New technologies, such as auto-steering tractors and improvements in plant genetics, have boosted farm productivity tremendously, dramatically increasing yields in commodities such as corn. The problem this creates is that as yields improve, prices collapse.
The challenge for farmers is to get their costs to fall as fast as their selling prices do.
How animals are treated: The public is watching now. The treatment of animals and processes in slaughterhouses have been controversial since Upton Sinclair published “The Jungle.” The tradition of investigating how well animals are treated continues to the present day, with one of the most potent forces being reporters who take jobs in the industry to document its practices. Warning: these articles report on behavior that you may find to be disturbing.
Recently the food business has fought back in states such as Iowa, passing laws intended to prevent investigative reporters or animal-rights activists taking entry-level jobs, at the behest of many in the industry. While such measures can work for a while, producers need to remember that as digital technologies make instant communication of anything newsworthy widespread, a negative discovery can reverberate everywhere. Stories of abuses in industrialized farms are rampant.
Indeed, some purchasers from farms, such as Whole Foods Market, have developed scoring systems for what differentiates healthy and kind farm practices from those that are abusive. As a new generation prioritizes environmental and sustainability concerns, those operating with less than stellar practices can expect greater scrutiny.
Tracking and tracing where food comes from. Similar to the pressures facing industrialized meat farming are pressures to provide safe, reliable supply chains for food. A recent analysis found that one in six people in the U.S. are sickened every year by eating food that is contaminated in some way. Moreover, sub-par food is reported to cost the industry approximately $7 billion per year.
For farmers themselves, increased regulations and the requirements to document what came from where, how much water it took to create their outputs, and other reporting rules are promising to add a whole new layer of activity — for which, of course, they don’t get paid. Managing these pressures is adding to the complexity of already complicated systems.
More food, with a lot of negative unintended consequences. As a recent United Nations report concluded, agriculture has accomplished magical increases in production, keeping up with the burgeoning needs of the growing human population. Indeed, we seem to be on a path to have a human population of 10 billion in just a few years’ time. As they note:
“Agricultural production more than tripled between 1960 and 2015, owing in part to productivity-enhancing Green Revolution technologies and a significant expansion in the use of land, water, and other natural resources for agricultural purposes. The same period witnessed a remarkable process of industrialization and globalization of food and agriculture. Food supply chains have lengthened dramatically as the physical distance from farm to plate has increased; the consumption of processed, packaged, and prepared foods has increased in all but the most isolated rural communities.
‘Nevertheless, persistent and widespread hunger and malnutrition remain a huge challenge in many parts of the world. The current rate of progress will not be enough to eradicate hunger by 2030, and not even by 2050. At the same time, the evolution of food systems has both responded to and driven changing dietary preferences and patterns of overconsumption, which is reflected in the staggering increases in the prevalence of obesity around the world.
“Expanding food production and economic growth have often come at a heavy cost to the natural environment. Almost one half of the forests that once covered the Earth are now gone. Groundwater sources are being depleted rapidly. Biodiversity has been deeply eroded. Every year, the burning of fossil fuels emits into the atmosphere billion of metric tons of greenhouse gases.”
Even as millions are still food-insecure, in much of the world food-related syndromes including obesity and associated illnesses such as diabetes are on the rise. Increased urbanization, which is now widespread in even poorer countries, also shifts people’s diets toward more processed, salty, and so-called “calorie dense” foods, all of which require more non-farm labor to produce.
Cross-industry competition in agriculture. Everybody thinks it’s a good idea to go with renewable energy, rather than continuing a reliance on fossil fuels, right? That is all very well, but land and water that could be used for food production are now being dedicated to producing biofuel. A recent study from the University of Virginia suggests that about a third of the world’s malnourished people could be fed with resources currently devoted to the production of biofuels.
The good news on this is that efforts are being made to come up with alternative ways of producing needed energy.
Suspicion regarding new technologies. As many organizations have learned, to their chagrin (we’re looking at you, Monsanto), even though technologies such as genetic modification and the deployment of nanotechnology to improve yields and transform plants show great promise, people are uneasy at the prospect. With heated arguments on both sides, it isn’t clear what regulatory regime will eventually take hold.
What is clear is that the controversies surrounding these new technologies have led, again, to unanticipated consequences. For instance, even though genetically modified crops could do a lot to boost yields in parts of Africa, local politicians are not supportive, mostly because they fear that adoption would result in their crops being rejected in GMO-sensitive areas such as Europe.
While it is impossible to predict where all this will leave individual farmers, it seems clear that agriculture is going to be more heavily industrialized with larger, technology-enabled farms, governments more actively involved in regulating such issues as use of water and energy, greater concerns about environmental impacts, and fewer ways in which small, local farms can eke out a living.
Rita McGrath, Columbia University professor and speaker and a West Windsor resident, is a globally recognized expert on strategy, innovation, and growth with an emphasis on corporate entrepreneurship. McGrath, known for her ability to connect research to business problems, has been recognized as one of the Top 10 Most Influential Business Thinkers by Thinkers50 in 2015 and 2013.
Reprinted from McGrath’s June newsletter. To to receive the newsletter visit www.ritamcgrath.com.