Transcript Farming in the 21st Century: What is Your Business?

Farming and Agribusiness in the
21st Century: What is Your
Business?
Paul Lasley
Some Observations about
Predicting the Future
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When I’m right, no one remembers and
when I wrong, no one forgets…
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Every generation believes they live in the
MOST rapidly changing period in history…
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The central problem of our time is that the
future is not what it used to be…
What is your business?
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Description of your farm, such as type of
practices employed, eg. feed lot, farrow to
finish, row crop, or cash grain etc.
Or what commodities you produce—cattle,
hogs, corn, soybeans, dairy, etc . or
What products you sell or services you
provide…
In the future…
You will need to:
 Articulate how your business helps
consumers fulfill their needs…
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Explain how it contributes to their overall
welfare and
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Contributes to their basic values and beliefs
How has your business changed
in the last decade or so?
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Each of us can identify a business or
industry that refused to change and
hence were forced out of business.
Superior performance and long term
viability requires constant vigilance
and willingness to change and adapt
Business Success is Dependent upon:
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Understanding the large scale social
and economic forces
Positioning oneself to take advantage
of the opportunities that lie ahead
Learning to read the market
Willingness and ability to change
A major challenge of the future
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Ability and willingness to change to
new opportunities
Accepting change is not easy
Thus we often ignore market
information and miss opportunities
Hard work is not sufficient--failure to
respond to market signals
What is the market telling us
about the demand for:
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Cars without air conditioners
Kerosene lanterns
Slide rules
Black and white television sets
8-track tape players
What is the demand for the following?
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Undifferentiated corn/soybeans
Organic fruits and vegetables
Outdoor experiences (corn mazes, hayrides)
Free range meat animals
Rural dwelling sites
What is the demand for:
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Grain for specialized uses (nutriceuticals,
pharmaceuticals)
Hunting preserves/hunting rights
Wholesome, safe food
Humanely raised livestock
Agro-tourism (farmstead B&B)
The Forces of Supply and Demand
Price
Supply
Demand
0
Quantity
Accepting Market Signals
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Too often we choose to ignore market signals and
continue to produce things that the market is
trying to discourage and likewise ignore
opportunities where demand is growing.
Why do we ignore market signals?
 Creatures of habit, tradition bound
 Change is difficult, it is uncertain, produces
anxiety, uncomfortable
Social and economic changes
are never neutral in their
impact. These changes
produce gains for some and
losses for others.
Important Trends and Forces
Influencing the Market For
Food and Implications for
Agribusiness
1. Re-assertion of Cultural Values
and Beliefs
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Business ethics, especially following
recent scandals on Wall Street
Food safety and quality
Environmental quality
Changing markets and structure
Animal welfare
GMOs
2. Economic Restructuring
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Integrated food systems
Increased contractual arrangements
Franchises and chains
Vertical integration
Globalization and international
competition
3. Population Shifts and Dynamics
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World population continues to grow
US population growth strong
Midwest population much slower
Iowa population growth lags behind
neighboring states
4. Population growth reflects
opportunities
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Opportunities for employment
Homeownership
Ability to get ahead, to achieve the American
dream
Increased mobility, especially among the
better educated and younger Iowans
5. Occupational changes
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Nation of employees rather than a nation
of self-employed
Education and skills for post-industrial
workforce
Dual career families, increased number of
women working outside of the home
Hectic lifestyles of typical two-wage
earner family
6. Personal safety is becoming
more important
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Terrorism
Agro-terrorism
Security systems
Identity theft
Safe communities, place to raise children
How might these trends affect your
business?
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Adapting your business for areas of new growth
Taking on new tasks or roles, new crops, new
products, new services
Where growth is a potential verses where there is
market saturation, and perhaps reductions are
needed
The need to assess where are the emerging
opportunities and how you can position your
business
Population Change and Demand
for New Foods
Percent Population Change
19902000
+13.2%
Population Change
19902000
Increase 13.2% or more
Increase 13.1% or less
+0.5 +12.4
19902000
+8.5
+9.6
+8.4 +5.4
+8.6
+8.5 +9.3
Percent Population Change
19902000
+5.4%
Changes in the Food Chain
Historically food production and
processing was a local (home or
community activity). This resulted
in much diversity in terms of local
food tastes and preferences, diets
and habits.
Examples of local cuisines:
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Chicken and noodles
Ham hocks and beans
Lukefish, kumla, and kringla
Biscuits and gravy
Grits or fried potatoes
Cornbread and beans
Bacon and eggs
Tostadas, enchiladas, nachos
Comfort Foods
 What were the special dishes (food) that your
mother or grandmother baked or prepared for
special occasions?
 Role of comfort foods—
 Help comfort us during sad times,
 Or to add a measure to celebrations
 Turkey at Thanksgiving, lamb at Easter,
homemade ice cream and apple pie, etc
What are the comfort foods for young
people today?
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Pizza
Hamburger and fries
Finger food, eg (chicken tenders)
Peanut butter and jelly
DQ Smoothie
Etc.
So what happened?
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Development of the refrigerated railroad
cars, refrigerated trucks and refrigerator
ships  long distance hauling of foods
from across the country  supermarkets
Greater selection, available throughout the
year, demise of local food system
What producers told us about trends in
the food system
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89% Food safety will become more
important
73% Consumers will become more
concerned about origins and safety
70% new opportunities will emerge for
farmers
53% population growth will heighten
demand
Local food production
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71% have a garden
Estimate that about 20% of food is
produced on their farm
 40% have fruit trees
 9% raise their own eggs
 13% raise chickens for butchering
 32% raise cattle for own freezer
 23% raise hogs for own freezer
 67% can, freeze or dry vegetables
Farmers’ concern about food safety
% Very or Somewhat
Food from your local supermarket
71
Natural or organic food stores
55
Local farmers markets
52
Direct purchases from producers
50
Consumer Driven Agriculture
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Demand for farm products will increase as
population increases
Demographic shifts—shifts in food tastes
and preferences
Increasing per capita income will reward
quality
Consumer Driven Agriculture
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Aging baby boomers, those born between
1946-64 will approach 54 million by 2020
Market growth and potential for older
population, less active, higher standard of
living
More expensive cuts of meat, exotic
vegetables, luxury food items, ready to eat,
higher priced restaurants, etc.
Consumer Driven Agriculture
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Per capita income growth is projected to be
about 1% annually between 2000-2020,
compared with 1.2% that occurred between
1988-98
Key question is how much of this higher
disposable income will be spent on food
and what types of food will be demanded
Consumer Driven Agriculture
Projections are:
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More fruit, vegetables, fish, poultry,
cheese, yogurt and prepared foods
More eating out
More attention to diets, health and
wellness
Consumer Driven Agriculture
Population projections
Hispanics
Asians
Whites
Blacks
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2002
12.6%
3.9%
71.0%
12.0%
2020
18%
5.0%
64.0%
13.0%
U.S. population stands at 281 million and by 2020
will grow to about 331-361 million (50-80 million).
In addition to the new demands
from consumer..
Agriculture will be expected to be a
source of:
 FOOD
 FEED
 FUEL
 FIBER
 INDUSTRIAL COMPOUNDS
Farming in the 21st Century
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Quality, quality, quality
Traceability
Country of origin labels (COOL)
Connections between producers and
consumers
Environmental friendly
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Learn from others—study
Don’t run in the herd
Success is more than money
Develop priorities and keep a sense of
balance
Enjoy life
In this changing marketplace and
culture, it is important that we better
communicate and connect with
consumers, explain what we do, and
equally important, why.
Thank you!