You might have heard this famous quote from John F. Kennedy: “The farmer is the only man in our economy who buys everything at retail, sells everything at wholesale, and pays the freight both ways.”
The world has changed a lot since he said those words in 1960, but the inherit problem still plagues agriculture. We’ve put a man on the moon, but we still haven’t figured out how to put more profit into farmers’ pockets. In some ways it’s gotten worse.
In 1980, farmers received 31¢ for every dollar spent by the consumer. Today, that number is half—16¢. Of course, the sheer dynamics of economies come into play and the size and scope of farms have grown in the past 40 to 50 years. All this had to happen to just survive. But ironically, the risks didn’t shrink proportionately, which is throttling the advancement of technology at the farm level.
As everyday ag continues to long for the “good ol' days” of $7 corn and soybeans in the teens, farms have had to adjust to the “new normal” of subpar commodity prices year after year with no end in sight. This downturn probably couldn’t have happened at a worse time as the industry was preparing for its next “revolution” powered by the promise of big data, the internet of things, robotics and even a new wave of crops boosted by plant-friendly microbe technology.
As farmers well know, when margins shrink they have little room in their operating budgets to purchase new technology and equipment or invest in experimental ag practices. In fact, there’s a tendency among many farmers to ditch recently adopted advancements such as variable-rate technology or genetics.
Farmers have a right to be wary of all the magic beans and bullets promising yields and returns they could only dream of. However, many have become too risk averse and don’t adopt anything no matter how many studies or testimonies prove its worth.
We’ve reached this point because ag retail is still doing business like it did when JFK articulated the problem in 1960. Buy my “revolutionary” hardware, product or service and all your troubles will go away, they say. The trouble is farmers pay for all the risk to prove such technology actually works on their farm and those risks have seemingly grown too great.
In order for farmers to get comfortable with and fast-track technology adoption, the risks need to be shared or mitigated altogether.
There are signs a disruption is coming. A startup company called Indigo Ag is attempting to upend the traditional ag retail model in a refreshing way. Instead of marketing and selling products like the ag retail herd, charging a fixed upfront price, Indigo shares the cost and lowers the risk of adoption.
For example, when launching their first cotton seed treatment they asked farmers to pay a fixed amount per acre post-harvest as long as they saw a certain production increase. In other words, Indigo doesn’t get paid unless the farmer gets paid.
It would be nice if other agronomic and precision tech companies would coalesce around this model so complementary technologies could be adopted in tandem. That’s important as any farmer knows there’s no one magic bullet to prosperity. But if more and more value holders in the industry would be willing to share the risks of progress with the farmer then maybe, just maybe, prosperity could be a two-way street.
Farm Journal AgTech Expo
Dec. 3-5, 2018
JW Marriott, Indianapolis
How are you keeping up with this brave new world of technology? Attend the Farm Journal AgTech Expo. For details, visit www.FarmJournalAgTechExpo.com