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by Dennis Slater, President, Association of Equipment Manufacturers

I had the opportunity to participate in the Ag Executive Forum in Chicago, January 28-29, 2014 and I want to share a few of the more notable nuggets from the program that I believe apply to you and your business, no matter what industry you serve.

The program was certainly stimulating and sometimes controversial. Those of us attending heard challenging presentations from experts advocating a broader perspective for all participants in agriculture - farmers, manufacturers, and agribusinesses, all of whom were in attendance. The 2014 forum was sponsored by AEM, Farm Journal Media and CropLife America.

The speakers were experienced leaders in their respective fields, in business and in academic achievement. The combined messages from the speakers created a sense that great opportunities continue to be in store for agriculture but also that many risks and obstacles will emerge in the next few years.

Nevertheless, the prevailing sense was excitement about the greater potential upsides of being in agriculture in the coming years. Agriculture, after all, makes a profound difference to the total economy and welfare of all citizens by providing food, fiber, fuel, plastics, industrial products, rubber and pharmaceuticals, to name the most obvious contributions.

Here are some of my most notable takeaways:

While the consensus was for continued success, producers, manufacturers, and agribusiness cannot depend on just knowing their own intellectual seed-bed, as it were. Success now relies heavily on seeing and grasping "what's out there." Innovation and ideas from outside agriculture can and will have a significant influence on your business.

Fracking technology is a great example of "outside forces" that have had significant unforeseen consequences for the energy-intensive business of agriculture by making energy cheaper. Fracking has also reinvigorated the manufacturing of nitrogen fertilizer, a critical input for production agriculture. With cheaper natural gas from fracking, could producers actually see costs reduced? Reducing costs is a good thing, but fracking can put pressure on water resources and appears to be diminishing interest in renewable energy sources from wind, solar, and ethanol, at least for the near future.

There is a case for climate change, but not what you might think. It was not your typical statement on carbon dioxide. Instead, climate change results from electromagnetics and solar storms and there is nothing we can do about those except prepare for emergencies like disruptions in the grid or cell phone usage which could result from these phenomena.

One of the most fascinating things arose with a question to the audience about the looming Farm Bill. It turns out your view of the legislation probably depends on the context in which you think about the bill. When the audience was asked what policies would make the biggest difference to "the future success of agriculture" - biofuels, immigration, environmental, food safety, transportation, trade, antitrust, and Farm Bill-ACRE - almost 47 percent of the respondents said environmental policy while the Farm Bill had not one vote. Overregulation was clearly top of mind with the audience.

Manufacturers absorb new technology by adopting the best technology quickly, but not so quickly that chances of success are utterly uncertain. This approach - fast following - has great advantages for equipment manufacturers; it's a practice making for fewer mistakes and greater success.

There are still significant barriers to business in China where equipment manufacturers encounter the requirement to have their computers "approved by the government." China also has a serious water problem, and that explains certain actions to tap into the Tibetan plateau, one of the world's largest sources of fresh water.

It may be important for manufacturers to be in China, but there are other places on the globe that offer much more promise for agriculture. Latin America, for instance, especially Brazil, is looking like the next California when it comes to producing value-added, high-nutrition, high-value crops. Because of climate and resources, Brazil can move from growing millions of acres of soybeans to producing in huge volume the same crops the San Joaquin Valley is known for. Growing such crops, Brazil can experience higher profits and a new level of influence in world markets.

Brazil also has the advantage of being in between the jet streams of the northern and southern hemispheres. That's important, because of continuing fallout from the tsunami of March 2011 and the destruction of the Fukishima reactor in Japan. The radiation from the event is apparently working its way across the Pacific to the west coast of the U.S., but it has also boosted radiation brought west by the jet stream. In the not-so-distant future, grocery store food displays may very well include notices of the radiation level in products. Brazil is not affected by the jet stream in the northern hemisphere so the radiation from Fukishima will not fall on its crops. Sounds a bit like science fiction, but certainly an issue to consider and prepare for.

Environmental policy influences capital markets and capital markets decide what businesses receive loans. Capital markets determine where agribusiness operations can have funds to expand and where they can't. In the U.S., we are taking property rights from the individual and giving those rights to "society" as we are apply urban zoning rules to rural life. This is not necessarily a good thing but that is the trend.

We should not believe the old saying that "they aren't making any more farmland." In the past decade, millions of acres have come into production from grazing land and from the Conservation Reserve Program (CRP). On the other hand, we were reminded that there remains a stark difference in farming operations between the huge farms of North and South America and much of the rest of the world. The European Union has 28 countries. In Romania in Eastern Europe there are farms of perhaps three acres, and in France they may extend to 200 acres.

In the coming economy, consumers will increasingly have choices between GMO food and non-GMO food. A certain customer segment does not want to consume genetically modified substances, and they will continue to demand more differentiation and clear labeling between the two categories. Despite this, part of the new economy will be agriculture products genetically designed to meet the demands of other buyers/customers as the science will compel suppliers to provide the precise specifications of their customers. In all of this, customer choice will drive business decisions.

That is just a sampling from the event. You may agree or disagree with the points I summarized here, but I thought you would find them interesting and beneficial. We hope to see you at the forum next year.

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