The second quarter of the 21st century has some underlying trends and perspectives that need to be incorporated into any agricultural strategic plan. The following are some views and perspectives from the road that have both short and long-term implications.
Global urbanization
Urbanization throughout the globe will impact agriculture in the long run. For example, China's urban population was 19 percent in 1980 and now stands at 65 percent. At the turn-of-the-century in the U.S. the urban population was 73 percent and today it is 84 percent. Urbanization results in smaller family formation and approximately a 5 to 10 year delay in starting the childbearing period. China's one-child policy, which was in place for 35 years, will result in a decline in population of 500 million people by 2050. In Western nations, the rate of natural population growth, as defined by the birth rate minus the death rate, is under the metric of 2.2 to have an increasing population.
Urbanization will create more of a divide between farms and cities and reduce the population’s basic understanding of the production of food, fiber, and fuel. Thus, a more proactive approach to connect the cultures from youth to adults will be critical. A positive opportunity for agricultural enterprises and entrepreneurs is to connect and link the divide through marketing experiences, value-added products, and services directed to the urban sector.
Transition and consolidation of agriculture
Two high priority items on any strategic planner’s table will be transition of agriculture's assets and management and the trend toward consolidation. An element in transition that is leading to the consolidation is the fragmentation of multi-generational family farms and ranches.
The challenge is that often the next generation is required to purchase the farm assets, such as land and facilities, at inflated values from their siblings who, up until the death of the vintage generation, do not have any involvement in the farm. With global competition leading to tight margins, the profitability and cash flow of the operation may not support these high-priced purchases and rental agreements. This situation leads to the business and land being fragmented and allows larger entities and outside investors the opportunity to purchase the assets and accelerate consolidation.
Another trend in agriculture is that 21 percent of farms and ranches have no next generation to take over the business. Again, this can lead to consolidation. On a positive note, when planned and executed with non-family members, the transition is often smoother as it is done from a business perspective without the baggage of family issues and challenges.
Final thoughts
Two trends in agriculture that appear to be emerging are the rapid consolidation of monoculture or single enterprise businesses like crops, livestock, fruits, and vegetables and the rise of agri-entrepreneurial pockets and regions with young and beginning producers, often in value-added and diversified businesses with distinct niches. One thing I have observed in both situations is that larger, family owned businesses are now incorporating more non-family members which brings new ideas and innovation to the business.