Agriculture Industry Brief

Given agriculture’s critical role in our economy and the way it touches our lives through the food we eat and the resources we share, it’s vital to stay on top of the news and trends affecting this industry. From trade issues to growth strategies, we cover key topics and trends and provide overviews from a state, regional, and national perspective.

Key Issues in Agriculture

Trade agreements

A major issue facing the agriculture industry is the United States government’s recent decision to disrupt trade agreements, such as the Trans-Pacific Partnership (TPP) and North American Free Trade Agreement (NAFTA). As a result, retaliatory agricultural tariffs have placed a costly burden on farmers. The government is offering $12 billion in farm aid1, but it’s feared that the payment will not improve the industry outlook. Kansas has much to offer international markets, and a threat to the security of these offerings affects both the agricultural industry and the communities they support.

Fields

Ag influencers – access to capital, market trends and subsidies

Farmers’ access to capital is a major factor affecting agricultural production. To operate a profitable business, farmers need proper financing and resources to optimize their investments. Without the appropriate financial tools, or a mismatch between what’s needed and what’s available, farmers may not be able to make the best decisions for their business. For example, they may not be able to invest in new technology or upgrade equipment.

Another factor affecting farmers’ profitability is market trends and the ability to adapt to them, such as the public’s increasing demand for organically sourced produce and humanely raised meat. In contrast, farmers growing corn, soy and other commodity crops receive government subsidies for growing these foods regardless of current market conditions. Unlike other farm products, subsidized crops are not as dependent on trends, the weather, international competition, or the relative strength or weakness of the dollar.2

 

Kansas Agricultural Growth Strategy – A State Initiative

As a result of a 2015 meeting of economic advisors, the Kansas Department of Agriculture (KDA) created the Kansas Agricultural Growth Strategy, an initiative aimed at growing the industry and ultimately, the state’s economy. The first step involved over 250 interviews with agriculture leaders across Kansas, followed by a Summit on Agricultural Growth that brought together diverse industry sectors. Using information from the interviews and summit, the KDA identified desired growth outcomes for specific agricultural sectors and opportunities for the industry statewide.3

Growth opportunities across sectors

In addition to these cross-industry growth opportunities, each of the 19 sectors identified desired outcomes and the action items to achieve them. Sectors include Ag Equipment Manufacturing and Sales, Ag Tech and Entrepreneurship, Beef, Corn, Pork and Poultry.4

 

Regional Overview

Agriculture is one of top industries supporting the Midwest’s economy

Spanning over 127 million acres of agricultural land5, this region is home to some of the richest farming areas in the world and produces an abundance of grain and cereal crops. These include corn, wheat, soybeans, oats and barley, which is why the Midwest is known as the nation’s “breadbasket.”6

Irrigation

Kansas is a leader in wheat, grain sorghum and beef production, with growth in dairy and other animal sectors. The state is deeply rooted in agricultural traditions, and farming continues to be a top contributor to its economic well-being.7

 

Growth and Change in U.S. Agriculture

Drivers of growth in agriculture

Main drivers of growth in U.S. agriculture are technological advancements such as innovations in animal and crop genetics, chemicals, equipment, and farm organization. And while technological developments help increase profitability and farm size, they also contribute to the decline in overall number of farms. That’s due to farmers’ ability to boost operations and have a better standing in the market.

What’s changing for farms and farmers

According to the 2012 Census of Agriculture, there were 2.24 million farms in 1982, compared to 2.11 million farms in 2012. This decline is also attributed to the increase in the average age of the U.S. farmer. And even though we’re seeing less traditional farms and farmers, there’s been a rise in young and diverse operators. The number of small family farms also continues to grow.9

 

Sources

1 “American Farmers Are in Crisis.” Siena Chrisman. https://www.eater.com/2018/9/14/17855080/american-farmers-crisis-trade-war
2 “Economic Factors Affecting Farming.” Devra Gartenstein. https://bizfluent.com/list-6186528-economic-factors-affecting-farming.html
3 “How the Kansas Department of Agriculture is Enhancing Ag Industry.” Jessica Walker Boehm. https://www.farmflavor.com/kansas/how-growth-program-enhancing-kansas-ag-industry/
4 “2018-growth-book-for-web.” Kansas Department of Agriculture. https://agriculture.ks.gov/docs/default-source/ag-growth-summit/january-2018-documents/2018-growth-book-for-web.pdf?sfvrsn=460380c1_12
5 “Agriculture in the Midwest.” USDA. https://www.climatehubs.oce.usda.gov/hubs/midwest/topic/agriculture-midwest
6 “The Midwest.” Source: The U.S. Department of State. https://www.factmonster.com/united-states/midwest
7, 9 “Census of Agriculture.” USDA. https://www.nass.usda.gov/AgCensus/
8 “Kansas – Estimated Economic Impact of Agriculture, Food, and Food Processing Sectors.” Kansas Department of Agriculture. https://agriculture.ks.gov/docs/default-source/ag-marketing/ag-contribution-2018-with-retail-ethanol-combined-update-final.pdf
10 “Women in Agriculture.” USDA. https://www.usda.gov/our-agency/initiatives/women-agriculture

 

Additional Resources

Farm equipment leasing/loans:

https://www.agweb.com/article/8-machinery-trends-for-2018-naa-greg-peterson/

https://www.farm-equipment.com/blogs/6-opinions-columns/post/14858-annual-tractor-combine-retail-sales-forecast

General, including news, markets, business, machinery and tech:

https://www.agweb.com/

https://www.agupdate.com/news/

Spending on AgTech:

https://www.forbes.com/sites/danielnewman/2018/05/14/top-six-digital-transformation-trends-in-agriculture/#3b3c6020ed2e

https://investmentbank.com/agtech-trends/

Working capital - trends in farm working capital:

https://ageconomists.com/2018/07/23/farm-sector-working-capital-at-lowest-levels-in-10-years/

https://www.usda.gov/our-agency/initiatives/women-agriculture