Marketing and Economic Aspects of Entrepreneurship: Raising Cane in the Low Desert-A Case Study

Article excerpt

This article chronicles a collaborative effort between entrepreneurial farmers in Southern California's Imperial Valley and University of California researchers to introduce cane sugar into the Valley. The region experiences climatic conditions conducive to supporting both cane and beet sugar. Synergies derivable include the potential to salvage the historically important but faltering beet sugar milling operations, generate healthier revenues from sugar crop diversification, and produce and market ethanol, electricity and other by-products, thereby improving profitability prospects of the local sugar enterprise as a whole.

Sugar: sweet, white, pure (at 99.9% sucrose, it's one of the purest organically produced substances)-and tricky to produce profitably (see Smith 2000; Kerr 2001; McCoun and Zack 2001). Indeed, in California, two sugar mills have given up operation in the last year alone. In January 2001 Imperial Sugar, the largest processor of refined sugar in the United States, filed for Chapter 11 bankruptcy, prompting farm organizations to warn that thousands of U.S. sugar growers could be impacted by the decision (Tait 2001).

This effort presents a case study of a pioneering collaboration between a group of entrepreneurial beet sugar farmers in the Imperial Valley in Southern California, and the University of California Agriculture and Natural Resources Desert Research and Extension Center (Ag Extension Center), in Holtville, California. The article chronicles their innovate joint efforts to introduce a second variety of sugar plant, cane sugar, into a geographical area with climatic conditions favorable to support both cane and the existing beet sugar varieties in the same locale.

The subject may be of interest to readers as a report on these entrepreneurs' efforts to capitalize on a single condition unique to their situation, the climatic advantage (that the area can support extraordinary success in the growth of both kinds of sugar), in order that the synergies possible from their tandem use (here milling) might yield the economic advantages described below. It is hoped that not only those in agriculture [where such diversification necessitates crop yield studies, procurement of seed stock, planting, cultivation, growth, harvest, milling and then commercialization, a quite time-consuming prospect (see Lu et al. 1994 for more information)], but entrepreneurs in general, might be encouraged to explore creative use of all varieties of product diversification, in areas far beyond the agronomic, to maximize the potential of their own company's unique situation. The crops grown in a geographic area are akin to a product (or raw material portfolio for a company, indeed are a "crop portfolio," the term used in farming, for the area. This group is seeking to introduce new varieties into their portfolio to reap certain business advantages. Frameworks for how companies can successfully pinpoint unrealized synergies and create an agenda of initiatives for addressing them is given in Goold and Campbell 2000. The potential of growing both cane and beet varieties is expected to bolster a faltering beet sugar milling operation, to derive additional revenues from cane sugar production, and to produce and market ethanol, electricity and other by-products, thereby improving the prospects for profitability of the local sugar enterprise as a whole (see also Sebesta 2001).

Improving Prospects for Beet Sugar

Carson and Botha feel that "Sugarcane....is a crop of substantial economic importance, providing approximately two thirds of the world's sugar with an estimated annual worth of about 143 billion." (2000, p. 1769). A funded study in the U.K. of the development of sugar beet as an economic crop concluded that beet sugar is totally dependent on the support of the local sugar cane industry, specifically the processing mill (Weeden, 2000). On another international front, India's production-entrepreneurial company, Sakhar, reports that of the 30 refineries processing raw cane this year, nine were forced to halt production (Financial Times 2001). …