Paulsen: Three important trends impacting agriculture today

By Greg Guse, Exec VP/Industry Analyst, Paulsen, Sioux Falls, SD

As a student of agriculture for nearly 40 years, I've seen lots of things come and go. Good times and bad times. Things like ethanol, biotechnology and genetic research that have literally changed the course of the industry.

Very recently, I've noticed several trends occurring that will drastically impact agriculture for the next few years. These trends are: a generational shift among ag producers, accelerated impact of technology and data, and even greater global influence.

A Generational Shift

I was astounded by a statistic shared at our recent S.D. Governor's Ag Conference. Today 10,000 people in the U.S. turn age 65 each and every day-and that number will remain constant for the next 19 years! If just one percent of our population is farmers, this means 100 farmers turn age 65 every day. In fact, more than 30 percent of today's principal farm operators are 65 or older. The average age of all farmers has been greater than 50 since the 1974 Census of Agriculture, and in the most recent Census, the average age was 58.3.

As a result, it's estimated that nearly half of all U.S. farmland will change hands over the next 20 years! Much of this land will stay in the family, farmed by a new generation of ag producers. However, many farm acres will be purchased by absentee landowners, who may not appreciate the legacy of land ownership and are more interested in annual returns or cash from the sale of the land.

Either way, a new generation of tech-savvy ag producers and new ownership of the land are trends to watch that will impact the ag industry going forward.

Even Greater Emphasis on Technology and Data

In just the last five years, no other innovation has had as much impact on agriculture as precision ag technology. New developments in machinery and software are enabling farmers to have more control over how they plan, plant and manage their crops. It's been said that today's farm tractors have more computing power than the first space shuttle that went to the moon! Yield monitors, rate controllers and sophisticated mapping programs help farmers improve efficiency and maximize yield.

Now that we are capable of gathering all this data, the next chapter will put greater emphasis on the analysis, security, interpretation and specific farm management recommendations that result from this technology. That new generation of farmers will welcome this data to make better, more informed crop decisions.

Greater Global Influence

Recent global supply issues have had a profound influence on our grain markets, sparking a welcome rally in corn and soybean prices since April. Too much rain in Argentina lowered crop prospects there when industry analysts were projecting millions of bushels more in production. Brazil corn prices also surged on weather issues.

These situations caught many traders off-guard, and prices moved up when the USDA projected a 100-million-bushel reduction in soybean carry-over inventory. Greater exports of grains to China and prospects for hotter and dryer weather later this growing season have fueled talk of $11 soybeans and $4.30 corn-huge improvements from the $9 soybeans and $3.50 corn we've lived with for much of the past year.

So my point is this: our ag economy, and thus our ag producers, are more affected than ever by influences beyond their control-global markets and weather.

Other Trends on the Radar

So there you have it-a generational transition, emphasis on data and technology and a growing global influence-all important trends in agriculture happening right now.

In writing this article, I discovered some additional trends that may be worthy of a follow-up article. These include the use of biologicals to protect crops from weeds, insects and diseases, greater regulations on crop traceability and verification and a changing food culture that puts increased demands on farmers and livestock producers.

Stay tuned and hang on-agriculture is entering a period of profound change that will only accelerate in the next few years.