April 2006
What follows is adapted from a presentation I gave to a joint conference on the futures of farming and alternative fuels.
There is no future in traditional agriculture, and those who persist in hoping that there is will go down to defeat and bankruptcy. But there is a remarkably prosperous future for new approaches to agriculture, with non-traditional products and markets, and non-traditional ways of addressing these markets. Let’s start by looking at why there’s no future for traditional agriculture.
Assuming that we don’t screw it up with a mutually destructive trade war, the global economy is going to continue to grow, and to offer new, rapidly growing markets. Of course, the other side of this coin is that it’s also going to produce new, rapidly expanding competition: Rapidly Developing Countries (RDCs) are modernizing their agriculture, boosting yields, and their labor costs are far lower than ours. That means that if all farmers do is produce a commodity product, they’re going to be sitting ducks for international competition. Getting out of the commodity business should be an absolute priority for any farmer who plans to be in business 10 years from now.
And, just to be clear, what I mean by a ‘commodity’ is a market product where the buyer’s primary consideration is price. Farmers may still be exporting raw wheat in 50 years, but it will be a designer product for a specific customer where price is not the principal consideration. Accordingly, farmers should be looking for ways to add value to the production process, with higher productivity, better information, better crops or livestock, or by targeting and developing new market niches for what they produce. I would encourage them to think about what kinds of new markets they can create that will be defensible against low-cost commodity producers.
In my view, there is not now, and never will be again, a global shortage of food, and anyone who thinks that farm commodity prices will recover is a prisoner of hope who is avoiding tomorrow’s realities. The green revolution is, if anything, just beginning, so that not only will there be more producers, but they will produce more per acre, at the same time as global population growth continues to slow.
Now let me now talk about possible approaches to finding the innovative ways to farm I believe is so crucial to prosperity.
A key factor driving change in agriculture is greater knowledge: we are learning more both about what affects our bodies and how to help plants and animals grow. The Human Genome Project, the decoding of the DNA of plants and other animals, and the explosion in the biosciences are all dramatically accelerating our understanding of what affects our health. This is both positive and negative. The obvious aspects of this are that we’re going to be able to come up with new diagnostics, pharmaceuticals, and treatments that will allow us to live longer, healthier lives. There are researchers who are talking about the possibility of increasing human life expectancy by 50% over the next 20 years, which would raise it to well over 100, and about the potential for curing aging as if it were a disease. The more subtle effect of having more knowledge is that the more we know, the greater our responsibilities will be.
The rise of micro-environmentalism
We are learning that the old saw that ‘one man’s food is another man’s poison’ is literally true. Food that is healthy for one person may not be healthy for another. In fact, here’s a cliché from the future that I suspect you will very quickly tire of hearing: ‘Eat right for your genotype.’
For example, I have Celiac disease, whereas my siblings and children do not. Celiac disease is an autoimmune condition, and it means that I can’t eat anything with the glutens of wheat, barley, rye, or oats. I recently saw an article on Celiac disease in an issue of PulsePoint magazine. The author of that article – a research doctor – asserted that only one person out of 90 with Celiac disease is correctly diagnosed. I’m not quite sure where she got that statistic, but let’s accept it for the sake of argument. If correct, this would mean that perhaps as many as 25% of the population shouldn’t eat wheat, rye, barley, and oats – or at least, those grains that haven’t been genetically tailored to exclude the specific protein found in gluten that causes problems. If true, this would represent a major new problem for grain farmers as they would lose one-quarter of their potential food market. It would also represent an important new niche market for those farmers who could produce gluten-free carbohydrates. As it happens, I don’t actually believe that particular statistic is correct, I’m merely using it as an illustration of how new knowledge in genetics and health care has the potential to change some of the fundamentals of the business of farming.
More knowledge also means more complications. Over time, people will want to know more and more about the food they eat: what seed was used, how it was grown, what fertilizers were used, how it was harvested, and processed, how it was stored, and how it was finally prepared for dinner. This is one reason why the ‘organic foods’ movement is not a fad like ‘zero carbs,’ but will persist and probably grow in importance. There are today consumers who are willing to pay a premium for food certified to be organic, and I believe their numbers will continue to grow until ‘organic’ foods become fully mainstream and cease being a niche. Over time, our expanding knowledge is going to mean that the food industry, as a whole, will have to provide a pedigree for everything we eat.
If this sounds far fetched, that is exactly what happened at a dinner given by the British Beef Marketing Board at the height of the Mad Cow crisis in the U.K. They served beef for dinner – of course ¬- but everybody found on their plate a description of which herds the cows came from, how they were raised, what they were fed, where they were slaughtered, how the meat was dressed, delivered, and cooked. This is an extreme example – but also indicative of where we’re going. And, as an off-shoot of this, the aging of the baby boomers also means that there is a movement now towards functional foods (‘nutriceuticals’), and eating foods that promise health benefits and ways to manage health without drugs. This means that current food products that are, for instance, high in anti-oxidants will be promoted and become popular for that reason, like blueberries or green tea are right now. There is widespread belief among many farmers that only a few producers will benefit from emerging ‘niche’ markets, and that the majority must still rely on commodity production and marketing. I strongly disagree – over the next 25-50 years, I believe the future of the vast majority of farmers will be in niche markets, well away from mass-production, low margin commodities.
Which, indirectly, brings me to demographics. Globally, by 2050 India will be the #1 country in terms of population, with China #2, and the U.S. #3. Global population will peak around 2070 at just under 9 billion people. The population of North America will also peak around 2070, then start to decline. The shift to the cities will continue, and virtually all new immigrants will concentrate in the big urban centers. The farm vote will shrink as the political power of the cities grows, so that less attention will be paid to farm issues. There will be major financial burdens from public & private pensions, and from the unfunded liabilities arising from government health care promises to a rapidly aging population.
But let me focus on two specific demographic issues that will offer farmers new opportunities – and cause them problems. First, there’s the aging of the boomers, born 1946 to 1967, and whose leading edge is turning 60 this year. They are becoming more aware of their bodies, and will actively seek new ways to enhance their health and longevity. In particular, the boomers seem to be willing to buy almost anything that promises to help keep them young and healthy – and many farm-fresh products can legitimately make that promise. Targeted advertising that offers them health benefits, especially prolonging their youth, will pay off in higher sales.
Unfortunately, there’s also a downside to demographics: the threat of a shrinking workforce. It’s no news to farmers that it’s hard today to attract young people to the business of farming. Moreover, there just aren’t going to be as many young people coming in as there are older folks retiring in any industry For every 12 boomers edging towards retirement over the next 10 years, there will only be about 3 echoes (the children of the baby boom) heading into the workforce. But with aggressive use of new tools, and an eye towards developing niche markets, I believe it should be possible to make farming a cutting-edge industry in rich countries like ours, one that offers opportunity and becomes attractive to young people for more than just the lifestyle.
If I’m right that the future of farming is in tailored crops and niche markets, and in the use of new tools and methods of marketing farm products, then there is no reason why farming cannot be a profitable industry that attracts young people for the income as well as the lifestyle. I know this is not the commonly-held view of farming, but if we keep doing the same things, the financial attractiveness of farming will continue to decline. But if we want to talk about the future of farming, then we have to talk about how it can be successful, not just how we can manage the decline.
The Internet and targeted marketing
I’ve already talked about how people are going to become more aware of the food they eat, and how individuals will become aware of the unique needs of their bodies These two drivers of change will, I believe, lead to niche farming – where farmers start growing crops, organic, conventional, or genetically modified, to suit the needs and desires of specific individuals with particular genetic needs. Now add the ability of the Internet to deliver customized messages to specific individuals, as with Amazon.com, and the increasing use of data mining, and you get the potential for much more direct relationships between farmers and consumers. I believe that within the next 20-30 years, we will see a customized revolution in food farming that will transform the economics of farming for those willing to use the new information tools we have at our disposal, and who are prepared to embark on new ways of doing things.
On the other hand, if we keep doing the same old things, we will keep getting the same discouraging results, and the attractiveness of farming will continue to decline. Moreover, farming will also have to compete with new means of food production. Part of the reason for this is that we will be able to grow food, including animal protein, in vats without ever visiting a farm. Although vat-grown meat has been a staple of science fiction for decades, it is now moving towards reality, and over the next two to three decades will become a factor in the marketplace. An article in New Scientist magazine, dated 20 March 2002, ‘Fish fillets grow in tank,’ is one sign of what’s to come. This isn’t necessarily a bad thing, though, as food farming will represent a declining share of agricultural output in any event.
Biotechnology and the farm
The 21st Century will, I believe, come to be known as the Bioscience Century, when the promise of genetics, coupled with the use of computers to perform research, will transform what we do and how we do it. Farming for industrial feedstocks and materials will become big business because it will be both more environmentally friendly, and more cost effective than traditional manufacturing. Agribusiness will fill the plains and prairies with plants producing feedstock for plastics and monofilaments and nanotech materials for manufacturing, livestock for pharmaceuticals and vaccines, and ethanol for both car gas tanks and hydrogen production on a rapidly expanding scale. Traditional products, especially those made from petroleum feedstocks, will increasingly be made from bio-based products instead. A sampling of possible examples might include:
- seat foam and resin panels for cars from soybeans;
- artificial spider’s silk polymers, used in everything from bullet-proof vests to surgical silk, from genetically-tailored bacteria and silkworms;
- polymers for clothing, fabrics, and polylactide plastics made from genetically-tailored plants;
- concrete reinforcement, which will use flax straw instead of steel;
- biopolyesters, such as those developed by Metabolix, which will be used for adhesives and resin coatings and moldings, as well as biodegradable packaging; and
- injection molded plastics using flax fibers for reinforcement instead of non-biodegradable fiberglass.
Meanwhile, the high price of petroleum is doing more than decades of government platitudes and environmental wishful thinking could: creating a market for alternative fuels. The amount of petroleum sold as fuel, or used as feedstock will shrink dramatically. This is a multi-stage process: it won’t all happen at once, but it will start immediately – in fact, it has already started. What’s happening already is widespread experimentation with fuels and systems, such as hybrid cars, that produce fewer greenhouse gases (GHGs). As processors settle on the most cost-efficient means of production, they will start to build larger and larger prototype plants, and then production-scale plants. But what has to happen is an act of political will – governments have to encourage the usage of ethanol and biodiesel in vehicles, if only to offset the subsidies now given for the production and use of petroleum. The payoff is big: potentially lower fuel costs immediately, plus significantly lower GHG emissions and much greater energy security and self-sufficiency.
Beyond that, starting within the next 5-10 years, ethanol production will migrate towards cellulosic ethanol, made from straw, waste wood, or through crops grown on wasteland. Based on some of the work that’s being done right now by companies like Iogen or SunOpta, ethanol from grain will likely be replaced by cheaper, more economical – and therefore more profitable – ethanol from cellulose – typically straw or waste wood. Moreover, ethanol made this way will be cheaper than gasoline. Iogen is currently contracting with wheat farmers to buy the stalks and chaff from their harvests to turn into ethanol, and they claim it will be at a price that’s lower than gasoline. Moreover, it’s possible to build production plants for ethanol from grain, such as wheat or corn, right now, and then later build another plant for pre-processing ethanol from straw next to it. The result is a system that gets steadily more cost-effective as time – and research – progresses.
However, no one interested in the future of ethanol should expect the transition to be smooth or easy. No matter what they may say publicly, the petroleum industry as a whole is not going to give up without a fight. They will lobby behind closed doors, arguing about lost jobs in the petroleum industry, ignoring the new jobs created from ethanol, especially in rural areas. Publicly, either directly or through other people, they will ‘wonder’ about the organotoxins that are released when ethanol is burned (ignoring the much more dangerous emissions from burning petroleum), and suggest that we really need the farmland for food production. It’s going to be a battle – but one I believe farmers will ultimately win because ethanol makes sense, it will be more cost-effective, and because the public will demand it once the word starts to get out, be understood, and accepted (although that takes time).
Two scenarios for 2036
Now, having set the stage for what might happen over the next 25-50 years, let me now paint two very different possible scenarios for the future of agriculture: a status quo future – what happens if current trends continue undisturbed? – and an activist future – how would it be different if farmers actively seek to create a Desired Future?
The Status Quo Future – circa 2036: Agriculture has been swamped by dependence on commodity products. Agricultural output has trended slowly downwards for the last 30 years – which is a disaster because agricultural productivity has continued to rise, meaning that fewer farmers are needed to satisfy demand. Farmers adopted a conservative, cautious approach to the future in the 2000s, sticking to those things that had been proven in the past, including traditional crops, traditional markets, and traditional marketing. In effect, rural parts of North America have become like the Australian outback -deserted places that only tourists visit. Farm incomes have continued to drop as agricultural surpluses continued to rise around the world, putting continuous downward pressure on profits, even in good years. Indeed, the cynical description of farmers’ greatest expertise is their ability to wring money out of the federal government. Persistent appeals through the 2010s and 2020s for what turned out to be ever-larger bail-outs seemed to be the only policy initiatives of farm groups, until finally the national urban vote forced federal politicians to cut back on what were described as ‘pointless bail-outs of a dying industry.’ ‘Besides,’ as one prominent politician recently said, ‘we need that money to protect what remains of our health care system.’
Because of lower incomes, farming communities effectively lost an entire generation – the second largest in history – as the children of the baby boomers left farms in droves, seeking a better, more secure ways to make a living elsewhere. Scores of smaller centers became ghost towns as farms were abandoned, and the businesses that served them failed. And the larger urban centers in farming areas are suffering as well – with no underlying industry to support them, they are floundering, and looking for a raison d’être. Working age population is heavily skewed towards older people as younger people have largely left. Looking back, it’s clear that when farmers failed to consider long-range planning, around 2010, they committed an enormous mistake, and effectively abandoned their own futures. Today, farming communities are near collapse, and the most popular quip is ‘Will the last person to leave the farm please turn out the lights’ A few farms have survived as tourist sites, while thousands of acres of farmland are returning to buffalo grass.
The Activist Future – Today (March of 2036), farmers are reaping the benefits of the foresight and investments they made in the 2000s. They are experiencing several different kinds of boom, and population is growing rapidly in rural areas for the first time in over a century. Projections for the next 20 years warn that infrastructure needed for the future is inadequate, and will require tens of billions more in government investment across the region, and employers are complaining about the employment shortage. Young people seeking opportunity are flowing into farming, especially those who come from a farm background and appreciate the lifestyle. Moreover, with the advances in communications that mean they can experience almost any entertainment available in the big cities, right in their own homes, so they feel they’re getting the best of both worlds – especially in those jurisdictions where governments made a point of creating a development plan for major airports and communications infrastructure in the 2010s.
The biggest boost has come from the groundswell resulting from the production of alternative fuels. Starting in the 2010s, the demand for ethanol started to build. Partly this was due to a trendy wish to fight climate change – much as the initial introduction of the Toyota Prius owed more to an eco-friendly appearance than reality. But the clincher was the continuing decline in the cost of ethanol compared to gasoline as the technology to produce ethanol got better and better. Indeed, the decline in petroleum prices in real terms over the last decade is almost directly attributed to rising competition from ethanol.
This success story is a classic case study – lots of bumps in the road, lots of political battles over subsidies, pressure groups, lobbying by other interest groups, and the nagging need for investment capital in production capacity. But the deciding factor was the cost-effectiveness of building ethanol production plants close to the source of agricultural production to minimize transportation costs. Moreover, the renewed interest in farming has kept the innovation pipeline humming for the last two decades, introducing more cost-efficient ways of producing and using ethanol, assisting in the development of fuel cells that use ethanol for the production of electricity, and, more recently, investing in ways of turning ethanol into hydrogen in ways that are cost-effective, which may finally overcome both the economic disadvantages of hydrogen, and help it recover from the hype that has made so many people leery of hydrogen for the last 20 years.
Creating the Future
What’s the difference between these two scenarios? If you look at them, they are almost diametrically opposed – so much so that it seems unlikely that both are possible. Yet, the world’s thirst for energy is not going to go away. In fact, unless we get hit with a major disaster, it must continue to grow, and rapidly. As ethanol proves its worth in the marketplace, and is accepted as more desirable than petroleum, then farmers that prepare for this shift, as well as those that pursue niche farming, will prosper. But the real difference between the two scenarios is the clarity of thought (also called ‘vision’) to look for the possibilities of the future, the political leadership and will to aim for the main chance, and the boldness to act outside of traditional boundaries. In the second scenario, farmers planned for success, invested in it, and committed to it with clear-eyed consistency.
Such consistency and foresight is neither popular, nor easy. A recent report on the ‘state of the future’ by the Woodrow Wilson Center in Washington, D.C., reports that interest in, and preparation for the future has declined significantly since the burst of interest in 2000. The primary difference between these two scenarios is one is predicated on dedication to creating a desirable future, rather than putting up with the future you get by staying within your comfort zone.
There are great opportunities ahead in farming, both in alternative fuels, and agriculture generally – but only if farmers capitalize on them. Alan Kay, one of the great technological visionaries of our time, once said that ‘the best way to predict the future is to invent it.’ Good luck, and God speed. Thank you.
by futurist Richard Worzel, C.F.A.
© Copyright, IF Research, April 2006
