The Changing Agricultural Industry

1
The Changing Agricultural Industry

• Michael Boehlje
• Center for Food and Agribusiness
• Purdue University

2
Fundamental Forces Shaping Agriculture

• Globalization of Agricultural Production and
  Demand
• Consumer Expectations
• Confluence of Technologies
• Government Policy

3
Tomorrows Farming

• Different types/sizes
• New products/services/markets
• New technology
• New business arrangements
• New performance assessment
• Information intensive
• Better managers

4
Different Types/Sizes

• Investors/Landowners
• Small Scale Producers/Rural Residents
• Traditional Farmers
• Industrialized Commercial Producers
• Integrated Production/Value-added operators
• Recreational/Natural Resource

5
U.S. Farm Household Typology

• Ruralpolitans
• Single Income
• Operator primarily working off the farm
• Double Income
• Operator and spouse primarily working off the farm

• Farmer Businessmen
• Traditional
• Operator and spouse primarily working on the farm
• Commercial
• Operator primarily working on the farm
• Large asset base

• Farmer Businessmen/Ruralpolitans
• Farm Operator with Spouse Working Off Farm
• Active Seniors
• Nearing retirement but operator still active on
  the farm

Brian Briggemans Dissertation Research in
Conjunction with the Economic Research Service of
the USDA
6
Data Source 2003 Agricultural Resource
Management Survey
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Data Source 2003 Agricultural Resource
Management Survey
8
Data Source 2003 Agricultural Resource
Management Survey
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New Products/Services/Markets

• Bio-energy/industrial
• Organic/natural
• Identity preserved/traceability
• Storage/JIT delivery
• Custom work
• Value added

10
Gross Farm Sales from Value-Enhanced Crops for
Commercial Producers
Significantly different between Commercial and
Mid-Size in 2003 at plt.05
11
New Technology

• Simplify/automate processes
• Roundup Ready
• Robotic or GPS guided machinery
• Electronic measuring/servo adjustment systems in
  machinery and buildings
• Implications
• Labor productivity
• Production skills
• Managerial skills/span of control
• Biological Manufacturing

12
New Business Arrangements/Models

• Contract production
• Qualified supplier
• Franchise grower
• Food supply chains

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New Performance Assessment/Metrics

• Better, faster, cheaper
• Environmental, animal treatment, wild lands,
  community commitment

15
Information Intensive

• Precision farming
• PDAs and real-time monitoring
• Farmers as information workers

16
Better Managers

• Hire skilled employees
• Develop business plans
• Use consultants/work-flow planners
• Develop standard operating procedures
• Manage risk
• Think like a CEO

17
The New Agriculture

• What we will do biological manufacturing of
  specific attribute raw materials for nutritional,
  pharmaceutical and industrial products end-uses
• How we will do it integrated value chains that
  enable genetics to plate traceability
• How we will compete
• Quality (better)
• Speed to market (faster)
• Cost (cheaper)