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Opportunities in Disguise?

March 8, 2014
By: Guest Editor, Farm Journal
 
 

I don’t think the challenges and opportunities have ever been as significant and exciting in agriculture as they are today. The fact that global trends influence U.S. farmers’ bottom lines is mind-boggling. FJ 026 F14149

From late 2008 to summer 2013, corn went from a $2.90 low to a high of $8.40—a 289% gain. But we lost more than 75% of that gain with the recent low of $4.17. Soybeans have gone from a $7.75 low in 2009 to a high of $18 in the second half of 2012. Cattle bottomed out at $79 in 2009 and recently reached $145 per cwt. As a result, we’ve had record net farm incomes for the past few years. 

Why the trip down price memory lane? These trends repeated themselves for poultry, cotton, wheat and high-value produce crops. The usual reasons given for the strong growth in prices range from the high demand for energy to droughts and livestock diseases. Ethanol probably is the most popular rational for the price increases. In my view, that isn’t fair or necessarily true. I suggest that the strong prices stem from the emergence of a growing global economic middle class. 

Eye-openers. There are three areas that significantly impact how we will position ourselves to capitalize on the emerging global trends affecting production agriculture and food.

Let’s start with data accumulation. Who owns and can be trusted to use the data generated by you and your supplier? How private and secure is this data, or should it be? This issue must be resolved before the value to producers gets garbled. Defined institutional policies and systems of trust have to be developed quickly.

The use of technology and information management systems has turned the economics of production agriculture upside down, so what’s the real issue? Why is there such turmoil with regard to how we gather, use and deal with producer- and vendor-generated data? 

It is because at the farm level, too many of us still view the world through the "commodity lens." We lost the political and public relations war on ethanol; instead of treating it like the value-added product it is, we treated ethanol policies and our reaction to them and their critics as though we were protecting traditional ag commo­dity policies. 

We are dealing with the same issue when it comes to Country of Origin Labeling. We resist labeling because our price givers­­—the harvesters and processors—treat the issue as a cost imposed on a commodity. 

If we continue to assume it is a commodity, it is a cost. If we begin to appreciate the significance of downstream, value-added oppor­tunities, it is a value. The only way to do this economically is to track and trace; this requires the use of technology, the generation of farm-based data and the development of trustworthy systems to manage it all.

Remember, every major new technological advancement has required a platform—a standardization so the new technology might flourish. For example, the hydraulic quick coupler and three-point hitch are standardized platforms that created immeasurable opportunity for entrepreneurs and innovators, as well as farmers.

Getting beyond the discussion of who owns the data and whether someone is going to abuse it is critical. Think about it: Between all your activity with social media, Internet-based technology and government reports, is there really much out there that someone can’t find out, if they really want to? The longer we treat the issue of data privacy as some com­ponent of the Ark of the Covenant, the greater the possibility of doing ourselves a disservice.

Beyond the borders. Secondly, we must aggressively pursue opportunities in China, as well as the emerging global middle class throughout southern and eastern Asia, Mexico, Latin America and Africa. Here is why: 95% of the world’s population lives outside the U.S. About 80% of the global GDP is generated outside the U.S. Our domes­tic food market is saturated.

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FEATURED IN: Farm Journal - March 2014
RELATED TOPICS: Crops, Economy

 
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