Agricultural Market Growth: An ‘Age’ Old Question
Another year is under the ag retail market’s belt and things have never looked more positive. In the December issue, CropLife® magazine presented the findings from its annual CropLife 100 survey and State of the Industry reports. I’ll let you read these for yourselves, but in a nutshell, the financial numbers and general optimism among the folks that make their living in agriculture have never been higher. This also marks the third straight year that this has been the overall state of things in agriculture — and most of those we surveyed expect this unprecedented winning streak to continue into 2013 as well.
Of course, in my mind, this all begs a very important question — have we entered a new “age of agriculture” where conditions for ag retailers and their grower-customers steadily improve year-after-year? Or is this merely the latest “up cycle” before a multi-year decline sets in?
By their nature, people in ag tend to be very cautious about their feelings on the state of their marketplace. In the dozen years I’ve covered this industry, I’ve never had anyone jump up and down (metaphorically speaking) proclaim “we’re king of the world!” Normally, the responses to good times from individuals have been more along the lines of “yeah, things are good today, but that could change tomorrow.”
But I’ve been hard pressed to find this kind of cautious view when discussing the state of today’s agricultural business with industry friends and those I’ve talked with at various trade shows and events during 2012. Back in September, speakers at the Mid America CropLife Association meeting were very positive in their assessment of ag for the foreseeable future.
“We are in a golden age of agriculture right now and it isn’t going to end for decades,” said Dr. Jay Lehr, science director for The Heartland Institute. “People sometimes talk about the light at the end of the tunnel, but right now, I don’t see any dark at the end of the tunnel.”
Even those outside of agriculture think it will continue to do well. In his relatively negative outlook for the global economy in 2013, Nobel Prize winner for Economics Jim Rogers singled out farming as the one bright spot. “I would say agriculture is what I would invest in today if I had to invest in something,” said Rogers.
Ed Lopez of the investment firm Van Eck Global, echoes this view. “Food, and the means to produce it, is becoming the new oil of the 21st century,” says Lopez. “As a result, agriculture is going to be one of the great new areas of the U.S. economy going forward.”
Naturally, this kind of steady growth will lead to its own challenges for ag retailers. Consolidation is likely to pick up as larger companies look to fill gaps by acquiring smaller ones. And input prices will probably continue to rise.
Still, in overall market optimism, I can’t remember a time when everyone felt so good about what tomorrow might hold. So, just perhaps, this current golden age will be a long one.