January 31, 2005, Janet Adamy for the Wall
Street Journal via CropChoice.com: American
agriculture is suddenly going through a lot of changes.
After decades as the world's biggest farm exporter,
the U.S. farm sector is facing new challenges. Overseas
farming giants are emerging to eat into America's business
of supplying the world with crops such as wheat and
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And at home, American consumers are demanding that
farmers change the way they grow and sell their produce
and livestock. Consumers want pesticide-free produce,
giving rise to new ways of cultivating and processing
food. They also are seeking new eating experiences.
Their appetite for Chilean sea bass, vanilla-flavored
lattes made with Italian syrups, and grapes in winter
is erasing the U.S. farm sector's unique ability to
generate a trade surplus.
U.S. farmers are seeking new streams of income from
their land, such as developing wind power, and, most
important, many are learning how to be marketers for
the first time.
Here are some major trends down on the farm.
1. The Shifting
Thanks to cheap land and labor, Russia, Brazil, Argentina,
China and other countries are emerging as powerful agricultural
producers. The burgeoning titans are building new roads
and bridges that benefit their farming infrastructure,
and overseas farmers now have access to U.S. equipment
and sophisticated biotechnology that deters weeds and
Russia, for instance, used to depend heavily on the
U.S. for wheat, but is becoming a rival wheat exporter.
It's expected to ship almost 6% of the world's total
wheat exports this year, according to the U.S. Department
The USDA predicts that there will be no trade surplus
in agriculture by the end of 2005. Just four years ago,
the U.S. farm sector was generating an annual surplus
of $13.7 billion.
But U.S. farmers are working to stay competitive. "What
we're seeing among our best producers is embracing technology
to reduce their costs of production to become more efficient,"
says Keith Collins, chief economist at the USDA. U.S.
farmers continue to have an edge in things like irrigation
and risk-management tools such as futures contracts
and federally subsidized crop insurance.
2. Tasty Imports
U.S. consumers have increased their appetite for foreign
food, and retailers are capitalizing on the trend. Imported
food was once hard to find, but now retail chains like
Cost Plus Inc. of Oakland, Calif., are popping up in
suburban strip malls, selling treats like Swedish gingersnaps
and Australian wine. The rise of new farm powers also
is shifting the balance.
Trade pacts, including the North American Free Trade
Agreement, make it easier for the U.S. to bring in food
from other countries. Meantime, European countries have
blocked U.S. exports of some genetically modified foods,
and several other countries banned U.S. beef after the
first U.S. case of bovine spongiform encephalopathy,
or mad-cow disease, was discovered in December 2003.
Other countries also can produce raw ingredients at
a lower cost, prompting food companies to go overseas
3. A Modified
After sweeping across the American Farm Belt, genetically
modified crops are making inroads overseas -- despite
resistance in some nations where critics contend they
could pose unknown risks to the food supply. Modified
crops can tolerate weed-killing chemicals and resist
damaging pests, saving farmers money in labor and lost
Eighteen countries now grow biotech crops, with Argentina,
China, Canada and Brazil leading biotech growth outside
the U.S. An additional 45 are researching and developing
their use, according to a study by C. Ford Runge, director
of the University of Minnesota's Center for International
Food and Agricultural Policy.
Monsanto Co., of St. Louis, is pushing into India with
biotech corn and cotton, and into Brazil with biotech
corn, cotton and soybeans.
And, while Europe imposed a de facto moratorium on
the production and import of gene-spliced foods, it's
starting to ease some restrictions.
As demand for organic food grows, so does the number
of organic farmers. Sales of organic food are growing
about 18% a year, with meat and fish experiencing the
fastest growth, according to figures from the Organic
Trade Association. The amount of U.S. certified organic
cropland for corn, soybeans, and other major crops doubled
from 1997 to 2001, according to the USDA.
Instead of just growing organic strawberries and apples,
farmers are expanding into agricultural staples like
organic corn, wheat and soybeans as food marketers offer
more organic products.
For farmers, the lure of going organic is a chemical-free
work environment and higher organic-crop prices. Organic
produce sells at about a 30% premium to traditional
produce. However, much of that premium gets eaten up
by the higher cost of growing chemical-free crops. Converting
pesticide-tainted land into organic soil can cost as
much as $10,000 per acre.
Although the number of organic farmers continues to
climb, there are signs the growth may be leveling off.
The number of organic farms rose by about 12% each year
from 2000 to 2003 in California, the state with the
most organic farmers. But last year, it grew only 6%
to 7%, for a total of about 3,000 organic farms in the
5. Longer Life
Commodity processors are increasingly using sophisticated
equipment to improve the shelf life and taste of foods.
Chiquita Brands International Inc., of Cincinnati,
last fall invested $3.5 million in a company that makes
packaging designed to keep bananas fresher. Landec Corp.,
based in Menlo Park, Calif., has developed a membrane
that regulates the flow of gases through the packaging.
When shipped and stored in the packaging, the shelf
life of a banana about doubles, making its quality more
6. The Safety
The industrialization and globalization of farming
is making food safety more challenging. Food travels
farther, spends more time in transit and is touched
by more hands, increasing the opportunity for problems
as well as the potential scope of any outbreak.
With the U.S. getting more food from overseas, detecting
an outbreak and finding its source becomes more complicated
and costly. The USDA estimates that five common food-borne
illnesses cost the economy $6.9 billion annually in
medical expenses, lost productivity and deaths.
Food-safety advocates also worry that new farming practices
are having unintended consequences. Livestock are increasingly
raised in confinement, a technique that allows producers
to control their environment and diet in order to speed
growth. But raising a large number of animals this way
can make it easier for diseases to spread. Many producers
resort to antibiotics so often that medical experts
are growing concerned. The problem is that the practice
can increase the opportunity for bacteria to develop
resistance to antibiotics used in human medicine.
New technology is helping processors screen for bacteria.
Minneapolis commodity-processing giant Cargill Inc.
is installing a system of blue lights in its meat plants
that can detect traces of chlorophyll on beef carcasses
-- a sign that stray animal guts may have spread E.
coli onto the beef. Previously, this job was largely
handled by inspectors relying on keen eyes to spot problems
with the meat.
Tabs on Trees
In a key food-safety advancement, the government and
technology companies are laying the groundwork for a
nationwide livestock-tracking system that would help
prevent the spread of diseased meat.
By tracking animals from birth to the supermarket,
regulators would be better able to find those that are
potentially exposed to diseases and keep them out of
the food supply.
The USDA has said it will put $51.8 million toward
an identification system. Many technology companies
are vying to supply the gear, and some farmers are already
adapting it. Digital Angel Corp., of South St. Paul,
Minn., makes a livestock ear tag that contains a data-rich
microchip. The company sold more than one million units
last year, five times as many as in 2003.
Some farmers fear such a system would bring to their
doorstep liability for a food-safety problem. Cattlemen
"tend to be very independent, and they are always
concerned about Big Brother inserting itself into their
business," says Kevin McGrath, president and chief
executive of Digital Angel.
8. The Answer
in the Wind
Seeking new streams of revenue, farmers are leasing
land to energy companies that erect towering turbines
with wind-spun blades to produce energy.
Such projects are a small but important source of income
for farmers, particularly in poor rural counties. One
turbine can generate as much as $5,000 in lease payments
a year, according to a report by the U.S. Government
The Department of Energy is aiming to make wind power
the source of 5% of the nation's electricity by 2020,
up from less than 1% in 2004. The department estimates
the shift will provide $1.2 billion in new income for
farmers and rural landowners and create 80,000 new jobs.
One challenge will be to match wind supply with demand.
States that are best suited to produce wind power, including
North Dakota and South Dakota, have seen little investment
because they lack big cities to use the power and the
transmission capacity to deliver it to small, remote
towns, according to the GAO. State tax incentives have
speeded projects in California, Texas and Minnesota,
and federal funding that stretches through 2007 likely
will spur more investment.
9. Aging Farmers
Young people continue to eschew farming, changing the
demographics of the typical American farm household.
The average age of principal farmers has risen steadily
since 1978; in 2002 it was 55, up five years from 1978.
Experts say that thin profits in most years and steep
upfront costs are keeping many young people from starting
their own farms or even taking over the family farm.
A poll conducted by Iowa State University last March
found that 57% of Iowa farmers would not encourage young
people to become farmers.
The state is working to change that. An Iowa State
University program pairs aspiring farmers with ones
who want to retire yet don't have heirs to take over
their farms. Prospective farmers work as apprentices
and get advice on securing loans to help them buy land.
Since 1992, the program has matched about 90 farmers.
10. Fewer Farms
The continuing decline in the number of U.S. farms
is reshaping the Farm Belt. The number of American farms
peaked in 1935 at 6.8 million. As of 2003, there were
2.1 million farms nationwide, largely because of widespread
farm consolidation. Improvements in farming equipment
have reduced the amount of labor needed on farms and
made it easier for farmers to handle large plots of
The declining farm numbers have been chipping away
at the population of rural areas. That has broad implications
for small-town America. Once-thriving downtowns are
struggling in part because they have fewer farmers to
patronize their stores.
The trend also is reshaping the political landscape
for the agricultural industry. While the Farm Belt still
has substantial clout in Washington, state farm legislation
is increasingly being drafted by people who lack ties
to agriculture, says Paul Lasley, chairman of the sociology
department at Iowa State University.
Ms. Adamy is a staff reporter in The Wall Street
Journal's Chicago bureau.