In a Generation, Mega-Farms will Dominate ‘Production’ Ag, Analyst Predicts03/20/2019
Twenty years from now, vastly fewer but much larger farms will generate the lion’s share of agriculture output, said chief executive Brett Sciotto of Aimpoint Research. Speaking at a farm conference on Monday, Sciotto said current trends in agriculture point to 100,000 “production” farmers in the country, one quarter or one fifth of the current crop of mid- and large-size farms that dominate the sector.
It will be agriculture at large scale, with some operators active internationally, said Sciotto at the Food and Ag Policy Summit sponsored by Agri-Pulse. There would be room for small farmers to prosper by focusing on niche or specialty markets, but as a class, medium-size farms would collapse under the pressure of competing in a world where large operators hold an advantage.
Looking to 2040, the market-research executive said federal support for agriculture might wither away. “The farm bill will become a food bill,” he said. Gene editing would be a mainstream technology.
Mid-tier farmers will be under the greatest stress in the near to medium term, Sciotto predicted. Processors will simplify their supply chains by dealing with a limited number of high-volume producers who can reliably meet their specifications for quality and quantity. “Lots of mid-tier and smaller farms will be left behind,” said Sciotto.
In the 1980s and 1990s, some analysts predicted a two-tier system of agriculture populated by many small farmers at one end and a smaller group of large-scale operators at the other. In this view, middle-size farms didn’t produce enough to earn a living but required full-time attention so there was no way to supplement income with a job in town. The analysts did not go as far as Sciotto in forecasting unprecedented levels of farm consolidation, the emergence of new technologies, or the grinding effect of tighter and tighter margins. The producers most likely to succeed would be highly efficient, skilled at marketing, adaptive, financially sound, and driven to expand.
Consolidation is a recurring theme in agriculture, said a panel of farm group executives who spoke later on Monday. “For some folks, it’s uncomfortable and painful,” said John Johnson, chief executive of the National Pork Board in discussing the consolidation trend. Said Jim Mulhern, chief executive of the National Milk Producers Federations, “We may have an industry bifurcation feature,” of very large and very small farmers.
Farmers are the dominant purchasers of farmland when it is offered, accounting for 60% to 80% of the deals, said Randy Dickhut, senior vice president of Farmers National Co., which manages and sells farmland. “We are continuing to see that now.” Local residents also bid on land when it comes to market near them, he said, and institutional investors get a small percentage of sales. Absentee ownership is a common fear in farm circles, especially as farms become larger. “I still think it will be diverse ownership,” said Dickhut.
Source: Chuck Abbott, Successful Farming