As U.S. food, feed, and fiber producers are confronted with increasing and more diverse demand, they will be challenged to expand the boundaries of productivity even farther.
“To meet the demands of a growing global population with limited natural resources and increasing societal requirements, producers will need to continue to increase yields per acre at increased rates,” according Elizabeth Bechdol, Alan Gray, and Brent Gloy, in “Choices,” the magazine of the Agricultural and Applied Economics Association.
Because the opportunity to bring new land into production is limited, “technology adoption will continue to play a crucial role” in enhancing agricultural productivity, they note.
Bechdol, who is director of agribusiness strategies at Ice Miller LLP, Indianapolis, Ind.; Gray, who is professor of agricultural economics and director of the Center for Food and Agribusiness at Purdue University, West Lafayette, Ind.; and Gloy, who is associate professor of agricultural economics at Purdue and associate director of research at the Center for Food and Agribusiness, say “it is not a matter of whether new technologies will be adopted, rather just the speed with which they are adopted.”
They cite five major forces of change that are shaping the economic conditions of crop agriculture:
• Growing and diversified demand — In addition to a global population projected to grow by 2.5 billion by mid-2050, with the majority of that growth in developing nations, agriculture will increasingly be called on for raw materials for energy, polymer, chemical, and pharmaceutical industries.
• Technology — Monitoring and information technology, biotechnology, and a variety of other technologies are converging to fundamentally change the way crops are grown. By combining biotechnology with mechanical and other technologies to control growth environments, agriculture is transformed into a biological manufacturing industry.
• Resource availability — The availability and cost of natural resources for the ag sector has a significant impact on its capacity to respond to growing demand. In some cases, as for land, fertilizer, and irrigation, higher prices will be required to bring additional supplies onto the market or to use existing resources more intensively.
• Societal influences — Concerns over using genetically modified organisms, environmental responsiveness, and sustainability have shown that public opinion can significantly influence the ability of agricultural operations to utilize new technologies in crop production. Faced with increasing government regulations and strengthening public opinions, businesses will be increasingly accountable for their impact on society and more transparent in their social responsibility measures.
“The competition for limited, available land “is fierce,” the authors say, “and those producers with the greatest efficiency will be at a competitive advantage in acquiring those resources.”
While scale efficiencies normally suggest expansion of farm size, they note, “producers will also have to purposefully improve the productivity of the land they manage. This will require the adoption of technologies that allow them to drive down costs per unit, including a combination of information, biologic, and other technologies.”