MACA 2014: The State Of The Agricultural Industry, And Then Some

The annual Mid America CropLife Association (MACA) meeting traditionally brings together not only agricultural industry leaders but engaging speakers as well. The 2014 edition of this event, held in early September in Indianapolis, IN, was no exception.

Terry Barr, CoBank

Terry Barr, CoBank

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One of the presenters spoke on the the financial shape of the agricultural industry. According to Terry Barr, senior director for the Knowledge Exchange Division of CoBank, agriculture has been blessed with an incredible seven-year run in terms of financial health. “In 2008, agriculture was a unique sector of the economy,” said Barr. “Although commodity prices did drip initially, they bounced back pretty quickly. So if you were looking for someplace to hide during the last recession, agriculture was a pretty good place to be.”

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But agriculture’s fortunes will be changing over the next couple of years, he warned. “We are now entering a new phase,” said Barr. “The cost side of agriculture will be the focus now as we leave $7 corn and drift to $3 corn.”

Until now, he said, agriculture’s economic growth has been driven by a pair of factors – demand for biofuels, particularly ethanol derived from corn, and an overall increased demand for row crops which has kept historic reserves at near record lows. “What’s largely driven agriculture the last five years is crop production,” said Barr. “There was always a major grain shortfall in some part of the world. In the U.S., we were below crop trend yields four out of the last five years. But over the next five years, a lot of this is going to reverse and stocks will go back up.”

Part of this will be driven by less growth in key U.S. crop export markets such as China and record harvests for corn and soybeans in 2014. Both of these factors will depress commodity prices. “Corn prices dropped 55% in 2013, and they will probably be down another 20% in 2014,” said Barr.

Ultimately, predicted Barr, this will move much of agriculture’s recent growth into entirely new areas. “The demand side for corn has really flattened out, and ethanol will still take its bushels, but it won’t be the growth driver for corn anymore,” he said. “Instead, we are going to move from a corn complex driven by ethanol to a corn complex driven by the export markets.”

At the same time as agriculture is going through these changes, the general economy will also be transforming as well. For one thing, said Barr, the world’s key banks will begin to raise interest rates, which have hovered near zero percent for the past seven years. “Will they rise tomorrow? No,” he said. “But you have to believe they will rise over the next five years, and that will change the dynamics for agriculture.”

Still, interest rates alone won’t have the biggest impact on agriculture going forward, said Barr. Instead, observers should keep an eye on agricultural-based companies and their balance sheets. “In general, companies are not investing relative to their profits like they were before 2008,” he said. “This capital sitting on corporate balance sheets will have an impact on the number of mergers and acquisitions that take place in the near future. There’s a lot of capital ready to be deployed, and we should see more consolidations on the supplier side of agriculture then we have during the past couple of years.”

A Panel Of Experts

There was also a panel of some top agricultural industry experts discussing challenges and hot topics. For the most part, their message was simple: Agriculture can help feed the world – if only the world will let it.

As Scott Kay, vice president for U.S. crop protection for BASF Corp., observed: “We have to change the conversation in agriculture.”

Lisa Safarian, Monsanto

Lisa Safarian, Monsanto

According to panelist Lisa Safarian, vice president for U.S. row crops business for Monsanto Co., pointed out, agriculture is being charged with the growth of the world in the coming decades. “The world’s population has doubled in one generation, and that’s something that has never happened before in the history of the world,” said Safarian. “And the United Nations estimates that this population will increase another 35% by 2050. So there will be an urgent need for agriculture to feed the world, but we will need to do so on less land than ever before.”

To accomplish this, agriculture is arming itself with not only the latest tools to increase crop yields such as biotech crops and precision technology, but by adding new workers to its ranks. As Susanne Wasson, U.S. commercial leader – crop protection for Dow AgroSciences, told attendees: “We are currently bringing on the next generation of new employees into agriculture. We at Dow have worked on adding new people so that today, more than 40% of our workers have less than five years’ experience under their belts.”

And as BASF’s Kay said, agricultural companies are doing what they can to give these new workers the tools to succeed at their jobs of helping growers achieve more crop yields. “Everyone one of these workers has to realize that it took more than one decision by the grower to accomplish a 100 bushels of soybean per acre,” he said. “Shame on us if we don’t invest in these people as a company the same way to help them do this effectively.”

Finding the right people and new methods to increase yields are only half the battle, remained Dow AgroSciences’ Wasson. The buying public must also accept these practices, which has sometimes been an uphill fight. “Our industry’s critics are largely driven by emotion, not facts,” she said. “The moms out there on the Internet are motivated by emotional conversations about the food their kids are eating, not how it helps growers.”

Monsanto’s Safarian agreed. “We as an industry have talked about things that don’t really engage consumers,” she said. “They really don’t care about things like higher yields and less crop protection products were used. All they know is genetically-modified crops are considered part of ‘Big Agriculture,’ and ‘Big Agriculture’ is bad.”

According to BASF’s Kay, this is part of the reason why agriculture needs to change its message, particularly when it comes to the consumer. “We need to be more proactive to the criticism of our industry,” he said. “I don’t know if we are in tune with the consumer vs. coming off always being defensive.”

Jim Lehman, AMVAC

Jim Lehman, AMVAC

Instead, suggested Jim Lehman, vice president of sales for AMVAC Chemical Corp., agricultural companies should rely on such informational resources as MACA and CropLife America to distribute positive messages to consumers. “I know several people in our business that are afraid to say they work in agriculture when asked by a stranger,” said Lehman. “But instead, we could say ‘we feed the world,’ and that would probably get a whole different conversation started that might connect with the average consumer.”

Talking To Consumers

Another speaker was Randy Krotz, CEO of the U.S. Farmers & Ranchers Association (USFRA). According to Krotz, there are plenty of trade associations devoted to further the cause of agriculture. However, USFRA is a bit different, namely because of its primary focus.

“Our goal overall is to build trust back in agriculture,” said Krotz. “We are a solely consumer focused organization. We create emotional connections to people, which makes us unique among agricultural trade groups.”

For much of its time, said Krotz, USFRA spends a lot of its time and money on consumer research, and the results are somewhat mixed. “Based upon our research, over 75% of consumers trust farmers,” he said. “But less than 40% trust the way farmers produce their food. Most of them don’t understand agricultural technology and don’t believe farmers are educated. That’s the gap we are trying to address.”

To accomplish this, USFRA is working hard to promote as many of the positive aspects of farming to consumers that it can. “We know that messaging alone will not rebuild this trust,” said Krotz. “We have to go back to telling our story. We have to help farmers be heard.”
One of these initiatives involves promoting the film “Farmland,” which looks at typical U.S. family farms and tells their struggles and triumphs in a documentary method. In 2014 and into 2015, USFRA is trying to get “Farmland” shown to high school students across the country as part of their teaching curriculum.

“Last year, the anti-agricultural film ‘Food, Inc.’ had its biggest year, and it was included in the teaching programs for more than 60% of the high schools in America,” said Krotz. “We want ‘Farmland’ to have this same kind of exposure to help spread its positive agricultural message.”

Hearing From Young Leaders

Finally, MACA attendees got the chance to hear from what could be called the youth movement in agriculture. These came from the winners of the MACA Young Leader Scholarship Program. Now in its second year, this program provides financial assistance to students looking for careers in agriculture at 12 different universities across the country. The students also have the opportunity to attend the annual meeting to learn more about the agricultural world and meet key industry representatives.

At the MACA meeting, each of these students shared with attendees some of their experiences as part of various internships served over the summer months. Here, they got to work in all areas of agriculture. “I really enjoyed working with Co-Alliance, an ag retailer, because I got to do a lot of direct work with the farmers themselves,” said Nolan Sampson, a student from Purdue University.

Kelsey Mussman, a student at the University of Minnesota, echoed this sentiment. “When I was working for Genesis Coop, they were so flexible in what I was interested in doing, which was marketing,” said Mussman. “So the company let me make some agronomy sell sheets to distribute to customers, as well as utilize them on social media.”

Other students worked with agricultural technology as part of their internships. “One of the most exciting things I worked on at John Deere during my internship was the company’s new planter,” said Jeffrey Barnes, a student from Iowa State University, “This unit will revolutionize the market by taking the planting speeds farmers can plant seed from 5 mph to 10 mph without losing placement accuracy. That’s pretty special.”

Jade Kampsen, a student at South Dakota State University, had a similar experience during her time at Central Valley Cooperative. “I didn’t grow up with a big farming background, so everything I did with agricultural education was a big learning experience,” said Kampsen. “My first ag class was precision ag, which I hated. But then, I ended up working with two precision ag specialists at Central Valley learning about variable-rate seeding and fertilizer and I realized that that was the best class of my life!”

In the end, it was clear all 12 students had really enjoyed their times with the summer internships and learned more about the world of agriculture along the way. “One of the most special parts of my internship at Pioneer was being part of the team there,” said Nick Steppig, a student from the University of Illinois. “That made me feel like I was part of something much bigger, which was being part of production agriculture.”

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