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Thousands in the agriculture industry have heard economist Dr. David Kohl speak on trends in agriculture over the years. But in case you missed it, we want to share his list of mega trends in agriculture for 2017-2025. Dr. David Kohl is Professor Emeritus of Agricultural Finance and Small Business Management and Entrepreneurship in the Department of Agricultural and Applied Economics at Virginia Polytechnic Institute and State University, a regular speaker, and the author of four books and more than 1,300 articles.
- Global Economics – It’s still going to be around. Remember, the ag industry tends to be the point dog of political, military and social reactions. We are the industry that feels it first when political action occurs. This creates opportunities, but also opportunities to fail. The millennial generation is not stepping up to plate in terms of business management protocols. It is critical that the mindset is geared toward innovation in these economic downturns.
- Consumer Trends – The food marketplace is changing. They are designed to process food for the masses. They are now getting requests for organic, ethnic products. Know what you do and do it well to go from good to great. We are going to see a splintered marketplace. Your business model isn’t designed to handle that splintered marketplace. Non-GMO is a growth market.
- Innovation and Technology – Many farmers have capitalized on technology, but it requires a higher level of talent. Systems must be replicated. Many farms have started using internships. You get to test drive your future employee. Too many people throw technology out there and expect it to be the cure. Turn your technology off two hours a day. Hear the silence. Our top level managers turn technology off two hours a day.
- Millennials – By 2025 millennials will be 75% of workforce. You have to be selective as far as bringing in millennials. Is your business culture in a place where you can select, rather than recruit? Surround yourself with good people, and you cannot pay a good person too much. Millennials are not about pay. They tend to show up, get along, and do what they say – they will have old time work habits. They want projects that make a difference and a balance of work/life –it’s a fine balance. It’s about productivity and not just being there. 75% of millennial purchases are “buying experiences.”
- Thriving Rural Communities – One of the big trends in agriculture is the resurgence of the rural community. Starting 20 years ago people living in town commuted to farm. They want education, healthcare, access to technology, lifestyle amenities, live in town, and commute.
- Disconnect to the Farm – 85% of Americans are two generations away from the farm. More urban gives you a narrow perspective on the world. Social media, extreme groups –all going to influence ag business models.
- Natural Resources/Environment – The great water wars are here. Investment firms are buying flat, black land, near a river and next to a port. Our biggest ally is Canada. There is lots of fresh water in Canada.
- Farmland – Why have land values not declined? Everyone will ask, “Is farmland a good investment?” The answer is yes, 82% of the time it will appreciate. Your key in buying farmland is being able to get through the dips. If it grows too fast it’s a weed – whether it’s a business or an asset. Right now the stock market is on sugar, and it’s growing too fast. Every time you have a supercycle. This year we are in an asset bubble, not a credit bubble. When the asset bubble corrects, it’s like letting air out of a balloon vs. crashing. I think you will have pockets of corrections. What’s holding it up is crop insurance, outside investors, and low interest rates. There is also spillover from energy, water, and minerals. How do spigots turn off? When a couple of big farms go down.
- Transition/Evolution – 21% of American farms and ranches have no next generation coming back. This is an opportunity. Cousin managing with cousin. Non-family partnerships, alliances/collaboration, farm/ranch/non-farm will become more prevalent.
- Optimism about Ag – 60% of farmland will turn over by 2030. Now is a better time to start farming than five to 10 years ago. Machinery and livestock are cheaper. What are you going to do to drive toward efficiency? We are only going to use 70% of resources we use today in the future. The future of ag is young people, women, and minorities.
For more information on how to put the Dr. David Kohl trends in agriculture to work for you, contact Jeanne Bernick at jeanne.bernick@kcoe.com.
