What Changes Are Possible in World Agriculture in the 21 st Century?
Agriculture’s New Era A new era in agriculture created by drivers. These drivers are revolutionizing the industry and permanently altering traditional relationships. Farm businesses that recognize, understand and pro-actively adapt to the WORLD’S needs will grow and prosper.
Drivers of Change Globalization of Markets and Resources Consumers’ Evolving Preferences A More Demanding Food Industry Government Interaction/Regulation The Pivotal Role of Technology
World Population Growth Populations continue to rise … End of the Cold War has allowed countries to reallocate resources and increase standards of living. Growing incomes allow people to buy more and better quality food (changing preferences).
Drivers & The Farm Business Globalization Consumers Food Industry Technology Government The Farm Business Environment ??
The New Agriculture … Farm Business Environment International Markets Commercialization/Biological Manufacturing Ecological Agriculture Differentiated Products Food Supply Chains Information/Precision Risk Diversity
International Markets New Markets in Old Places More Liberal Trade Environment Competitive Pressure ! Global Access to Technology Increased World Wide Production Capacity Global Sourcing and Selling
Percent of World Grains and Oilseeds Produced in U.S Soybeans6045 Wheat1611 Corn5040
Commercialization Commercial (Industrialized) Mentality – Full Utilization of Resources – Managing Inventories – Specification Buying – Outsourcing – Process Control Technology
Process Control Technology Monitoring/Measuring and Information Technology – attribute traceability throughout the chain Biotechnology/Nutritional Technology – manipulation of attribute development and deterioration Intervention Technology – anytime intervention if attribute development deviates from potential (gap resolution)
Ecological Agriculture Total Biological Systems Recycling Nutrients Capturing Value from Byproducts New Revenue Streams – Carbon sequestering – Environmental amenities – Wildlife/wildlands
Differentiated Products More Differentiated, Less Commodity More Attribute Driven/Value More Traceability/Identity Preserved Types of Products – Generic commodities – Enhanced component commodities – Specific attribute raw materials
The Food Supply Chain More End-User Responsive Better Flow Scheduling Improved Quality Control Food Safety-Traceback Competitive Advantage? Sustainability? Who Will Control?
Information/Precision Monitoring/Measuring Technology Smarter Machines Process Control/Quality Span of Control
Risk Operating/Tactical Risk – More volatility – Short peaks, long troughs Strategic Risk – Relationships – Environmental – Policy changes
Diversity More Differences Between Farms (no typical farm!) More Market Segments Customized Solutions More Conflict/Confrontation
Business Models Independent Producers Multiple Plant Entrepreneurs – General managers – Plant managers – Workers Franchise Growers Network Qualified Suppliers Piece Work Contractors
Management Skills Areas Strategy Production Finance Procurement/Merchandising Personnel Leadership
Successful Strategies? Develop a Strategic Direction Adopt New Technology Appropriately Control Cost Evaluate Networks/Alliances/Linkages Manage Risk Expand Carefully Think like a CEO/general manager
Key Challenges in Agriculture’s Future Adapting to change Evaluating technology Achieving profitability – Cost cutting – Growth Defining organizational capabilities Achieving organizational transformation
Strategic Business Planning for Commercial Producers