Growing in uncertain times: transformative production practices to optimize farm resources and margins

With the global population expected to reach 10 billion by the year 2050,the future of the agriculture industry around the world is bright and ripe with opportunities. However, a consistent downward trend in the market infrastructure of United States agriculture has resulted in farmers experiencing a multi-year slump in commodity and livestock prices that is pushing many to the financial brink.2017 marked the fifth consecutive year that farm solvency ratios weakened, while both liquidity ratios and working capital deteriorated to their weakest levels since 2002.In total, farmers and ranchers have weathered a “45% drop in net farm income since its highest level of $136.1 billion in 2013, the largest four-year drop since the start of the Great Depression” (Harvie, 2017). Historically, the agriculture economy has travelled the path of a ‘linear’ model, where raw materials are used to make a product, and after its use any waste is thrown away. This model has duped agriculture producers into believing in a linear production cycle, where only inputs and outputs are considered. This mindset has led to the belief that synthetic fertilizers and high inputs equate to high yields and high profits; too often, producers fall victim to the idea that maximum profit is attained by maximizing output. In the future, in order to be successful, producers must change and adopt business models that bear resemblance to circular economies.

Alteration of traditional business models and focal points can be a daunting challenge. How does a producer effectively transform their operation without making mistakes which could jeopardize future generations?

This report aims to suggest steps and models, employed by top corporations in various industries, that can be used as supplementary assistance for a successful transformation. Many operations are already doing this to some extent by increasing their focus on the adoption of new technologies to foster further emphasis on efficiency and minimize wastes. As the world’s oldest and most entrenched industry, agriculture is not easily disrupted; the introduction of technology into the industry has promised to change that by bringing it into the modern age. With innovations in the agriculture technology sector occurring at a rampant pace, the potential 2capabilities of new technology are still uncertain. Newly introduced technologies promise to revolutionize age-old practices, but often fall short of expectations. Applying Moore’s law to the Gartner Hype Cycle, the majority of agriculture technology is still in its infancy and is yet to deliver its technological promises.

The optimal pathway to success and sustainability for farmers facing uncertain futures, will occur when efficiency, technology, and differentiation are combined and directed towards creating a circular and synergistic relationship between all farm activities, resources and industries.