CONS/DER IHIS

Pe"fectingBusiness-

Mork Berg under-stonds lhe business-

lo business relc:fionbeller lhon mosi.

the siLr-ration from both sides? You'll find a detailedanalysis of that relationship in these pages, alongwith some sage advice from a young businessmanr'r,ho knorvs the customer extremely well-"Evervbody must have the opportunityLo make money."

Sounds like advice we all can use

R*

Feiiow dealers, meet Mark Berg, one ofyou who has taken the necessary steps to

bridge the sometimes considerable gapbetween customer and dealer, grower andretailer, small businessman and world-travel-ing spokesman for Arnerican soybeans in par-ticular and American agriculture in general.We met Mark at a crop protection field

demonstration in Minnesota on a rainy Julyday. He was the star of the show, the reigning

president of ASA's 30,000-plus mem-bers. But, he informed us, he rvas alsoan independen{ dealer.Who better to describe the business-to-business relationship that deterrnines_your financial health than one r'vho sees

to-BusinessRsmrroNSrilP

Y iJ."?::fi '1

l"iTlT,?"* l",il;

That's a farmer gracing our cover.That's also a dealer. And it's also the pres-ident of the American SoybeanAssociation (ASA).

Rob Wiley

UnderstandingrHE Business - to - Business

REuquoNSHrP

s American agriculture becomes moresophisticated and technical, the rela-tionship between dealer and farmer

grows even more crucial.As long-standing businessmen, most deal-

ers fully understand and appreciate thebusiness-to-business aspect of Americancapitalism. Dealers have become a vital partof the agr:icultural infrastructure, occupyingperhaps the most vital rung on the distribu-tion ladder from basic manufacturer to thefarmer and, ultimately, to the consumingpublic.

A dealership may be considered a "small"business for various reasons, but the laws ofsupply and demand, profit and loss applyequally to them as they do to major interna-tional conglomerates.

If the basic manufactur:er who suppliesmaterials to the distributor is to profit, so

must the end user. If the distributor whosupplies prbduct to the dealer is to profit, so

must the end user. If the dealer who pro-vides products and serwice to the farmer isto profit, so must the end user.

That end user, the farmer, who suppliesfood and fiber to American and world con-sumers must profit if the system is to workat all.

Those are basic economic facts, and deal-ers understand them well. For any one linkin the chain to profit, all links must receivean adequate return on investment.

For the system to work at peak efficiency,however, every lilk in the chain must alsograsp and accept the idea of profrt. If thedistributor doesn't profit, the dealer is left todeal directly with the basic manufacturers,who are not set up for the task. Ifthe dealerdoesn't profit, the grower must deal directlywith distributors or manufacturers, andprobably pay more for his inputs becausethose organization's overhead wouldincrease dramatically.

Farming itself must lose its image as apastoral interlude and must accept its roleas a major business in the American econo-my. Farmers must accept their roles as busi-nessmen, much as dealers have, out to makea profit on their products - crops - and takecare of their most precious raw material, theland.

Their importanee to the American econo-my is obvious in any story or research oninternationaltrade. The onlyconsistenttrade surpluscomes fromagri culturalproducts, adirect tributeto the ability of,U.S. farmers -and their busi-ness partners.

Farmers forthe most partunderstandthat everyonein the chainwants them toprosP€r,because with-out them, the whole system fails. They maysometimes forget the business-to-businesspart of the equation that calls for profit onall sides.

DsALpn & Appucaron magazine found aunique individual who firlly understands allthe ramifications of that business-to-busi-ness relationship - Mark Berg, SouthDakota dealer and farmer who is cunentlyserving as the president of the AmericanSoybean Association. We invite our readersto comb Mark's thoughts on different seg-ments of the business chain.

His underlying message: *The dealer hasto make sure there's an income out there forthe producer."

By Rob Wiley, Editoriol Director

Mork Berg weorsof leosf fhreehots: deoler,{ormer ond cor-porote citizen os

the AmericonSoybeonAssociofion pres-ident.

Dealer

MarkBerg

"EverYbodY lulusrrruu

opportqto makd

hen MarkBergre ceive d

his degree in agengineering from

South Dakota StateUniversity in 1979, he

had a ready-made careerwaiting on the family farm

just outside Tripp, SouthDakota.He wanted more.

The family farm, in the capa-ble hands of father William,was self sufficient, growingcorn and soybeans, some win-ter wheat, and housing a fewstock cattle on around 1,600acres. The Bergs did their own

spraying with several SPra-Coupes.

The Coupes gave Mark an idea

for a second business - Providingapplication service to his neigh-

bors.From that idea sprangBerg's Ag Service, a deal-

'Whotever it fokes for lhe producer to moke money is {ine with me''- Mork Berg

ership specializing in crop protection chemi-

cals, seed and serrrice, with healy emphasis

on the service. The company does not deal infertilizer.

And Mark Berg also found time to activelyparticipate in the family business, the farm,and even take on considerable extracurricu-lar activity on'behalf of the American soy-

bean grower. Berg currently serves as presi-

dent of the American Soybean Association(ASA), a position heavy on travel andresponsibility.

At its peak, Bergls Ag Service took care ofsome 40,000 acres, including about 12,000

acres of Nebraska winter wheat Berg wouldspray before the South Dakota groundthawed. The added responsibilities of theASA position, however, forced some harddecisions on the 41-year-old Berg'

"When you commit to something Iike theASA, the unfortunate thing is you have togive up something else," Berg says. "Customapplication is where I decided to cut back,because I'm not around enough to monitorthe business. I feel more comfortable notrunning all the acres.

"I do plan on popping back up again ast-iE

t5

soon as my involvement with theAssociation is done."

In the meantime, younger brother Mikemanages the dealership; all 3 Bergs remainactive on the farm.

Berg's Ag Service runs 5 applicationmachines: a Big A, 2 John Deere high clear-ance sprayers and 2 Melroe Spra-Coupes.

Service-OrientedMark Berg, who earned his Certified CropAdvisor (CCA) certif,rcate, has a firm graspon what farmers need from dealers andwhat dealers should provide.

"Really, a dealership should be a problem-solving entity for the grower," Berg says."Ihat's the value of technolory such as yieldmonitors; the more information the dealer

e the

n itYmoney."

has, he more we can help the grower. Ifthere are problems in a field, we're there tohelp solve those problems."

Berg didn't name his business Berg's AgService on a lark; he's based the company'sreputation on its ability to provide constantand usefrrl service to its customers.

Before spraying a field, Berg or a companyemployee will scout the freld beforehand,noting precise problems and basing thechemical recommendation on that first-handknowledge. If there's a problem with a fieldor a complaint, Berg treats it as an opportu-nity to spend more time with the customer.

If gettiirg the CCA license helps his busi-ness and his customers, he'll do it.

"I don't know if the CCA has given me alymore of a knowledge base, but it makes meconscious of the need to keep my knowledgebase at a certain level," Berg says. "Therecertification process helps keep me up-to-date on the newest technolory coming downthe tube. It helps from a sales standpoint,too, because there are some dealers outthere who aren't CCAs. You can positionyourself a little better with the license."

The CCA license is a voluntary programaimed at improving the professionalism ofanyone involved in recommending pesticideand fertility programs to farmers.

For a change, Berg says, the industry tookpositive action before the governmentpassed legislation requiring something morestringent and expensive.

"It doesn't matter if I wear the producercap or if I wear the ASA cap or my dealercap, if we can be more pro-active on theissues dealing with the environment, we canposition ourselves in a very positive light forthe long term," he says. "I think being pro-active is very important."

Business-to-BusinessHaving a foot in both business worlds -farming and ag retail - enables Berg to see

the relationship with open eyes. He has afeel for what both sides need and what bothsides can realistically provide the other.

His recommendations as a dealer, forexample, carry a little extra weight becauseof his farming experience. His growers see

him as one of "them.""I can actually try products and programs

on my helds," Berg says. "Basically, we'rerunning test plots on our fields. From a busi-ness relationship standpoint, that gives ussome credibility. I can say I've tried thesethree chemicals and these three hybrids,and based on what I saw in our fields, this ismy recommendation for your fields. That'svery beneficial."

And even though many dealers may nothave that advantage, there are ways theycan improve the business-to-business rela-tionship.

"It's very important to always build on thepeople relationship," Berg says. "Make sureyou continue to monitor that grower's fields.If there is an application or cher,nical prob-lem, the best thing you can do is go out thereimmediately. That grower may unload onyou, but by the time the conversation is fin-ished, you should be in agreement on how tosolve the problem.

"Nobody's really harmed, but the growerreally appreciates your taking the time to go

out and listen to him. If you let him sit andfester, hell start tel-Iing his foiends that youtook his money, sprayed his fields and nowdon't care about him an;,tnore."

All in all, Berg says, farmers generallyhave a solid respect for their dealers-

"As a whole, at least in my part of theworld, growers trust the dealer a greatdeal," he says. -fhey value the dealers rec-ommendation on chemicals and otheraspects of their businesses. If the dealer hashis relationships built to the proper level, hehas the ability to steer the grower almostwhere he wants to on a purchasing decision.A grower never wants to be perceived as justanother number." -R.W. q

PROFIT TIP

Positionyourself as the

service andinformation

leader in yourservice afea to

atffact morebusiness.

Farmer

Mark Berg

for the

::.i]

' il n:.1

Ir:i

II

"The DEALERneeds ro

b e s t decark Berg thefarmer under-stands the pressure

Freedom to Farm puts onMark Berg the dealer.

How can the dealerplan his inventory

when his cus-tomers may not

finalize theirplanting

decisionsuntil theweek

before they hit the field?As an active participant with father

William and brother Mike in a 1,600-acreSouth Dakota farming operation, Mark Bergknows firll well the first criteria for any agri-cultural business decision: the grower has tomake money.

Anything that helps make that happen isgood; anything that hinders it is bad.

"Freedom to Farm was probably one ofthebest things to ever happen to American agri-cultural from the political arena,'Berg says."The grower can now make a decision togrow what the end user wants. We weremaking decisions based on what the govern-ment allowed us to grow under previous

farm programs."The latest farm bill stopped aworldwide erosion in confi-dence about the country'sability to deliver its goods,

Berg says. And with agexports pegged around $60 bil-

lion a year, regaining that confidencecould very well mean the difference between

prosperity or a depressed ag economy thatwould make the early 1980s look like a

picnic.Allowing American farmers to grow

for the market sends the right mes-sage to overseas customers, Bergsays. Those customers will continue

"The deoler con'f sell his cuslomerssomefhing for opples if he doesn'f

end up plontinn "oo!;r,;o,t aurn

to buy American agricultural products ifthey think they can depend on de1ivery.

And that spells good news for dealers, too,

even if it might add some headaches on theinventory side.

Healttry Environment"Freedom to Farm does make it difficult fordealers," Berg says. "But what it comes

down to is this: for the dealer to have ahealthy business environment where he can

) make the1O151O n ^S

e grower."make money, the producer needs to makemoney first. And to make money in today'sworld, the producer needs the opportunity todecide the most profrtable crop for him toplant right up to the day of planting.

"If the producer is making the best deci-

sion to get the best net return for his partic-ular farm on that day, that s really what thedealer needs, too. That will make for a veryheal{,hy dealership."

Berg has helped run the family farm busi-ness since graduating from South DakotaState University in 1979. I{e has also ownedand managed Berg's Ag Service, a full ser-vice crop protection and seed dealership-inT?ipp, since 1983.

His perspective on the business-to-busi-ness relationship, then, is necessarily broad-er than most dealers and g::owers. He liter-ally walks in both shoes and has first-handexperience with the unique problems andconcerns ofboth.

For example, he does see some problemsat the dealer level from Freedom to Farm,but there could be more serious concernshigher up in the distribution chain. Basiccrop protection product manufacturers, forexample, usually make their productsmonths in advance based on projectedacreages for the various crops.

'No so long ago, some of the major manu-facturers actually wanted growers to booktheir products even earlier than usual,"Berg says. "The reality with Freedom toFarm is that's not going to happen. It reallywill put pressure on the manufacturers to beable to deliver products when the dealer

needs them instead of all at once before theseason begins."

Dealers and farmers working together canmake the new business scenario work forboth of them, Berg says, especially in hisarea where the corn/soybean rotation willstill dominate. Throughout the Midwest,farmers and dealers have grown accustomedto pre-planning the crop season based onthose two major crops. It could come down toa matter of adjusting inventory from onetype of products to the other.

Communications will drive the changingbusiness relationship between dealers andfarmers, with both sharing the responsibili-ty of keeping the other business "partner"informed.

'Growers will make their decisions later,but they will have to make sure they conveythat decision to their dealer as soon as theymake it so he ean have the seed and chemi-cals on hand when they are ready to p1ant,"

Berg says. "And the grower needs a dealerwho is aware of what products are availablefor which crops, one who can monitor hisfrelds and provide ag:ronomic advice whenneeded. The grower does depend on thedealer many times during the decision-mak-ing process, so the dealer network hasbecome,more and more imporbant."

The Changing FarmThe Berg farming business has changedmuch just since Mark Berg finished collegein 1979. The acreage - around 1,600 - is abit bigger, although the crops are the same:corn, soybeans, winter wheat. Because of hisbusy schedule as a dealer and as presidentof the American Soybean Association (ASA),

Berg limits his active farm involvement toharvesting and plantilg time. Dad Williamdoes most of the marketing, with some helpfrom Mark and brother Mike.

"Our marketing is considerably differenttoday," Mark Berg says. "We look beyondthe local elevator more to see what's hap-pening and try to negotiate our prices basedon the world market.

"The average farmer today has far moreknowledge about foreign markets than peo-

ple might think because those marketsi.nfluence prices daily. A grain purchase inChina or bad weather in Brazil influencesthe market immediately. It's wise marketingto know what s going on around the world."

Astute marketing has worked especiallywith soybeans, Berg says. In just the last 5years, U.S. growers have produced three ofthe largest crops ever, yet demand remainsstrong.

"And it s increasing 3 to 5 percent a year,"Berg says. -R.W. u

PROFIT TIP

Maintaininventory

flexibility toaccommodate

any lateplanting

decisions.

President

Mark Berg

a year."country to visit. Instead ofwhich applicatorto trade, Berg courts whole nations as poten-tial trade partners for American soybeans.

Quite a step upward for a young business-man from a small South Dakota town.

"You give up a lot back home when youget involved in any organization," Berg says."But you can also gain enough as an individ-ual and an industry to make it worth thetime and effort. The industry is much moreimportant than Mark Berg, ASA president."

Werghty MattersIn his role as ASA president, Berg has fullfiduciary responsibility for the organization.He acts as the association's chief liaisonbetween the 26 a{Tiliated member state asso-ciations. He spends considerable time inWashington, D.C., representing his mem-bership in all Congressional agriculturalpolicy debates. And he travels throughoutthe world to help promote the sale of U.S.soybeans to various markets.

The list of legislative issues alone isimpressive: NAFTA, fast track negotiationauthority, farm bills, environmental issues,taxes that pertain to soybean farmers, cleanwater, clean air, alternative fuels - virtuallyany bill that would affect the way American

"The

GROWTH RATE,"soybean

demandis between

3 to 5 percent

o one wouldever describeMark Berg's

plate as half empty.Not content with help-ing manage the familyfarm near Tripp,South Dakota, Bergstarted a retail dealer-ship, Berg's Ag

Service. nWhen his state soybean

grower association neededorganizing and membership

recruiting skiils, he respond-ed with resounding results.Those results led to more and

more involvement rvith thenational American SoybeanAssociation (ASA), where Bergquickly ascended the leadershipladder. He is now in the middleof a year-long presidential termwhich ends in August, followedby a year as Chairman of the

Board ofDirectors.Instead of which

seed to plant, Bergnow decides which

"The more reloiionships you con build, the greoter strength you conbring to your industry." -Mork Berg

soybean farmers do business attracts Bergand the ASA

Headquartered in St. Louis, Missouri,ASA acts as the soybean farmers'grassrootsorganization in Washington and in worldtrading circles. Its approximately 31,700members represent just about half of totalU.S. soybean acres. It is funded throughmembership and corporate dollars andmaintains 13 international offices devotedsolely to promoting the use of soybeans insome 100 countries. Sk of those are in thePacffic Rim area.

The international program is funded byfunds provided by the United SoybeanBoard (USB), which oversees the nationalcheckoff dollars collected from all U.S. soy-bean growers. Each gxower pays one halfofone percent of his total crop value into thefund, which the USB then allocates for vari-ous activities, including university research,domestic market development and promo-tion and the international efforts managedby the ASA.

*The national federally-mandated checkoffstarted in 1991," Berg says. "When thecheckoff started, the national soybean cropwas valued at about $11.5 billion- Today, it'svalued at more than $17 billion. The growthin value has been a continuous curve, so thecheckoffis working."

ASA will likely invest around $26 millionin international promotion and marketdevelopment in 1998, Berg says. Soybeanscunently account for about $11 billion of themore than $60 billion agricultural trade sur-plus. Soybeans and soybean products arethe largest agricultural commodity exportedby the U.S.

"That gives us a big advantage in tradenegotiations," Berg says.

Primarily because of the trade embargoimposed by then president Jimmy Carter inthe 1970s, American ag interests are alwayssuspect in the world marketplace, Berg says.With so much of the soybean farmers' eco-

nomic welfare dependent on those markets,the U.S. can ill afford any setback in worldtrade.

The recent Congressional defeat of "fasttrack" authority for the administration intrade negotiations was such a setback, Bergsays.

"Our concern is that we have access tothose world markets," he says. "We needthose trade treaties negotiated where wehave access without quotas or tariffs. Wefeel the defeat of fast track authority sentthe wrong message to our trading partners."

Berg points out that fast track authoritydoes not give the administration final say inany negotiated trade pact or treaty. Rather,

it simply allows the administration to nego-tiate a treaty which Congress will approveor disapprove. Fast track authority keepsCongress from adding amendments to theproposed treaty once it reaches theCongressional debate stage.

-Ihe U.S. president hasn't had fast trackauthority since 1994, and there have beenmore than 100 treaties negotiated in theworld since then," Berg says. "We have beena part of very few of them. Most countriesdon't even want to sit clown with us at thenegotiating table if they know Congress canamend whatever agree-ment is reached."

Building CoalitionsWhatever the issue, Bergsays, American agricul-ture must learn to act as

an industry and not aBalkanized collection ofindividual segments. Partof his duties as ASA presi-dent includes getting thestates to act collectivelyand to ensure the differ-ent parts of the countryrepresented by associa-tion membership act asone.

Freedom to Farm hasmade that part of his job abit easier.

"lt took the competitionaway from the differentregions of the country,"Berg says. "We're muchbetter now at looking atwhat is best for the indus-try instead of what is bestfor the Midwest or the South. It has enabledus to focus on the many things that aremore important to the industry as a whole."

Berg and ASA have even reached out toforeign competitors, inviting representativesfrom Brazil and Argentina to their meetingsand searching for common ground in pro-moting the use of soybean products through-out the world.

"It's important that the ag input industry,the end user of our product and everybody inbetween that we build these coalitions as

our numbers dwindle," Berg says."Hopefully, we can create an environmentthat's healthy for everybody to prosper eco-

nomically. I view our neighbors in Braziland Argentina as no more competition to meon an individual farm basis than my SouthDakota neighbors. It makes sense that if wework together on some key trade issues thatwe can have much more impact." -R.W. ql

soybean farmers do business attracts Bergand the ASA

Headquartered in St. Louis, Missouri,ASA acts as the soybean farmers'grassrootsorganization in Washington and in worldtrading circles. Its approximately 31,700members represent just about half pf totalU.S. soybean acres. It is funded throughmembership and corporate dollars andmaintains 13 international offices devotedsolely to promoting the use of soybeans insome 100 countries. Six of those are in thePacffic Rim area.

The international program is funded byfunds provided by the United SoybeanBoard (USB), which oversees the nationaleheckoff dollars eollected from all U.S. soy-bean growers. Each grower pays one halfofone percent of his total crop value into thefund, which the USB then allocates for vari-ous activities, including university research,domestic market development and promo-tion and the international efforts managedby the ASA.

"The national federally-mandated checkoffstarted in 1991," Berg says. "When thecheckoff started, the national soybean cropwas valued at about $11.5 billion- Today, it'svalued at more than $17 billion. The growthin value has been a continuous curve, so thecheckoffis working."

ASA will likely invest around $26 mill;onin international promotion and marketdevelopment in 1998, Berg says. Soybeanscurrently account for about $11 billion of themore than $60 billion agricuJ.tural trade srrr-plus. Soybeans and soybean products arethe largest agricultural commodity exportedby the U.S.

"That gives us a big advantage in tradenegotiations," Berg says.

Primarily because of the trade embargoimposed by then president Jimmy Carter inthe 1970s, American ag interests are alwayssuspect in the world marketplace, Berg says.With so much of the soybean farmers' eco-

nomic welfare dependent on those markets,the U.S. can ill afford any setback in worldtrade.

The recent Congressional defeat of "fasttrack authority for the administration intrade negotiations was such a setback, Bergsays.

"Our concern is that we have access tothose world markets," he says. "We needthose trade treaties negotiated where wehave access without quotas or tariffs. Wefeel the defeat of fast track authority sentthe wrong message to our trading partners."

Berg points out that fast track authoritydoes not give the administration final say inany negotiated trade pact or treaty. Rather,

it simply allows the administration to nego-tiate a treaty which Congress will approveor disapprove. Fast track authority keepsCongress from adding amendments to theproposed treaty once it reaches theCongressional debate stage.

*The U.S. president hasn't had fast trackauthority since 1994, and there have beenmore than 100 treaties negotiated in theworld since then," Berg says. "We have beena part of very few of them. Most countriesdon't even want to sit down with us at thenegotiating table ifthey know Congress canamend whatever agree-ment is reached."

Building CoalitionsWhatever the issue, Bergsays, American agricul-ture must learn to act as

an industry and not aBalkanized collection ofindividual segments. Partof his duties as ASA presi-dent includes getting thestates to act collectivelyand to ensure the differ-ent parts of the countryrepresented by associa-tion membership act asone.

Freedom to Farm hasmade that part of his job abit easier.

"It took the competitionaway from the differentregions of the country,"Berg says. "We're muchbetter now at looking atwhat is best for the indus-try instead of what is bestfor the Midwest or the South. It has enabledus to focus on the many things that aremore important to the industry as a whole."

Berg and ASA have even reached out toforeigrr competitors, inviting representativesfrom Brazil and Argentina to their meetingsand searching for common ground in pro-moting the use ofsoybean products through-out the world.

"If,s important that the ag input industry,the end user ofour product and everybody inbetween that we build these coalitions as

our numbers dwindle," Berg says."Hopefully, we can create an environmentthat s healthy for everybody to prosper eco-

nomically. I view our neighbors in Braziland Argentina as no more competition to me

on an individual farm basis than my SouthDakota neighbors. It makes sense that if wework together on some key trade issues thatwe can have much more impact." -R.W. eI

ASA (7 eeg-99)