I recently centered my thoughts on the factors impacting the economics of agricultural production in the first decade of the new century, and found a vision for the next 10 years.
First out of the chute is that land values, particularly in the upper Midwest, appreciated dramatically (despite a slight decline in 2009), while the stock market for the most part showed modest returns.
The grain industry, which historically has 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 (unexpected but high-impact) such as outbreaks of mad cow disease, foodborne illnesses and H1N1 flu had dramatic impacts on parts of agriculture.
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 with a mix of delivery methods have emerged in this past decade.
Producers in their golden and twilight years will continue to farm and ranch 10-20 years beyond previous generations because of technology in agriculture.
More business, marketing and financial decisions will be made or influenced by women.
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 farmland will become more apparent. Will this become a neo-colonial land grab, particularly in the southern hemisphere, with environmental considerations? Asia, specifically China, will lead the way.
Whatever happens, it will be an interesting decade to be a globetrotter and Road Warrior.
Dave Kohl, PhD., Corn & Soybean Digest trends editor, is professor emeritus at Virginia Tech. He's published four books and over 500 articles on financial and business topics. You can reach him at sullylab@vt.edu.