Agriculture is one of the few industries that I can think of that has a purpose larger than simply profits. I’m not saying that companies aren’t looking to make money, but rather there is a comradery across the industry because many are working together for the most noble of goals; to feed the world.
This is no easy task. The world’s population is growing exponentially, with estimates that in the next 30 years, more than 2 billion people will be added to the population. Meanwhile humanity is overusing Earth’s dwindling resources and not giving it enough time to recoup from the use. On top of all this, the public is demanding food be grown to match their current health obsessions- more meat, organically grown fruits and vegetables, and non GMO products, while not realizing the toll that has on our land, our farmers, food supply, and the industry as a whole.
Here’s what we know for sure: there are shifts being made by the big industry players. The decisions they make today motivated by the need to better weather the current market conditions (that are relatively short-lived) will affect the future of our industry. Whether this is for the better or worse remains to be seen.
Here are 3 ways we may see these decisions affect us:
- R&D cuts will lead to a slow down in innovation- With the Dow/DuPont merger in addition to others looming, we’re hearing a lot of news about impending plans to reduce staffing levels of R&D talent. Even if there aren’t cuts, there will certainly not be as much hiring as they might have done separately. While this relatively short-term economic issue has in many ways been caused by getting ahead in the technology department, the current levels of innovation need to continue to be able to meet the potential global food crisis.
- Corporate concentration will lead to higher prices and less choice for consumers- You’ve heard it before- the more players are in the game, the more competition works to regulate prices. It’s one of the foundations of capitalism. When competition slowly disappears, whether it’s because companies are looking into other endeavors or they’re merging with each other, the public loses. Many areas of the agriculture industry are already being controlled by large firms. For example, one company controls the seeds of over 91% of U.S. soybean acreage.
- Rising costs of American produce will lead consumers to buy more imported products- Many consumers are notorious for wanting things better, cheaper, and faster. If they can’t find what they’re looking for from local vendors, they go wherever they need to go to get it. Unfortunately, it’s nearly impossible to find something that’s cheap, fast, and better, and usually, the consumer must settle for two of the three. If products grown on U.S. soil become too expensive and consumers start reaching for substitutes from the developing world, they’re often giving up on quality and/or product information.
While the mission to feed the world is still at the forefront, the impact that the Agribusiness giants are having with their actions to correct their short term problems could have real implications for agriculture in the near future. Share your thoughts on the merging agriculture giants on our twitter @arris_partners