I was asked some weeks ago to speak to a Purdue University ag business conference, where the focus was on trying to catch up with the rapidly evolving nature of today’s farms.
An ag economics professor there named Mike Gunderson was early in the agenda, and clearly felt that all of us needed to be reminded of some home truths.
“The goal of the market is to put the average business out of business,” Gunderson said.
He isn’t the first to say this, of course. Nor, despite the highs of the last decade, can we really shake the theory that the average long-term price of a commodity is just below its average cost of production.
Of course, there’s one big factor on the horizon that has made it all too easy to dismiss the risks inherent in such thinking.
That is global population growth, and the dire need to feed 10 billion people by 2050.
But this may not be the rock that we have been hoping for. It’s easy to forget that the UN’s projections of only a decade ago called for a global population of 13 billion, and that while it still officially clings to a forecast for 10 billion, practically everyone outside the UN has lowered their estimate to nine billion.
There is also the all-too-real fact that, in the marketplace, need doesn’t matter. Ability to pay is all that counts.
Farmers have long produced enough food to provide 2,500 calories a day for everyone on the planet. Agriculture has done its part. The fault is in the distribution, and the market on its own has no capacity to solve this.
Population is growing in areas where there isn’t enough income to add demand. And in areas where there is income, population isn’t growing. We only need to look at population growth in the developed world. Even during the years of its “one-child” policy, China’s population grew faster than Europe’s.
It’s easy and it’s comforting to keep saying that global population growth will ensure farmers a good living, except it means today’s young farmers may well be embarking on a career with greater challenges than they are expecting.
It is a sobering reality.
Yet there is encouraging news too, including new research into today’s multi-generational farms that you will read about in coming issues of Country Guide.
On farms where parents and children are able to chart their way past all the potential family pitfalls, and where they are able not only to deal with the communication demands and the emotions, but use them to build something positive, the opportunity for our farms to be globally competitive is historic.
There’s almost a kind of magic on farms where the generations work together, building on each other’s capabilities with a focus on making better decisions within a framework of best business practices.
More and more farms see how important it is to get there. This is deeply encouraging.
Are we getting it right? Let me know at [email protected].