Farming in 2036
Are you a commodity producer or a value-added producer? Richard Worzel offers a quick way to know.
According to the definition used by this Toronto-based futurist, a commodity is a product for which the buyer’s primary consideration is price. By contrast, a value-added producer sells mainly on consumer preferences: unique health properties, consumer relationships, exceptional taste and top quality.
In Worzel’s analysis, there will be two kinds of Canadian farmers by the year 2036: those who grow commodities and those who add value. The grandson of a dairyman, and frequent speaker at forward-looking agriculture events, Worzel predicts a tough future for those who stick with the commodities model.
Sponsored by RBC Royal Bank, Worzel outlined this thought-provoking analysis at the Saskatchewan AgVision Conference held this past spring in Saskatoon.
Why is he so down on the status quo? Simply because he believes the global commodities game is getting crowded.
“We are seeing an extensive increase in foreign competition,” he says. “All developing countries are now employing techniques and technologies that we have been using for years. As a result, a number of countries that used to be net importers of agricultural commodities have now become net exporters.”
Worzel advises that farmers who’ve been frustrated by low prices for bulk grains and oilseeds had best get used to it. These rapidly developing countries are modernizing their agriculture and boosting yields, all supported by labour costs that are much lower than Canada’s. In this environment, he expects that world prices for bulk, undifferentiated commodities will be under downward pressure for years to come.
Mega-trends show the way
In Worzel’s view, the first order of business for any commodity-dependent farmer is to get out of the commodity business as quickly as possible. As an alternative, look to produce higher value crops and livestock for premium markets. Those markets will depend on the longterm development of two agricultural mega-trends.
The first trend relates to aging, affluent consumers, who want two things above all. First, they want to be healthier. As science’s knowledge of nutrition increases, and the link between genetics and nutrition becomes better understood, consumers will be encouraged to fine-tune their diet with specialized premium foods. Farmers who are in a position to grow these specialized foods will be among the industry’s leaders for the future.
Consumers will also want to know more about their food: how it was grown, harvested and processed. Worzel expects that demand for organic products, far from being a fringe factor in the market, will become fully mainstream. With the leading edge of the North American baby boom generation turning 60 this year, he maintains that consumer demand for healthy alternatives and food information can only accelerate.
The second mega-trend relates to new uses for agricultural products. The most important will be industrial materials and alternative fuels.
“Farming for industrial feedstocks and materials will become big business,” says Worzel, “because it will be both more environmentally friendly and more costeffective than traditional manufacturing.” He cites advanced materials like plastics, monofilaments and nano-tech materials from crops, and pharmaceuticals and vaccines from livestock.
Today’s high prices for crude oil will encourage the search for cheaper, more sustainable sources of fuel. In the first wave of change, the big winner will be ethanol made from grain. Later on, ethanol will be made much more cheaply from cellulose: straw, waste wood or crops grown on marginal land.
Status quo vs. activist
On the road to 2036, Worzel sees a fundamental split between those who embrace change and those who stubbornly resist the inevitable. By 2036, he predicts, Canadians who cling to commodity-style agriculture will see their standard of living decline and their communities depopulated. Those who take a consumerfocused approach will have stronger economic results, more sustainable communities and a younger generation willing and able to take the reins.
Worzel is the first to admit that change on this scale is disruptive and even traumatic.
Nonetheless, he views it as merely the latest reinvention of the industry.
“Farming has always been a technology business,” he says. “In fact, agriculture’s adoption of new technology has changed human society throughout the course of history.
“What’s new here is not the pattern, but the technologies.”
To move from commodity-based to consumer-based agriculture demands new ways of thinking. Worzel sees it as the difference between being a passive accepter of the future and an active maker of the future. If Canadian agriculture can achieve this long-term transition, the sky’s the limit.
“There is a remarkably prosperous future for new approaches to agriculture,” says Worzel, “with non-traditional products and markets, and non-traditional ways of addressing these markets.”
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