April/May 1997
Coming Megatrends in Agriculture
Library
Home
E-Mail
Back
Prairie Grains is the
official publication of
the Minnesota
Association of
Wheat Growers,
North Dakota Grain
Growers Association,
South Dakota Wheat,
Inc., and the
Minnesota Barley
Growers Association.
Polarization of farms by size. More
big or small farms; fewer mid-sized
From 1973 to 1992, census figures show rapid growth in numbers of super farms ($500,000 in sales or more), large farms ($250K to $500K), and "sundowners" (part-time farms with $10K to $99K in sales). But the numbers show dramatic declines in numbers for mid-sized family farms ($100K to $250K in annual sales).
Separation of Landowners
from Land Operators
As landowners have held on to land longer and longer and land prices have remained higher than what could be serviced from crop income alone, more and more of the land farmed today is rented. For example, there are 3 million owners of farmland in the country, but today only half operate all the land they own. Another 6% farm part and rent the rest. The remaining 44% rent out every acre they own. If inflation re-ignites, this trend towards a "landed aristocracy" of gentlemen farmers (and wealthy farm widows) will only accelerate as land's value as a "safe haven" for cash runs prices even further out of reach for someone who would have to finance to buy it and try to service the debt from farm earnings.
Increasing use of consultant specialists
As farming becomes more and more complex, more and more farmers are finding they cannot remain competitive in every aspect of technology and management. Thus, they are focusing their energies on the aspects they know and enjoy most, and leveraging their management abilities by bringing in the "hired gun" to stay on top. Top uses of consultants, in order of frequency:
- Professional accounting, tax and estate planning.
- Professional crop scouting and fertility/pest management
- Professional consulting in enterprise analysis and financial management.
- Professional marketing and risk management services.
From starlight to satellite; the coming
age of GPS/precision farming
Global positioning technology is no passing fad. It will be the next great leap for American farmers in global competitiveness. Through computerized yield mapping and precision application of fertilizer, micro-nutrients and pesticides, costs will eventually drop and yields improve. Farmers who ignore it will be seen ten years from now in the same light as farmers who ignored the advantages of hybrid corn and chemical fertilizers and pesticides until they either adopted it, or were squeezed out of business by those who adopted it earlier.
The rising role of "comparative
advantage" over political clout
Eventually, the phase-out of U.S. farm price supports and the scaling back of global subsidies and tariffs via the World Trade Organization will restore the role of comparative advantage in allocating farm resources, market shares and profits. A prime example is an end to policies which subsidize water development projects in desert areas with target prices designed to encourage production of crops already in such surplus, that there are set-aside requirements for prime ground where no irrigation is necessary. Cropping practices worldwide will tend to re-focus on producing those crops for which the region has natural advantages, such as soils, climate, and labor availability.
Rapid growth in "designer" crops
and livestock genetically engineered
for special uses and markets
More and more farmers are discovering the key to prosperity is not convincing or badgering the marketplace into wanting what you have but to have what the market wants. Value-enhanced varieties of corn, for example, are already being grown on one out of every ten acres and are in a sharp acceleration phase. High-oil corn varieties, for example, nearly tripled in 1995, jumping from 170,000 acres to 460,000 acres. Premiums range from an extra 15-20 cents for high-oil varieties to a dollar a bushel for high amylose corn.
In livestock, genetic improvements have already revolutionized the hog and poultry industry. And now, alternative species are rapidly approaching critical mass. Emu-production, long considered just an expensive hobby with no real future, has reached the point where we can buy emu filets in the meatcase of our local supermarkets and consumer acceptance has reached the point where investors in northeast Iowa are opening an emu-processing plant.