2010 PACE Annual Report

Retailers are Micro Efficient, Macro Inefficient

Agriculture is growing in complexity and risk at all levels in the supply chain, making it critical that the retailer understand the interface between all the things that drive the ag market today: International trade, global food demand, demand for inputs, the value of US currency and more. Retailers do a good job of managing their business down to the grower, but the small-medium sized retailer may become increasingly vulnerable as market drivers become more diffuse, more global and more volatile.

Fertilizer Market Volatility

With crop prices on the rise again and fertilizer scarce and growing more expensive, retailers are on the watch for a repeat, if milder, version of the fertilizer debacle of 2008. The reality is that there are no mechanisms for retailers to manage risk that today rests squarely on their shoulders. Manufacturers are working on the issue but no clear answer is seen in the near to medium term.

Commodity Bubble … Again

Lowered corn harvest estimates led to a jump in commodity prices, driven in part by Wall Street speculation that’s not based on solid ag market indicators. Which means, as fast as the market goes up, it could go down on perceived “bad news” through a Wall Street sell-off. If this comes to pass and two years out of three feature volatile market swings, agriculture can probably expect this to be the new normal.

Generational Turnover

Businesses are working hard to hire and train up the next generation of ag specialists with the quickly retiring boomer generation on the way out, and a changing new generation of employees coming in. There are fewer rural-originating young people from which to choose, and urban/suburban kids have in general not grown up understanding even the most basic concepts of farming.

Sustainability From Above

Food processors and consumer retailers want to be able to show evidence that their business practices are driving sustainability, and are/will be pushing harder on suppliers to comply with specific regimens that help them attain that goal. Potentially, their demands could supersede those of regulators.

Organic and Sustainability

Environmental activists are working hard to equate sustainable with organic, and the industry continues to push back. Following PACE, the “modern agriculture” contingent walked away from the Leonardo Academy, a group working on developing sustainability standards for ANSI certification, for building “organic” into its standards document.

Public View Of/Understanding of Modern Agriculture

The American public by and large neither understands nor respects the work of American farmers that use “modern” production agriculture methods. The danger is that policy that undermines modern ag is more likely to be tolerated by an indifferent or hostile public, leading to a diminishing of our ability to improve yields and produce more food.

Intertwined Regulations Still Tangled

EPA has not clarified jurisdictional issues that exist between FIFRA, ESA and CWA, which has made it extremely difficult for ag advocacy groups to work effectively on the industry’s behalf.

Nutrients In Watersheds

Nutrient intrusion in watersheds is becoming a higher visibility issue both in the Gulf of Mexico and inland lakes in the Midwest. At the state level some governments are talking about limiting nutrient rates in agriculture. Perception is increasing that voluntary efforts are not enough/not working.

Need For Precision Standards

The lack of precision data standards has been an issue for some time, but its identification as a major limiting factor in the wider use and adoption of precision technology has reached a crescendo.

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