Sunday, January 16, 2011

Inside the box...

Mike Wilson speculates about "10 Trends That Could Revolutionize Farming" in the Jan 11 issue of Farm Futures and I pored over it as I am a fan of his writing and thinking. But the carefully boxed predictions were remarkably mundane.

[FF doesn't post mags very fast, so, with apologies, I'll list his "revolutionary trends" and my initial responses. Please read his work for yourself.]
  1. Documenting sustainable practices. Given the fact our every move is currently logged and located on a memory chip of some kind when we move into a field, I found this one curiously trivial. Big whoop.
  2. Growth despite higher costs. And this would different from the last few decades how?
  3. Decoding ag's role in the bioeconomy. OK, this is a trend (it reads like the the old pharmaceutical/nutritional idea), but judging from the explanation, it is trend that will likely NOT have much effect.
  4. Managing increased volatility and risk. Duh.
  5. Operator as ag-advocate. This tiresomely false adversarial choice is already too widespread and hasn't made much difference other than the obligatory "storytelling"altar call at every farm meeting now. Let's face it, we're talking about defending subsidies and closed markets and ignoring medical/nutritional advice we privately take ourselves. And mostly advocating to ourselves.
  6. Everyone into the pool. Not immediately obvious, even after you've read it. The prognostication is we'll team up to buy expert advice. The old peer group idea from years ago.  It happens now, but without the expert advice Mike's experts sell.  This is asking a barber if you need a haircut.
  7. Successor selection and development. Again, this is revolutionary?
  8. More technology ahead.  And I had thought we had discovered everything.
  9. Global influence on marketing. You have to go back a long ways to find a time when this wasn't the case. Telling us to watch out for the unexpected is hardly illuminating.
  10. Working with more regulations. I think this is spot on, but certainly not revolutionary.  Anybody in our industry who doesn't see this coming is looking backwards.
OK - I've taken my shots at his list, so in fairness I should at least come up with my own to give my idea of "revolutionary", along with some blue-sky predictions. So here goes. [No particular order]
  1. Climate change. Maybe Mike just didn't want to wander into this swamp, but this is THE big one IMHO. Not only are we moving our production north, we will change how we farm here in the Midwest. With larger and more frequent rain events, we'll have to work harder on drainage. We'll "machine up" to plant in 72-hour windows around the clock. Ditto for harvest, which means massive investments in grain-swallowing facilities.  Also an ice-free Arctic will enable Canada to really expand production and compete for trade. It will change our grain flow as well.
  2. Africa.  There is a reason land funds (and China) are all over the big continent. And the great secret of our time is the belated beginning of per capita income growth in many developing African countries, much like we saw a decade ago in India.
  3. No more Mr. Good Government.  What little subsidy we get will be chump change. The regulations, however, will be a massive opportunity for those who can process information and keep their cool.
  4. Natural gas. Electric cars. And hybrids. And super efficient diesels. Plug-ins don't even register on most farmer horizons because we mostly live too far from anywhere. But for the tens of millions with a 12 mile commute this will be huge. The upshot will be that we have likely seen our peak gasoline usage which has serious ramifications for biofuels just as they fall from political favor. We have a short corn crop this year and states will be flogging the EPA for mandate relief, like Texas did.  Weirdly the politics of the right (which farmers love) will be the undoing of socialist ethanol. It's going to have to compete on even grounds with say, our own dairy farmers. Radical! Now add in unexpected NG finds, a growing LNG infrastructure and demand curve for oil in the US will even decline, as it has been doing for gasoline.
  5. Diabetes/obesity/foodies.  Just to control health care costs, which will soon be seen as imperative to make our economy work, we will move toward vastly different attitudes aboutleading diets. Meat consumption, especially the reds, will continue to slide, making exports crucial. Which means we're going to have to play nice with others here and abroad to protect "free-ish" trade. International belligerence will be a luxury good we can't afford. Meanwhile, rising consumer nutrition awareness coupled with the cultural change induced by 47 cooking channels will shift consumer attitudes from "cheap is good" to "good is good". The protein sector will be able to adapt to both food preferences and animal welfare concerns via a new consumer tolerance for mildly more expensive food - if it fits the new ideas of good eating. In a simultaneous advance cancer vaccines will shift the leading causes of death more toward food/obesity/lifestyle causes and away from perceived environmental causes. Less attention will be paid to traces of all manner of pollutants in air, water and food as cancers become less lethal.
  6. The emergence of localized farming firms. Rather than the multi-county BTO's, contiguous competitors will realize a 20,000 acre operation in a10-mile radius is stunningly more efficient as well as much more defensible. All it takes is for 3-4 guys to get along.  And their wives, of course. Farm names will read like law firms: Plunkett, Wilton, and Schroeder.
  7. Captive suppliers. Grain buyers will devise programs like Walmart to tie suppliers to them. Farms will sport signs like "Proud to be a Cargill grower". In exchange for your own elevator hours, separate dumps, private basis, and frequent-grower perks, you will send everything from every acre every year to one buyer. These arrangements will all be unique, just like your affairs at the bank. And like beef contracts, open-market producers who want to auction their grain to the highest bidder at any given moment will cry foul.
  8. The end of Extension as we know it. Somewhere between budget crises and the realization that public farm advice is worthless from a competitive viewpoint (if everybody know it, it has little actual value), farm firms will seek private info with the help of land-investing behemoths to know what others don't.  This is already being done with crop reports and weather, I suspect.  Why attend a field day when you have the applicable Pioneer researcher on speed-dial?
  9. Rapid response.  I have already posted about the "first-mover" premium. The reaction time for the handful of farmers producing the output will be blistering. Already, we see texted plan changes on the fly. Add in more info "inputters" in farm firms and trusting relationships between partners and the pace of business will make today seem plodding.
  10. Longer planning horizons. With larger, more nearly "immortal" farm firms, the individual lifetime will not be the scheduling boundary it now is. Efforts to add contiguous ground - either rent or buy - will begin a generation or more before. More economic "forests" that take 100 years to payoff will be begun.
  11. Lower profiles. Successful farmers - mimicking other top business leaders - will be submariners. As we overplay Facebook, discretion and anonymity will be the trademarks of having "arrived". They will not populate grower associations or farm organizations. Their social groupings will resemble other professions, and increasingly include other professions. They will golf with VPs of finance and venture capitalists. They will have dinner with political aides and scientists. They won't gossip as much with neighbors, but will communicate often with friends in South Africa or Ukraine.  This is another trend in progress that goes widely unacknowledged. We already have an "Elite", folks.
  12. The withering of "farmer" lobbying. Who in political office will take seriously a group that is shrinking and predictable? Heck, buy your own Congresshuman, like other guys do. Seriously, if you want to be heard in Congress, try kicking $25,000 in his/her campaign fund.  The Supreme Court decision just fixed our political system as a battle of dollars, as political campaigns become the growth industry for the next decade. In addition, with fewer subsidies, why slog off to DC every winter, when  you could be doing something useful? Regulatory battles will be decided more often in courts, not legislatures.
  13. The obsolescence  of "safety nets". Farmers overwhelmingly despise safety nets for others. We will outgrow ours. Already several disgruntled insurance customers are asking what they are getting for their dollars, and Washington has realized they are actually subsidizing insurance sellers. Farm firms will self-insure.
  14. In-house expertise. Accountants, attorneys, and technology people will become relatively cheap as we train too many young people for these careers. An attractive lifestyle and real responsibilities will attach more of them to a farm, or, more likely, back to a farm firm. Advisory services will struggle to offer anything farm firms need, and will see serious pricing power erosion.
  15. Adulthood. Farmers a generation from now will realize it is not about them. They will not corner you to "tell their story" or "advocate" your arm off. They will listen and suggest ways they can supply, advise, help, or partner with you to help you reach your goal.


Anonymous said...

Interesting predictions. Since farmers have never been inclined to be team players (every operation for himself, and kick the brother out, too), it will be interesting to see if your prediction regarding 20K acre partnerships will come true or not. One prediction I would like to see you make is how the end of subsidies plus consumer preferences for good (not cheap) food will affect the cost and distribution of land. Will the BTO's still have the ability to outbid everyone else in the neighborhood for overpriced land without the taxpayer subsidies they now enjoy? I work for the NRCS, and my job is no longer about sharing information and providing technical assistance to farmers. For the last 5 years, my primary mission has been to shovel money via CSP payments to my BTO neighbors- thus insuring that, for the forseeable future, my dream of land ownership for the sustainable production of real food will not be feasible. Will anyone besides BTO's be allowed into the game?

Bill Harshaw said...

No mention of robotics? If a robot can milk cows, there ought to be no problem doing field work.
If you cut farm programs in half, say, will that dent the value of farmland significantly, maybe enough to pop the current bubble?

Anonymous said...

I agree that the article was lame. My prediction is that Mike Wilson will be replaced by someone who can think. As for your predictions, it would be a surprise to me if larger farms band together to grow. Most successful farmers like to be the CEO, and I don't see them working together on this. Big egos. Extension days may indeed be numbered unfortunately. I always have trusted them. I think that farmers will be shocked by how despised they will become in the future, even in their own localities, as income disparity widens and people figure out that farmers are the "haves" and they are the "have nots", and farmers are the new "welfare queens". All that good will is slipping away.

From Virginia said...

John, this post might serve as the core for the presentation I discussed with you. There may be some other issues for your crystal ball, e.g. traceability of meat using nano technology.

Anonymous said...

With $5.00 corn and $12 beans, ok. Its funny how quickly we think the prices will never drop out of bed.

Anonymous said...

Excellent thoughts, John.

Being from the BTO side of the equation, I agree with many of your concepts regarding the future and see some of it happening already. People would be bewildered to find out how some of the largest growers from the South are already in "peer groups" with farmers in the North. Chemical companies, service providers already struggle with serving me...if I need something or have questions, my network will probably take me to the creator or auther of the problem or question at hand. I may already know the CEO of a company selling me something before the Sales Rep that is calling on my farm has even met him/her themselves...

Always enjoy your writings, John...this is one of your best!

Anonymous said...


I have long held that farmers/ranchers past trend to the introverted side of the bell curve out of necessity. Long unaccompanied hours in the saddle, be it brown leather or black cloth are unsustainable for the gregarious. Farmers/ranchers of the future will trend to the extrovert side of the curve also out of necessity. Reference your futuristic vision of points # 6, 7,8,9,11,14 and 15 and the companionable skill sets required to accomplish.

Thank you for the thought provocation.