What's farming's future look like?
You are farming in a much different way than Dad and Grandpa. And your son and grandson will farm in a much different way than you are. Agriculture is a work in progress and always will be. But what can we expect in the future, so we can be better prepared?
Purdue University economists Michael Boehlje and Bruce Erickson look at farming in the 21st century and say new management strategies and new business models will be required. Among the drivers of structural change, they include:
- Human capital
- Financial structure
- Business climate
- Family life cycle
- Market's value chain
Boehlje and Erickson believe that farm operation will be more important than actual farm ownership. As operators grow older, two to three percent of farmland ownership changes annually, but the amount of farmland available to an operator is four to five percent annually. The more aggressive operators who are successful at establishing a relationship with owners will have more opportunity.
Technology has mitigated time constraints, say the economists, who cite an example of being able to put in a crop during a narrow planting window: "If planting 2000 acres in Illinois starting April 1 using a 24-row planter and working 12 hour days, there is about a 70% chance of finishing planting by May 1. If auto-guidance allows 16 hours per day and improves efficiency five percent, chances improve to 85%. With one 36-row planter and guidance, the chances of completion by May 1 exceed 90%."
Fewer human resources will be needed as a result of advancing technology, whether it is weed control, data collection, or employee management.
New business models will be created to help farm managers also address timeliness constraints, such as organizing operations in different geographical areas to take advantage of the weather, or to overcome logistical issues of machinery transportation. Those models may include machinery rental, custom farming, or even 24 hour per day operation with precision farming methods that lower equipment costs per acre.
Growth strategies will also be different from the familiar purchase of 80 acres here or renting another 160 acres there. The economists foresee growth of one operation to include taking over the farm operation from a soon-to-retire farmer. That may include retaining the individual along with all of his equipment and the land that he not only owns, but rents as well. Essentially, the process would be acquisition of a business rather than acquisition of assets.
Traditionally, the farm business has supplied its own labor, capital, and management, but future operations may not be a bundled package. Labor and management may be as diverse as any manufacturing business with skilled experts on the payroll. Capital may come from investors well outside the operation or even beyond traditional sources.
Boehlje and Erickson also create a new management model for farmers that is parallel to the corporate world. They include more management from an office than a tractor seat; teamwork instead of hired labor; executive mentality instead of operational orientation; and leadership with management systems.