By: Dr. Kohl
Many of you know that I travel to the far reaches of the United States, and in some instances other countries, to deliver educational experiences for young producers and others aspiring to be involved in the great industry of agriculture. Despite recent misconceptions on social media about future opportunities in the agriculture industry, there are many reasons to be optimistic, as an industry that is the foundation of the American economy and lifestyle. Here are my top ten reasons to be excited about agriculture, in no particular order.
- First, growing emerging markets in the world are demanding more food, fiber and fuel. Jeff Simmons, one of my former students at Cornell University and president of Elanco Animal Health, provides evidence for this hypothesis in his research. Simply put, it is called the 50-100-70 Rule. By the year 2050, the word population will need 100 percent more food, fiber and fuel, and 70 percent will be produced by technology-enhanced efficiencies. As emerging nations’ standards of living rise, agricultural industries aligned with these nations have a splendid opportunity to capitalize on these trends. Producers also have an opportunity to be part of something bigger by fulfilling these demands to feed and clothe the nation and world.
- Second, agriculture is five dimensional, providing food, fiber, fuel, products for the life sciences, and life experiences or agri-entertainment. Thinking outside the box will be a critical skill. It will be important to understand that one must think globally and then bring that relevance to your operation and apply it with the resources and talent available.
- Third, there will be more opportunity in the next ten years than the last forty years. That being said, there will be more opportunity to fail as well because the stakes are higher, with more volatility at the extremes. This volatility will actually create opportunity. The key is to have a business positioned to proactively capitalize on opportunities. Timing is important in any business’ success.
- The intergenerational transfer of farm businesses provides opportunities for young people in farm and non-farm families. Twenty-one percent of farm families have no next generation of farm management, providing the opportunity for young aspiring agriculturalists to align with an older generation producer outside the family. Both models can be successful for producers who are willing to give up control in order to continue the legacy of the farm and nurture the next generation.
- The future of agriculture is very exciting because there is not “one size that fits all.” There will be a growing market in certain areas for the business model that provides local, natural, and organic products. Many of these businesses will be entrepreneurial, with a need for flexibility, efficiency, and systems management with strong business planning skills and execution. The traditional midsized farm that focuses on efficiency in agriculture with a modest living withdrawal supplemented by non-farm income will be prevalent as well. Of course, the large complex agribusiness with multiple owners and parties will require high business management acumen.
- Agriculture can be very profitable. An examination of the top 20 percent of agricultural producers on farm record databases finds that the average return on assets every year since 1995 is above 10 percent. This group includes a wide range of commodities operating in all types of economic and weather cycles. However, on the downside, the low 20 percent showed a negative return, suggesting a widening gap of profitability between the “status quo” producers and those who strategize and implement best management practices.
- Young producers have access to strong networks of support and education. The young producer educational programs offered by Farm Credit associations on business and financial topics are classic examples. Others in the industry are supportive on either a group or one-on-one basis by forming strategic alliances to provide educational experiences to improve the industry.
- Being able to network via technology using social media, and receive training via video conferencing or webcast, along with traditional face-to-face methods facilitates leadership. It also equips leaders not only for the business, but for community policy, decision making, and public relations at the local, state and national level. These opportunities are only limited to one’s time, imagination, and energy.
- Speaking of technology, the convergence of biotechnology, engineering, and information technology will provide opportunities for the younger generation who have a good advantage in the adoption of new methods. The key will be to adopt practices and technology consistent with your resources and business philosophy.
- Finally, being a young producer who is successful in the new era will require balance. That is, business success will be measured by return on assets, while lifestyle success is measured by “return on life” with proper allocation of “return on energy” in business and life. Many producers in face-to-face learning programs will tell me that the best crop they raise is their children or others they mentor.
These ten perspectives on the agricultural industry truly create an attractive environment to carry on the legacy of agriculture and the lifestyle it can provide.