It is hard to believe another decade has passed! There is an old saying that the older one becomes; the quicker time passes. In my experience, this saying is true! Let's recap some of the observations and perspectives that have occurred in the second decade of the 21st century for agriculture, the global and U.S. economies, and trends in general. 

Super cycle and post-super cycle

 When we entered this decade, the agriculture industry was in the midst of the great commodity super cycle. The growth of the BRICS economies (Brazil, Russia, India, China and South Africa) was a boost for U.S. agriculture. These countries collectively added a middle class the size of the U.S. every half decade. The fast rise of these nations, along with ethanol and the globalization of trade policies, was a boost to the farm and rural economies. Those fortunes changed in 2013 as globalization moved to the decoupling of trade, trade agreements and populism. The demand for ethanol dropped and the slowing of the global economy hindered agricultural incomes. While the agriculture economy did not crash, the extended margin compression has taken a toll both financially and emotionally on the players in the agriculture industry. 

Economic record setter

 At the beginning of the decade, the general economy and urban areas were growing out of the Great Recession. Now, a decade later the longest economic expansion in the history of the U.S. has occurred. While not at record levels, the pace of economic growth has been slow and steady. Growth was mainly a result of the central bank policy in the U.S. and abroad. After observing workers’ 401(k)s being reduced to “201(k)s” during the Great Recession, the Federal Reserve policies have increased the Dow Jones from 8,000 points to 28,000 points and the 401(k)s have now increased to “801(k)s.” This wealth effect is not only in the stock market, but urban and suburban American real estate. Consumers are on a spending binge exhibited by consumer confidence indexes that have consistently been above 90. 

Land values did not crash

 The current agriculture economic cycle has played havoc on cash flow, profits, working capital and liquidity. However, farmland values have remained resilient despite the surge of appreciation earlier in the decade. Hedge funds and outside investors have played a part in the resilience of farmland values this decade. However, the main cog in the land value wheel has been the baby boomer producer. As opposed to the farm crisis in the 1980s when baby boomers were acquiring debt at a youthful age, the graying baby boomer has considerable equity built up over the years. Despite being challenged by lower margins and tight cash flow, some producers are using equity to bridge the financial adversity cavern. When entering the decade, boomer producers were between the ages of 46 and 64. Now, the boomers are exiting the decade between 56 and 74 years old. They are acquiring land as a hard asset as opposed to the returns in a bank account and the risk in the stock market. Later in the decade, some farmland has declined in value up to 20% to 35% from the peak. However, these declines are spotty throughout the United States. 

Alternative products

 Who would have known at the beginning of the decade that plant based, cultured lab meat and alternative dairy products would be gaining momentum in the marketplace? What was a concept a decade ago has the power of deep-pocketed investors, consumer driven trends, social media and mainstream influencers to provide a threat to conventional agriculture products. Monitoring these trends will be a high priority for both the meat and grain complex over the next decade. 

Urban agriculture

Another complexity, but also an opportunity, is urban or vertical agriculture. This group of innovative entrepreneurs often uses outdated malls or buildings where square footage has electric and plumbing along with building security as a low-fixed-cost alternative for a niche crop. The advantage over the traditional producer is it reduces or eliminates transportation and distribution costs, and takes advantage of proximity to the customer.

 Competition

 Technology, bioengineering and big data have quickly changed the face of agriculture in the past decade. This technology is being adopted and implemented globally. South America has seen nearly a 100% increase in corn and soybean production. This, along with the alignment of these countries to growing emerging nations, has reduced U.S. market export share from nearly 80% four decades earlier down to about one-third. Also, more competition is being seen in regions such as Eastern Europe and Africa.

 Amazon’s use of data metrics has changed the way consumers shop and consume agricultural products. The accelerated growth of the craft beer industry, vineyards, “the romance industry” and value-added production for many commodities has been a challenge, but also an opportunity.

NGOs

 Non-governmental organizations (NGOs) have placed increased pressure on what, where and how one conducts business in agriculture. Controversial topics such as cage-free chickens, chemical use and GMOs have increased the presence of these organized groups with deep pockets and both social and mainstream media support. Increased urbanization in the U.S. and worldwide will only fuel more discontent from these groups as the general population becomes more disconnected from agriculture and natural resources.

 Consolidation

 Whether it is machinery dealerships, seed and chemical suppliers, processing facilities, banks or the Farm Credit system, consolidation is the watchword. The economic downturn in agriculture has accelerated this movement toward bigger agriculture. Another contributing factor has been the grocery chains that are streamlining purchases of agricultural products for efficiency. Consolidation is playing havoc on the demographics of rural America who are observing the rapid disappearance of small towns.

 Decade challenges and changes

 While the decade of agriculture has been challenging, positive changes have also occurred. According to the recent census, the average age of farmers has increased. However, there appears to be a new, emerging group of young farmers and ranchers. Included in this group are more women, minorities and veterans.

 Another group of young farmers is the agricultural entrepreneur who often returns to agriculture after seeking fame and fortune outside the industry. These groups are engaged in entrepreneurial activities called “side gigs” both inside and outside the industry as a source of diversified or dimensional income. Agricultural entrepreneurs create businesses of all shapes and sizes. Some new producers enter the industry through a family business or startup venture, or seek alliances in collaboration with partners with similar values and goals. The energy among this group will propel the agriculture industry into the next decade.

 While this list is not exhaustive, it illustrates the rapid change occurring in the agriculture industry as we launch into the third decade of this century.