The other day in St. Cloud, MN, the finishing touches were in place for my final address of this decade. Before going on stage, my thoughts centered on all the factors impacting the economics of agricultural production in the first decade of the new century. After my talk, an extended stay in an airport hotel because of a major East Coast snowstorm allowed me plenty of time to ponder them and a vision for the next decade.
First out of the chute is that land values, particularly in the upper Midwest, appreciated dramatically, while the stock market for the most part showed modest returns.
The grain industry, which historically had two favorable years in every 10 years on average, experienced a bullish super cycle only observed three other times in the past century. At the other end of the spectrum, the livestock, timber and horticulture industries, while experiencing record prices in some years, found deep economic adversity particularly late in the decade.
Black swan events such as outbreaks of mad cow disease, food borne illnesses and H1N1 flu had dramatic impacts on certain sectors of our agriculture industry. Some of these events had a higher profile in the media than others, depending upon competing headline stories.
Alternative energy initiatives played a significant role in the profitability of our agricultural industries on both the revenue and cost sides. Some industries were winners while others were losers.
Technology applied to agriculture is having an accelerated effect. Higher yields due to efficiencies on the cost side with the use of technology are definitely being observed throughout the country. Supply and production are being generated by systematic production managers on larger business entities, which influences the supply and demand equations domestically and globally. Yet despite this trend, a growing number of producers are aligning with consumers who demand local, natural and organic products, thus splintering the agricultural marketplace. Technology has come a long way in this decade. Social media, online education and blended educational strategies that include a mix of delivery methods have emerged in this past decade.
What can we expect in the next decade? The following are a few points to ponder:
- Producers in their golden and twilight years will continue to farm and ranch 10-20 years beyond previous generations because of technology applied to agriculture.
- More business, marketing and financial decisions will be made or influenced by females.
- Special interest groups and consumers will continue to drive the business models.
- With 21% of farms and ranches with no next-generation from the family, mentor and mentee alliances and business entities will be formed by forward-thinking agriculturists.
- Water availability and regulation will determine how and where the industry conducts business.
- Land/lease deals between countries with money and those with farm ground will become more apparent. Will this become a neo-colonial land grab particularly in the southern hemisphere, with environment considerations? Asia, specifically China, will lead the way.
Whatever happens, it will be an interesting decade to be a globetrotter and Road Warrior.
Editor’s note: Dave Kohl, Corn & Soybean Digest trends editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at firstname.lastname@example.org.