AG BUSINESS IN SW FLORIDA: PRESENT AND FUTURE. Prepared by: The Lutgert College of Business. Florida Gulf Coast University - PDF

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AG BUSINESS IN SW FLORIDA: PRESENT AND FUTURE Prepared by: The Lutgert College of Business Florida Gulf Coast University Dr. Stuart Van Auken and Dr. Howard Finch Principal Investigators Dr. Ara Volkan,
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AG BUSINESS IN SW FLORIDA: PRESENT AND FUTURE Prepared by: The Lutgert College of Business Florida Gulf Coast University Dr. Stuart Van Auken and Dr. Howard Finch Principal Investigators Dr. Ara Volkan, Dr. Walter Rodriguez, Dr. Shelton Weeks, and Dr. Gary Jackson Research Collaborators June 6, EXECUTIVE SUMMARY OF AGRICULTURAL RESPONSE... 7 Purpose of the Study Research Protocol Ag Strengths in SW Florida Climate (Viewpoints of Nine Executives) Lands (Points-of-View of Six Executives) Citrus (Views of Four Executives) Consolidation (Insights from Four Executives) Vegetables (Perspectives of Three Executives) Soils (Views of Two Executives) Labor (Perspectives of Two Executives) Regulations (Views of Two Executives) Geography (Perspectives of Two Executives) Ag Management (Insight from One Executive) Science (Perspectives of One Executive) Technology (View of One Executive) Water (Insight from One Executive) Natural Markets (Perspectives of One Executive) Grapefruit (View of One Executive) Crop Flexibility (View of One Executive) Ag Weaknesses in SW Florida Labor Issues (Perspectives of Eleven Executives) Agricultural Costs (Views of Nine Executives) Land Costs (Perspectives of Five Executives) Citrus Industry (Reflections from Five Executives) Pricing (Views of Three Executives) Cattle (Views of Two Executives) Promotion (Perspectives of Two Executives) Typography (View of One Executive) Ag Opportunities In SW Florida Citrus (Perspectives of Five Executives) Competitive Options (Viewpoints of Four Executives) Vegetables (Insights of Four Executives) Alternative Fuels (Insights of Three Executives) Land and Land Credits (View of Three Executives) Ornamentals (Points-of-View of Three Executives) Sugar Cane (Viewpoints of Two Executives) Cattle (Views of Two Executives) Link to Environmentalists (View of One Executive) Education (Perspective of One Executive) Vertical Integration (Insight from One Executive) Food Safety (Point-of-View of One Executive) Threats to Ag Business In SW Florida Competition (Points-of-View of Eight Executives) Diseases (Perceptions of Eight Executives) Environmentalism (Views of Five Executives) Land Development (Points-of-View of Five Executives) Government Regulations (Perceptions of Five Executives) Water Issues (Perceptions of Four Executives) Policy Issues (Perspectives of Three Executives) Protection of Ag Products (Insights from Two Executives) Climate (Views of Two Executives) Comments Related to Ag Businesses Five-Year Trend Line Pro Citrus (Perspectives of Three Executives) Neutral Citrus (Views of Two Executives) Con Citrus (Points-of-View of Four Executives) Pro Land (Insights from Two Executives) Neutral Land (Perspectives of Three Executives) Con Land (Viewpoints of Four Executives) Pro Ag Business (Perspectives of Two Executives) Neutral Ag Business (Insight of One Executive) Con Ag Business (View of One Executive) Pro Vegetables (Viewpoints of Three Executives) Pro Cattle (Insights of Two Executives) Pro Sugar Cane (Viewpoint of One Executive) Commentary on the Continuation of Ag Business Operations Despite Land Sale Opportunities Ag Diversity (Views of Four Executives) Sale of Land (Perspectives of Three Executives) Continuation of Ag Operations (View of One Executive) Pressures to Sell (Views of Two Executives) Diversification Outside of Agriculture Future Importance of SW Florida Agriculture Pro Future Importance (Views of Nine Executives) Con Future Importance (Views of Two Executives) EXECUTIVE SUMMARY OF ENVIRONMENTAL RESPONSE Comments on Whether Land Use and Protection Are of Interest to Environmentalists High Density Real Estate Development (View of One Environmentalist) Common Interest Model (Perspective of One Environmentalist) Pro Agriculture (View of One Environmentalist) Response as to Whether the Development of Ag Land for Real Estate Purposes Threatens Florida s Heritage Protection of Agricultural Heritage (Views of Two Environmentalists) Definitional Issue of Heritage (Perspective of One Environmentalist) Comments on the Awareness of Real Estate Projects That Threaten Land Irrevocably Pro Awareness (View of One Environmentalist) Negative Awareness (Point-of-View of One Environmentalist) Commentary on Preference for Developers Versus Agriculture Pro Comments in Support of Agribusiness (Viewpoints of Three Environmentalists) Negative Comment Relating to Ag Business (Perspective of One Environmentalist) Recommended Strategies of Environmentalists To Protect Agricultural Land Recommended Strategies (Points-of-View of Three Environmentalists) Final Reflections of Environmentalists (Points-of-View of Three Environmentalists) EXECUTIVE SUMMARY OF POLITICAL LEADER RESPONSE Responses Concerning the Provision of State Aid to Ag Business Pro State Support (Viewpoints of Four Political Leaders) Comments on the Effectiveness of Agribusiness Organization in Eliciting Concessions Pro Organization (Perspective of One Political Leader) Need for Organizational Support (View of One Political Leader) Commentary on Whether Agribusiness Is a Sinking Ship Pro Ag (Perspectives of Three Political Leaders) Responses to One s Extent of Participation With AG Lobbyists Lobby Interactions (Perspectives of Two Political Leaders) Agribusiness Interactions (Views of Two Political Leaders) Views of Political Leaders as to What Agriculture is Seeking the Most Perceived Agendas of Ag Business (Points-of-View of Four Political Leaders) Comments on Political Leader Support for Additional Ag Research Funding State Financial Support (Points-of-View of One Political Leader) EXECUTIVE SUMMARY OF REAL ESTATE DEVELOPER RESPONSE Response to the Extent that Ag Lands Are Being Targeted by Residential and Commercial Real Estate Developers in Light of Florida s Immigration Patterns No Ag Targeting Per Se (Perspectives of Two Executives) Pro Ag Land Targeting (Views of Four Executives) Other Factors Influencing Ag Targeting (Perspective of One Executive) Perceived Attitudes of Ag Business Landowners to Selling Out Pro Attitudes Toward Selling Out (Viewpoints of Four Executives) Family Issues (Perspectives of Three Executives) Comments on Heavily Targeted Ag Lands Site Characteristics (Viewpoints of Four Executives) Market Factors (Views of Two Executives) Actual Physical Locations (Viewpoint of One Executive) Other Factor (Perspective of One Executive) Responses to Developer Interests that Are Held in Ag Land Interim Interests (Points-of-View of Three Executives) Non-Speculative Comments (Insight from One Executive) Comments on Types of Executives Most Active in Pursuing Ag Lands Active Participants (Views of Three Executives) Inactive Participants (Perspectives of Four Executives) Responses of Developers on the Future of Ag Lands Five-Years From Now New Ag Focus (Points-of-View of Three Executives) Ag Land Conversion Slowdown (Points-of-View of Three Executives) Market Factors (Views of Two Executives) Incentive for Ag Land Conversion (Insight of One Executive) Land Use Shift (View of One Executive) Comments on Factors Impacting Ag Land Conversion Governmental Influences (Points-of-View of Four Executives) Market Realities (Views of Four Executives) Agricultural Efficiencies (Views of One Executive) Natural Forces (Insight of One Executive) Other Factor (View of One Executive) AG BUSINESS IN SW FLORIDA: PRESENT AND FUTURE EXECUTIVE SUMMARY OF AGRICULTURAL RESPONSE This summary is a compilation of the essence of ag business executive responses. It begins with weaknesses to reveal a self diagnosis of ills and issues, and proceeds through strengths, threats, and opportunities. It also reflects on the future and a litany of issues that are most germane to the agricultural industry. Above all, it presents top-of-the mind issues and salient beliefs about the industry. Ag business is now dealing with labor issues and rising ag costs, as well as rising land costs. There is a need for skilled and educated labor and a rising cost structure is exerting pressure on profit. Troubles continue for the citrus industry (e.g., water, diseases, labor and foreign imports), and the perishability of ag products continues to exercise a pressure on price taking. Despite these weaknesses, ag business in SW Florida basks in a unique window of warm weather and is generally characterized by a lack of freezes. Ag land is also viewed as a long-term asset and is noted for its potential. Citrus is seen as the apex of quality production due to climate and single blooming. There is no place in the world that produces the quality of citrus found in Florida and the industry is seen as resilient. 7 External forces, however, do serve as threats to ag business in SW Florida. These threats encompass foreign competition, diseases, environmentalism, land development, government regulation, water, and even climate in the form of hurricanes. Among the competitive issues is a concern over the impact of Brazil, especially its cost structure and lack of regulations. Diseases in the form of greening and canker remain unsolved and pressures, from what many ag executives view as uninformed environmentalists, continue to be felt. The Florida in the Year 2060 report also reveals that only the Panhandle of Florida will not be facing build-out in fifty years and that nearly seven million acres of undeveloped ag land will be needed to accommodate the exploding population. Government regulations are still viewed as being burdensome on ag, as well as water management policies. Overall, the threats evidence the potential to influence Florida s economic base in significant and undesirable ways. Although ag will always be open to external threats, many opportunities exist as countervailing forces. Among them, citrus continues to apply science to diseases and in the development of stronger root stocks. Citrus also evidences potential for demand stimulation and additional growth. Additionally, ag opportunities serve to lessen competitive pressures and such opportunities extend to vegetables due to their growth and demand matching potentials, as well as alternative fuels through crop production. The sale of land and land credits is part of the opportunity equation and ornamentals appear attractive due to a growing Florida population. Finally, sugar cane and cattle offer opportunities and a common bond exists for farmers and environmentalists to come together due to their common interest in land protection. 8 The trend line for Florida s immediate five-year future is mixed with the most controversy seen in such areas as land and citrus. With regard to the former, the impact of development and enhanced population projections casts a shadow over land, despite the positive relating to land s economic return. Citrus, however, has positives relative to economic efficiency, the future for new root stocks, and land value. The negatives encompass return, foreign competition, and mainly greening. A solving of the greening problem would do much for the citrus industry. The five-year trend is also buoyed by vegetables which are characterized by growing demand and lesser competition. However, ag business in general is impacted by poor returns and free trade, yet a silver lining may be seen in the development and application of technology and science. Uniquely, labor is not a top-of-the mind issue in looking out over the next five years. Given these observations on the present and future states of ag business, ag executives continue to pursue an economic model that includes land sales, yet part of the model involves the seeking of ag diversity and the protection of land to enhance its value. Additionally, the underlying value of land fosters a sense of security among ag producers. As ag lands continue to be held, they appreciate in value, while efficient ag production yields an economic return. Further, the diversity that is sought tends to be within ag although a minority of ag producers are well entrenched in the real estate development field. One thing is clear, SW Florida is viewed as increasing in importance in ag production relative to the rest of the state. Developments along the coasts and inland encroachments point to a longterm trend of SW Florida ag growing in relative importance and stature. In fact, SW Florida may become an ag oasis. Basically, it is becoming too costly in an opportunity cost sense to keep or 9 assemble large tracks of lands in other areas, such as Central Florida due to development pressures. Even if SW Florida can maintain its status quo, it will grow in relative importance as ag production statewide continues to shrink. Basically, SW Florida may become the ag mecca for the state of Florida and depending upon the attitudes of the United States government toward food independence, ag business may become an even more valued member of the economy. Overall, ag business in SW Florida is a key resource whose luster may still be difficult to discern, yet all of the fundamentals that promulgate success are in place. Hopefully, this report will shed additional light on current and future prospects for ag business in SW Florida. Purpose of the Study This study is designed primarily to reveal the perceptions of ag business executives toward the present and future state of the ag business industry in SW Florida. It is designed to reveal top-ofthe-mind issues and the beliefs of those responsible for the health of the industry. The study reflects a candid view of pressing issues and the silver linings pervading the industry. It is unique in that it directly assesses the strengths, weaknesses, opportunities, and threats pervading the industry, as well as the revelation of five-year trends and the importance of ag business in SW Florida relative to the rest of the state. It also assesses the prospect of ag business continuation in light of land sale opportunities and the extent of diversification in response to pressures on the industry. To develop a well-rounded study, this research also embraces the views of environmentalists, politicians, and real estate developers concerning ag business and its future. With respect to 10 environmentalists, the study assesses the relevancy of land usage and its protection; the impact of real estate developer encroachments on Florida s heritage; and real estate projects that may threaten land in an irrevocable way. Additionally, the degree of support for agriculture among environmentalists is to be determined, as well as the strategies of environmentalists that may protect agricultural land. The study also assesses political leaders on their perceptions of State support for ag business; the clout of ag business as an organized force; and whether ag business is a sinking ship. Additionally, the study reveals insights into ag lobbying; a determination of what ag business is seeking; and support for agricultural research funding. Finally, the last section of the study assesses real estate developers as to the extent that ag lands are being targeted and their perception of ag s willingness to sell out. Additionally, the views of real estate developers as to targeted areas and individual developer interest in ag land are revealed. Other assessments include a revelation of the most aggressive developers and developer perceptions of the future of ag lands. The views of environmentalists, politicians, and real estate developers reveal an external perspective and help to reveal the extent of support for ag business and the obstacles that ag business faces in the future. Such assessments can clarify thinking and help in the development of strategic responses. 11 Overall, it is believed that this is the first comprehensive study of ag executive perceptions and beliefs in the state, and its development may help in the galvanization and prioritization of issues facing the industry. The study, hopefully, will reveal the concerns in need of in-depth study and response. This work is sure to engender debate and controversy and possibly it will be Promethean or life-bringing in its impact. Research Protocol The study emanated from a list of twenty-four ag business CEOs that ranged from citrus, to vegetables, to juice processors. However, the greatest focus was on citrus. Of the twenty-four executives who were approached concerning study participation, fourteen agreed to an in-depth, personal, face-to-face interview and participated in an interview ranging from one hour to an hour and a half. Appendix I contains the list of participating executives and the names of their companies. A perusal of the list reveals that they are key players in ag business. These individuals graciously gave their time and regaled us with colorful stories and in-depth insights. To encourage thoughtful reporting, the principal investigators informed each executive that their response would not be revealed by name, rather their responses would be placed in categories or taxonomies. It is felt that such an approach fostered objectivity and helped to bolster the study s credibility. It will be noted that the numbers of executives who responded to, or reported, a given issue have been revealed, thus showing the magnitude of executive response. As might be expected, what is 12 important to one executive may not be to another, hence the frequencies of executive response denote patterns in the data. The same procedure was likewise followed with environmentalists and political leaders. In the case of the former, three of five environmentalists who were approached responded and four of nine identified politicians participated. The names of these participants appear in Appendix II. Drs. Ara Volkan and Walter Rodriguez served as the study s research collaboration in these areas, contacted potential respondents, and conducted face-to-face interviews. They administered research questions that were unique to each group. Finally, Drs. Shelton Weeks and Gary Jackson contacted five real estate developers and followed the same exact study protocol. The names and companies of these participants appear in Appendix II. 13 Ag Strengths in SW Florida The strengths of ag business are heavily seen in the areas of climate, lands, citrus, consolidation, and vegetables. References are made to such climatic areas as SW Florida s window of warm weather and lack of freezes, while such considerations as SW Florida s land values and land applications are also evidenced. Citrus is praised for its quality, single blooms, and unique climate among other considerations. And consolidation is noted for its efficiencies, economies of scale, and a longer-term perspective, as well as other attendant strengths. Finally, vegetables are perceived as offering natural advantages. Other strengths are seen in labor, regulations, and geography. Additionally, strengths are noted for each of the following: ag management, science, technology, water, natural markets, grapefruit, and crop flexibility. Overall, climate has the highest executive response and citrus, climate and lands are the leaders with respect to the number of individual comments and/or observations. Clearly, ag business in SW Florida evidences significant strengths. Climate (Viewpoints of Nine Executives) There is a window of warm weather for three months during the year; only two other areas have it (California and a spot in Mexico). SW Florida has a two-month window of opportunity. SW Florida ag is south of the generally perceived frost line. SW Florida s climate offers a strategic advantage over the rest of the U.S. 14 Quality citrus is due to our subtropical climate. There is generally no frost south of Highway 60. Florida ag has a geographic advantage (also reported under Geography). Florida has a climatic window of opportunity. Florida s climate has encouraged citrus crop production to move here in an attempt to escape freezes (also reported under Citrus). The SW Florida climate is great for vegetables (also reported under Vegetables). SW Florida offers
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