Farm Business Goals And Competitive Advantage

This paper investigates empirically the relationship between both farm business goals and sources of competitive advantage, and various farm and producer characteristics using new primary data collected from a survey of Ohio farmers. Results show that most farmers do not recognize sources of competitive advantage and practice strategy implementation beyond reliance on longstanding paradigms for success within the context of government farm program support and the use of traditional risk management tools. However, several key insights emerge. Farmers who engage in cost leadership strategies are more profitable. Farmers who suggest that the goal of their farming operation is to enhance profitability/efficiency use more management tools, while lifestyle farmers use fewer. Larger farmers are more apt to engage in a cost leadership strategy, while those with higher debt-to-asset ratios and those that are more livestock oriented are more likely to engage in differentiation or focus strategies. Smaller farmers and those that produce specialty or value-added crops are more likely to focus on a particular niche market. Lastly, the use of the Internet as part of the farming operation does not influence the probability of engaging in any particular business strategy. It is apparent that the government farm program has contributed to a strategic where few producers have an explicit or implicit farm business strategy beyond "working the program" and acting as price takers. Or if a strategic choice is apparent, it rests primarily with cost leadership.