The Changing Structure of Agriculture Independent Insurance Agents of Iowa Rural Agents Conference January 26, 2006 Michael Duffy Director, Beginning Farmer Center

The Changing Structure of Agriculture: Outline Farming Agribusiness Consumption

The Changing Structure of Agriculture: Farming A farm is defined as any place that sold or could have sold $1,000 worth of agricultural products. This definition has been used since 1974 Case of the disappearing middle Tight margins Increased reliance on government payments Aging population Changing rural environment

General Characteristics and Demographics

Income and Enterprises

Land

Next Generation

The Changing Structure of Agriculture: Agribusiness Disappearing middle Increasing concentration

Agribusiness Concentration Changes and increased concentration have occurred in almost all phases of agribusiness support –Seed –Machinery –Fertilizers –Pesticides

Consumer Patterns

Changing Structure of Agriculture; Concluding Thoughts Agriculture is changing and will continue to change at the production, processing and consumption level Production is dominated by a dual system with a large number of very small firms and a small number of large firms. These trends have been continuing for a number of years

Changing Structure of Agriculture; Concluding Thoughts Concentration in agribusiness is resulting in fewer large firms with an increasing share of the market provided by fewer companies. U.S. consumers spend a decreasing amount on food as such they are able to spend more away from home buying more of the attributes than the food

Changing Structure of Agriculture; Concluding Thoughts Consumer preference do change over time; some indication that other attributes besides convenience and price are important Energy price increases could slow or reverse some of the trends Very little is inevitable; the questions are should the U.S. be concerned with these trends and what could be done

Changing Structure of Agriculture; Concluding Thoughts Increasing concentration leaves the U.S. more vulnerable to supply disruption, bioterriorism, environmental impacts and pest changes Strategies could be pursued at both the national and state level; policies such as controlling anti-competitive behavior, internalizing the external costs, and supportive policies could all be enacted

Possibilities for Income for Beginning Farmers Farm with tight margins with a lot of volume Widen the margins through management and marketing Alter production for non-commodity commodities or alternative crops Supplement income with off farm employment (could be on farm) Full time employment, farming part-time or wait to start farming

Changing Structure of Agriculture Change is inevitable; the direction of the change is not We must decide as a society what type of agriculture we want and what we want from it Individuals have to decide how they are going to fit in the structure and operate accordingly The choice is ours

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