By Dusty Sonnenberg, CCA, Ohio Field Leader, a project of the Ohio Soybean Council and soybean check-off
Agriculture is very important to Ohio’s economy. Annually the Food and Agriculture industry contributes more than $100 billion to the state’s economy, and accounts for 14% of the jobs in Ohio. One out of every seven workers in Ohio is employed in agriculture. The industry is constantly changing, and the challenges and opportunities facing agriculture are ever evolving. “We know that there are trends impacting our industry, and being aware of what is going on around us is important,” said Adam Sharp, Executive Vice President of the Ohio Farm Bureau Federation. “I have a list of ten things that are on my radar and on the radar of Ohio Farm Bureau.”
“We are seeing a technological revolution in agriculture,” Sharp said. “This includes things like biotechnology, genetics, robotics, various sensors and remote access, data, data systems, and data protection. These have all changed very dramatically in a short period of time.”
The level of adoption of the technology by farmers will determine how much it can benefit their operations in the future.
“Today everyone is talking about the supply chain and supply chain disruption,” Sharp said. “The agricultural supply chain is bigger than just securing seed and chemicals and fertilizer for the immediate need. Those are critical inputs to agriculture, but the disruptions caused to the supply chain by the pandemic showed that parts of the agriculture supply chain are too cumbersome. It was not nimble enough. As changes are made to the supply chain and it evolves, new partners will form to speed up the process. Farmers need to ask what this means, and determine what agriculture needs to do in order to be better positioned in the future to take advantage of the supply chain and become a critical link in it. It is both purchasing and receiving materials and also selling materials on down the line.
“With the new supply chain being developed, we need to make sure that the affiliated data is able to stay with the product and that the added value from that data can be captured. We often hear about de-commoditization and selling a more specialized product. The current supply chain is not set-up to handle that. Farmers need to look forward and see how they can capitalize on premiums from the changes being made and connecting the data to what they produce .”
“Urbanization and development pressure on farmland has always been a big deal,” Sharp said. “The recent announcement of Intel moving into central Ohio is important to our state and the economy, but it also means the loss of farm ground. Ohio lost 100,000 acres of farm ground in the last year. Looking forward, agriculture needs to determine how that loss of ground matters, and how the benefits of new industry and the growth of urban centers balance with the pressure on the state’s agriculture system.”
Technology is allowing food production in ways not seen before, such as vertical agriculture which utilizes existing structures such as old warehouses and factories to be converted to controlled enclosed food production systems in urban areas.
“Agriculture needs to ask itself if we still need all the current farm ground,” Sharp said. “In general, the industry would say that the answer is yes, however the industry also needs companies like Intel to produce the chips and technology for the new farm machinery. The issue is the pressure on farmland and how all the land use issues play a part. Issues such as solar fields, energy development, and all the other uses coming together need to be considered in this discussion.”
“Whenever the conversation of climate change comes up, there is always a new facet,” Sharp said. “Climate change includes topics like the carbon footprint, and carbon markets, carbon sequestration, and other evolving topics. Agriculture needs to follow where the federal policies go and if those policies will be beneficial to agriculture or damaging. Agriculture needs to be engaged in the discussion and direction it takes.”
Global energy transition
“The discussion of energy, such as solar and wind as well as pressure from the current conflict in Ukraine, has everyone’s attention. Things are shifting,” Sharp said. “Agriculture needs to look at what its role is going to be in the energy discussion. Agriculture uses a lot of energy to function, such as running a grain system and dryer, or milk parlor, or machinery in livestock buildings and greenhouses. Agriculture is also being brought into the discussion because of the land for use in solar production or wind energy generation. Globally things are shifting and agriculture is going to be impacted moving forward.”
“If you haven’t heard of ESG, you need to look it up,” Sharp said. “Environmental, Social and Governance criteria are driving the decisions that are impacting our farms right now. It looks at value-based investing. It is large groups of investors and corporations placing their investments in areas that align with their values in these three areas. It is translated into things like ESG scores and that drives investments. It gets into environmental issues and sustainability and how employees are treated. Producers need to understand that the way they operate their farms, and the way they act, impacts how they will be able to market their products going forward. Potentially, if a producer embraces this and gets in front of it, ESG can possibly be used to add value.”
“Farmers need to be aware that consumer demands are ever shifting and will drive our markets,” Sharp said. “Farmers who sell directly to the consumer understands this already. Those who sell commodities to an intermediary may not realize where the consumer demands currently are or how they are changing.”
In recent years there has been a greater amount of attention in the industry given to understanding what the consumer wants. Documentation has been taking place to tell the story of agriculture and how changes made in production align with what the consumer is asking for. Record keeping of production practices and conservation practices and animal welfare are all a part of this.
China and Russia
“Global trends with China and Russia are to be noted. They are both jockeying for political power on the world stage. Russia is getting more of the news currently because of what is going on in the Ukraine, but China is even higher in my mind. Ten times bigger,” Sharp said. “China is jockeying for more power on the world stage, and for the last 2 or 3 decades they have been trying to reposition where they are on that stage. This is especially true in agriculture. Agriculture needs to understand the work China is doing in the world and why. We also need to understand the impact that repositioning can have as one of our largest markets, and where the risks are in their actions. They are building out infrastructure to play globally. The Belt and Road Initiative is a global infrastructure development. They also are working geopolitically with trade treaties around the world. We need to keep in mind agriculture’s relationship with China and Russia as the dynamics are changing.”
Agri-food value chain consolidation
“Understanding where the dynamics are changing across the food value chain and what the future of the farmer is going to be in that arena will be critical,” Sharp said. “Understanding broadly what the future is of food and agriculture, and how the grocers and restaurants are buying our products and marketing and positioning those products, and how they want to interact with farmers will be very important going forward.”
“Everyone is impacted by inflation,” Sharp said. “Inflation is at a 30-year high. We all see how it impacts us, and it is a big deal. We need to consider where the inflation impact goes across the agriculture system and the food chain. Consumers are wondering if all the money paid in higher prices goes to the farmers, and we know that the answer is no. A lot of those dollars never get realized back into the farmers’ hand. This is a very different dynamic than many of our current farmers are used to, and we need to be paying attention.”