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The Challenges in Agribusiness.

Every business faces challenges. From labor to assets, companies face new hurdles each day. Farming is no exception. However, the challenges faced in agriculture seem a bit more daunting, the stakes seem a bit higher, the process seems more of a gamble, and the losses a bit more personal.

In the next few pages, Business Perspectives asked two local businessmen associated with agribusiness what they faced daily in their chosen professions. Their answers remind the reader that for those involved, agribusiness is more than just an economic venture--it is a personal struggle.

Ellis Reeder and Reeder Farm Supply, Inc.

Going south through Mississippi, U.S. Highway 15 passes through Pontotoc, the county seat of Pontotoc County. The Cherokee and Chickasaw Indians named the Pontotoc region "the land of hanging grapes" as a tribute to the area's rich agricultural heritage. The county has changed greatly in the last 20 years, adding a Wal-Mart here and a McDonald's there, but farm equipment sale centers remain a cornerstone along the highway.

Turning left onto Water Street and heading east for about a mile, a landmark of sorts exists just over the railroad tracks. Reeder Farm Supply, Inc., stands unmistakable, although some of the white letters have fallen from the blue, weather-worn sign. This store is one of two; the other shop is located in Baldwin, Mississippi. Stacks of feed and barrels of seed fill the store on one side, while the other side holds rows of shelves. The owner, Ellis Reeder, is a man of average height and build with graying hair and glasses that alternately perch on the bridge of his nose or hang from a chain around his neck. His voice is deep and authoritative, yet polite and endearing. A customer picks up a vial and asks, "How much will I need for my herd?" Reeder looks at the man and at the vial, ponders for a moment, and quotes an estimate. The man nods and orders the specified amount. Reeder smiles and asks his assistant to collect and load the bottles for the customer. He prepares the credit slip and hands it to his cust omer who nods his thanks and leaves.

In the last 20 years, agriculture has changed considerably in Pontotoc County, Mississippi. As he sits at his desk, Reeder notes that there are very few "full-time" professional farmers anymore. Most are now "part-time" farmers, people who cannot afford to farm full-time anymore, or who have found they can make more money working in one of the local factories. Another customer comes in and Reeder excuses himself to take care of business. Throughout Pontotoc, fields once open for cattle grazing or for crops have now become home to a host of furniture factories. Employment is good and stable in Pontotoc, but farming is declining.

"Many of the farmers have just quit," says Reeder. "Agriculture is terrible. You combine low prices with low yields and nobody can make a return on their money. Most of the farmers are losing money." Reeder remembers when the county had several dairy farms creating big business. But over time, the economic prosperity of the dairy industry dwindled, the owners grew older, and new recruits refused to enter the business.

"There were 30 dairies, but now there is only one left in Pontotoc County," Reeder says. "The dairy industry is one segment of agriculture that has left this part of [this region] and is leaving other parts of South Mississippi and Louisiana. A dealer from Arkansas was visiting this summer. He used to have 75 dairies and now he has 35. So, that tells you what's going on in the dairy industry. It's going out, and nobody's replacing it. It is going to Florida and California where there are [up to] 15,000 cattle in a commercial thing. It's a factory." Reeder sees the commercialism as a general trend in farming in Pontotoc. He also notes that the hog industry has left. "The late seventies were good years. But, since the eighties, prices have dropped," he says. And, so have the farmers.

Not all farming has diminished. Raising cattle remains popular. Reeder himself estimates he owns 700 to 750 head of brood (breeding or female) cows, raised primarily for beef. When asked if he is a cattle farmer or cattle rancher, Reeder's eyes twinkle and he laughs, saying, "Well, in Texas, I guess you'd be called a cattle rancher. Here east of the Mississippi River, we call ourselves cattle farmers."

Cattle farming is not without its hardships. According to Reeder, cattle prices have been bad for almost seven years, with prices improving last year. Weather is the chief enemy. As Reeder explains, cattle prices have been good, but the drought for the last three years has destroyed any possible profit.

"Usually, you only have to feed your cattle for three months, the winter months, and the cattle graze the rest of the time," Reeder says. "But, with the drought, you have to feed all twelve months." Due to the drought, Mississippi has been declared a natural disaster area.

Reeder has been raising cattle since he was eight years old. After earning an education degree from Mississippi State University, he coached and farmed for five years. Then, he sold insurance for 13 years before the previous feed supply store owner offered Reeder the chance to buy the business. Reluctant at first, Reeder eventually purchased the business and has served Pontotoc County for the last 20 years.

"I have hundreds of walk-in people needing a few bags of this or that," Reeder says when asked how many customers he serves. But, only about 15 to 20 of those customers are full-time farmers. Business is steady throughout the week, with the full-time farmers coming in during the weekdays, and the part-time farmers shopping on the weekends. According to Reeder, the majority of his customers raise cotton, corn, soybeans, and beef cattle.

"Farming is a tremendous investment, with land and labor," he says. "A farmer may have a $2-$3 million dollar investment, but he cannot make his money back on his production costs. There is something wrong with the system, in my opinion." As a result of the low return, Reeder notes that many farmers have gone broke.

"To put it in a nutshell, the number of big farmers diminishes each year and will continue," Reeder says. "This affects everyone." Reeder sees the farming trend leaning toward commercial farming, which is another reason why local dairy farming has all but disappeared from Pontotoc. Although prices may be sagging, Reeder is upbeat and hopeful. He does not see an increase in business in the future, but that is not why he stays open for business. His mission is one of service. Reeder views his customers as friends and family who depend upon him, and that keeps him motivated.

But, even Reeder has competition now. The distributors who sell to Reeder are now also selling directly to the farmers. "We're competing with the people we buy from; has cut into our business tremendously," he says.

Reeder jokes with one customer while helping another, and all three laugh at the punch line. Although trends have changed in 20 years, Reeder's business remains the same. Although he does not know what will happen to his business in five years, Reeder sees no immediate change in serving his fellow farmers.

Bill Batttle and Battle Fish Farm

As one leaves Memphis, the best route to Battle Fish Farms in Tunica, Mississippi, is south on Highway 51. When heading in that direction, the traveler will pass a series of casinos located just off the main road. Within ten minutes of reaching the sign welcoming visitors to the City of Tunica, the traveler turns east to Battle Fish Farms. Small ponds dot the roadside and on the left is a large building with lettering declaring it the "Pride of the Pond." Further down the road is a storage facility and what appears to be a private residence. This is Battle Fish Farms.

Bill Battle, co-owner and manager of the business, appears comfortable and good-natured in outdoor fatigues as he gives orders over the radio in his office. Overlooking the mounds of business magazines and paperwork is a mounted deer's head. This is a unique, yet understandable scenario--the merger of the outdoors with the business world.

Ironically, located in Tunica and surrounded by casinos, Battle Fish Farms resulted from a gamble that paid off. Paul Battle, Bill's father, and a partner started the venture in the early seventies, built the first small pond, and loaded the pond with fry (baby fish) bought from a friend. They originally sold their crop to "fish out" ponds in the northern United States, where the fish were shipped live. The partners then built a hatchery and had approximately 40 acres of ponds. However, the venture was not without its trials.

"We probably made every mistake we could make, from then until now," Battle chuckles.

As Battle recalls, the partners' reasoning was that if a small pond worked well, then a larger pond would work even better. They built an eighty-acre pond prior to the days of aeration equipment. But, "They came in one morning and 200,000 pounds of fish were dead," he states with a knowing smile. "It nearly put them out of business."

From that experience, Battle Fish Farms' owners learned that smaller ponds are indeed better. If disease or some other calamity befalls a pond, the losses are contained within that pond and not the entire crop. Catfish farming itself is fraught with challenges, and Battle rates the process as "high risk." Currently, Battle Fish Farms consists of approximately 200 ponds holding almost 3,000 acres of water.

According to Battle, disease is perhaps the largest ongoing challenge to catfish farming, and the prevalence of disease continues to grow. At first, parasites topped the list of diseases, but Battle notes that some of the current problems are becoming more challenging. He observes that stocking rates and feed amounts also affect the spread of disease among the crop. Battle uses Channel Catfish, which are probably more susceptible to disease than common catfish that dwell in lakes and river bottoms. Fortunately, the losses appear seasonal.

Natural predators also pose a threat to catfish farming. It is not uncommon to look out along the edges of the ponds and see Blue Herons stalking through the water. Double-Crested Cormorants, excellent fishermen in their own rights, also cause headaches for Battle. The law protects both birds to some extent and limits Battle to little more than scare tactics to frighten the predators away. Chasing away the Cormorant is a daily battle in the winter.

Catfish farming is seasonal. The slowest time is in the fall when the outside temperature begins to cool. By winter, the catfish become dormant and require very little maintenance. During this time, Battle's employees do repair and maintenance work on equipment. In the winter, Battle may employ 35 to 40 employees. Then, the peak season for catfish production, both in demand and activity, is in the summer, when Battle may employ up to 50 people. During this season, workers are required around the clock, seven days a week, mainly because the rise in temperature and activity quickly depletes the ponds' oxygen. Aerators run 24 hours a day.

In one year, the farm will produce between 8 and 10 million pounds of fish. In addition, Battle's hatchery produces between 20 and 40 million brood fish each year in order to keep up with demand.

Battle's largest current challenge comes not from predators, but from overseas competition. Vietnam now raises catfish and imports approximately 800,000 pounds a month to the U.S.

However, Battle has a partnership with another catfish farmer, and they have formed Pride of the Pond, a processing plant that supplies catfish for wholesale and retail distribution. While sales are nationwide, Pride of the Pond primarily supplies catfish to Alabama, Arkansas, Mississippi, Missouri, and Tennessee, and a portion to Indiana and Kentucky. The plant processes approximately 250,000 pounds per week and employs approximately 165 people.

Surrounded by casinos, one must wonder how that industry has impacted Battle's catfish farming. Battle is philosophical in his answer:

"They [casinos] have shortened our labor supply," he says. But, working alongside the casinos does have its advantages. "We sell some [catfish] to all the finer casinos," he adds with a laugh.

Although the challenges remain and change, Battle is very optimistic about catfish farming's future. In fact, Battle is currently adding 10 new ponds with a total of 100 water acres. Pride of the Pond just underwent an expansion and is expected to increase production to 300,000 pounds per week. Battle sees the industry growing, with an increase in the demand for catfish.
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Publication:Business Perspectives
Geographic Code:1USA
Date:Sep 22, 2000
Previous Article:Cotton and Its Importance to the Memphis Area Economy.
Next Article:Innovative Approach Has Tennessee Setting Its Sights on Agribusiness Development.

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