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Top 10 global trends in Agriculture

These micro- and macro-shifts will shape the industry

Wise growers keep micro- and macro-changes in agriculture present in their minds in order to be competitive in the industry. According to Richard Brock, President of Brock Associates, producers need to have more flexibility in the future. Brock’s commodity marketing service recently identified ten emerging trends in agriculture.

One of our megatrends, possibly understated, is the rapid adoption and impact of automation technology,” Brock describes. Autosteering and plant genetics technologies may have a large impact in the near future as they enable equipment to complete more work in less time. A breakthrough year is expected in corn yields, results that haven’t been seen since the 2004-2005 season. Looking at information from breakthrough years from 1990 onward, yields may range from 170.7-185.8 bu. per acre, far above the 162 bu. per acre trend yield. Accordingly, prices for harvest corn have decreased to a range of $3 per bushel. For growers in locations with record-breaking yields exceeding 250 bu. per acre, such prices have less of a sting due to decreasing breakeven prices.

Such megatrends illustrate the need for producers to have more flexibility in the future, explains Brock. “Farmers also need a growth strategy to survive,” he says. “Plan to grow by 6% per year.” In order to be successful, Brock insists that growers must analyze tools for risk management and continue training young producers. Over the most recent three-year period, options usage and futures declined, and young producers – accustomed to corn prices of $6 and more – are least likely to use such tools. Brock believes that niche markets with premiums will see rapid growth, and that low-cost producers will also find success in the marketplace.

10 Changes Producers Should Watch Carefully

  1. Shifting Farm Structure
    Younger producers will soon be the recipients of large transfers of farm assets
    , given that the average grower is nearly 60 years old, and 30% of whom are older than 65. In the Midwest, a typical 2,000-acre farm could easily be valued at $10 million, just looking at an average land value of $5,000 per acre. Trends favoring larger farms is expected to slow down as it nears the equilibrium point.
  2. Acceleration in Technology
    What most growers known i
    ntuitively will be confirmed – and in some cases, challenged – by data analysis in the near future. Newer programs and equipment depend on greenness sensors, aerial satellite imagery, soil maps, and millions of points of weather data. Farmers should expect mounting debates concerning the issue of data ownership.
  3. Biotechnology Strategy Evolution
    While the use of GMOS is not likely to cease, its continued presence is likely to elicit numerous public relations and political objections. For instance, in states like Vermont that require GMO labeling, costs increase. However, a number of GMO advocates support a federal solution for labeling which would eliminate the need for state initiatives. The industry would benefit from a shift in public opinion.
  4. Specialization to Continue
    Agricultural production continues to become more specialized. For example, in 1982, 35% of all farms were producers of corn, while in 2007 this figure dropped to 22% as a result of technological advances, economies of scale, and government policies. Currently, manygrowers have diversified with non-GMO products, organics, high-starch corn and high-oleic soybeans
  5. Resource Scarcity
    Irrigation is the source of food production increases of more than 40% since 1961, but it is widely understood that the supply of groundwater is finite. There are mounting concerns regarding the Ogallala Aquifer, which supplies nearly 30% of irrigation groundwater in the United States, as a possible depletion of nearly 70% is expected if current trends continue.
    Climate change also presents a challenge. As scientists have estimated, key crop yields decrease by 10% for every

    1.8°F increase in temperature

  6. Changing Commodity Environment
    Between 1980-2004, the correlation of crude oil prices to corn prices was 0.35. However, in period from 2005-2013, that correlation increased to 0.87. The strong relationship between crop prices and energy is similarly illustrated by other commodities.
    Because the demand for biofuels has generally run its course, future crop demand growth may be less bullish than in the recent past. While it is likely that soybean exports will continue to be in high demand in the future,

    China – which currently purchases nearly two-thirds of all traded soybeans – has built up its stock of soybeans from almost zero to 17.4%, which should ease its demands in the import market.

  7. Meat Consumption Shift
    The consumption of meat in the U.S. decreased 7.8% between 2007-2013. On the other hand, China has been the top consumer of meat in the world since 1992. China’s consumption of meat more than doubled that of the United States by 2012. China’s poultry and red meat consumption is expected to rise 15.2% by the year 2022. This is likely to cause a shift in U.S. exports, with fewer feed grains and more pork being shipped to China. As reflected in Shuanghui International’s acquisition of Smithfield Foods, it is more efficient and cost-effective for China to import finished goods. Nonetheless, U.S. oilseeds and grains will still be needed by producers of meat, as the total world demand of poultry and red meat is expected to rise 15.1% from 2013-2025.
  8. Public Scrutiny of Livestock Treatment
    Rapid changes are being seen in the food system as safeguards for raising livestock in humane and sustainable ways are demanded by consumers and insisted upon by regulatory commissions. For example, supermarket chains and l
    arge food companies are gradually removing the use of sow farrowing crates from their supply chains. Such changes are also required by state legislation. In this environment of increased consumer interest, transparency can often be useful: Cargill, for example, persuaded skeptics in 2011 when they took reporter Lisa Ling on a tour of a slaughterhouse in Colorado, during a feature on “The Oprah Winfrey Show.”
  9. Environmentalism’s Influence Grows
    Farmers must be aware of a complicated, growing set of regulations covering everything from pesticides to fertilizer. One current battle concerns the
    Chesapeake Bay watershed. In federal district court, a judge ruled that an agreement between six states and the Environmental Protection Agency (EPA) that would implement a total maximum daily load (TMDL) of pollutants was acceptable within the provisions of the Clean Water Act. Previously,farm groups had sued to stop implementation of that 2011 agreement, and they warn that the ruling will have far-reaching implications across the nation.
  10. Government Policy in Flux
    As governments change within nations, policies may also shift. However, the approaches taken in recent years in the United States and many other nations with respect to biofuels, land use, monetary policy, and GMOs will likely continue. China will probably see the largest changes as it slowly embraces the use of GMOs. If GMOs gain widespread acceptance for domestic crops in China, it would have a large impact on the nation’s self-sufficiency and its ability to become a net exporter.
Top 10 global trends in Agriculture обновлено: March 12, 2015 автором: admin

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