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Five trends in agriculture
Crop prices and land values are skyrocketing upward. The
economy is recovering, albeit slowly. U.S. grain exports continue to hum along.
Meanwhile, this is coupled with tight grain stocks.
So what’s wrong with this picture?
“The biggest risk (to agriculture) will be interest rates,”
says Jason Henderson, vice president of the Federal Reserve Bank of Kansas
City. Henderson briefed members of the agricultural media at the 2011 Bayer
Ag Issues Forum at the Commodity Classic
in Tampa, Florida, held earlier this year.
Current federal fund interest rates hover around .25%.
“We don’t know when and how fast, but there is only one
direction they (interest rates) will go, and that’s up,” he says.
When interest rates rise, farmland values tend to fall.
“The challenge for agriculture is positioning itself for a higher
interest rate environment,” says Henderson.
Other topics and trends speakers at the Commodity Classic discussed
They play a part in today’s agricultural markets. Still,
money put in petroleum and metal funds dwarfs money invested into agricultural commodity
funds, says Gary Blumenthal, president of World Perspectives, Inc.
“Usually, these funds dominate
commodity funds,” says Blumenthal.
Still, the added capital placed in
agricultural commodity funds means more volatile price swings, he says.
farmers dominate U.S. agricultural production.
farms produce 10% of all U.S. commercial agricultural production,” says
is the place to be for college students seeking jobs.
Amid the Great Recession, agriculture stands out.
“Iowa State University places 98% of its agricultural
graduates,” says Blumenthal. “We are finally in a sexy area.”
traits center around better use of water.
Some of you in waterlogged areas like
South Dakota need less water, not more. Long term, though, getting the most out
of scare water supplies will be a concern in many regions. That’s where
drought-tolerant and water-optimization traits come into play.
“It’s how you make the best use of water
available, whether this is from rain or irrigation, to increase value in
agriculture,” says David Morgan, president of Syngenta Seeds.