market innovation should be a priority for both industry and government investment.

Much like the big players from the auto industry in the 70s and 80s. we are committing errors as fresh production leaders by sheltering ourselves under our good reputation. We are ignoring current opportunities and overall, failing to understand real market needs.

Today it is necessary to innovate, take risk, invest in exploration, diversify and without a doubt, industrialize.

None of this conflicts with our current role as fresh produce leaders. To maintain our positions, we must remain competitive.

Competitiveness means keeping up to date with market needs but mainly, it means creating the factors that set your product apart.

I am fully convinced of what I have preached over the last several years and I hope others can see this vision.

Follow Eric Viramontes on Twitter at @ervs_viramontes.

 www.freshfruitportal.com

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