Welcome to the weekly edition of The Ag Globe Trotter by Dr. Dave Kohl.
In a recent speaking engagement, a producer asked an intriguing question, “What are five things the next generation of farmers and ranchers will face?” We all agreed there were more than five factors, but let’s take a look at the ones that rose to the top of the list.
It should not be a surprise that technology made the list. The next generation of producers will be required to manage three dimensions of technology -- biological, engineering and information -- in an integrated manner. This will require them to analyze their resource base of land, water, facilities and people skills for alignment with the marketplace, while keeping a close eye on operational efficiency. Some producers will be in the position to go high-tech while others may take a different route with low tech, resourceful and innovative methods using one's resources. One of my favorite aspects of agriculture is that the industry is not one size or method that fits all. During one's business lifecycle, components of technology sophistication may vary as the business and economic landscape shifts.
Consumer tastes are changing rapidly both in the United States and globally! This will be a fact of life for the next generation of farmers and ranchers. A splintered marketplace that values convenience, transparency and the customer experience will provide new opportunities to add value and differentiate your products and operation. Can producers in both commodity and niche markets add value to this segment? The linkage of human health to food production and distribution will accelerate rapidly in the next decade. Substitutes to traditional agriculture products like milk and meat will be competition in the marketplace.
Past generations faced business transition, but future generations will see distinct changes. The stakes will be higher with more complex negotiations with family and nonfamily members. Expect more generations and perspectives to be involved in the decision-making process as individuals live longer. This could mean having three to four generations in the transition process. The management skills of the next generation, while still focusing on production, will require a balance of business, finance, people management and operational efficiency.
Soil and water health
Soil and water health is the next strategic advantage over both your neighbors and competitors. Good stewardship practices will pay dividends in terms of production, but will also be valued by consumers and society. The key will be to tell your story in a very compelling manner.
Whether it’s economics, weather, markets, financials or society’s behavior, extremes will be everywhere every day. This will require one to manage the controllable variables and manage around the uncontrollable ones.
What five factors do you think will influence the next generation of producers?
Dr. Kohl is Professor Emeritus of Agricultural Finance and Small Business Management and Entrepreneurship in the Department of Agricultural and Applied Economics at Virginia Polytechnic Institute and State University. Dr. Kohl has traveled over 8
million miles throughout his professional career and has conducted more than 6,000 workshops and seminars for agricultural groups such as bankers, Farm Credit, FSA and regulators, as well as producer and agribusiness groups. He has published four
books and over 1,300 articles on financial and business-related topics in journals, extension and other popular publications.
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