The Future of Agriculture Post-Covid-19
Perspectives from Industry Influencers
Agriculture is by far one of the most unique industries there is. Growers are at the beck and call of their livestock, their crops, their equipment, and it’s all driven by timetables. As if that isn’t enough, then you have Mother Nature who adds fuel to the fire with her unpredictable sense of humor. Farming doesn’t stop. The supply chain doesn’t stop. Time doesn’t stop. Agriculture doesn’t have a chance to stop.
When the impact of COVID-19 hit much of the world, it rapidly changed lives and the daily rituals of business. To the outside world, it seemed that agriculture was unharmed. That was until it compromised the food supply chain. The pandemic infiltrated the industry from the reduction of intake at processing plants to unfulfilled contracts due to school and restaurant closures, meat shortages, milk dumping, rotting produce in the field, however, it’s not stopping the resiliency of the trade. Remember, it doesn’t have time to stop.
It’s unclear to the fate of businesses, post-COVID-19. Will some emerge stronger, weaker? Will there be more consolidation, less? Will manufacturing take on a different role? What will change and what will stay the same? Are changes made today short-term, long-term? Much of it is unknown, however gathering insight, from those that have their pulse on the market may shed some light.
I recently polled a group of highly respected agricultural professionals that have been around the block a few times, make that the globe! The focus was on two topics – one thing that will permanently change for the agricultural industry post-COVID-19 and one thing that will not change.
The virtual panel included members from large equipment manufacturing, members of agricultural media and industry ag influencers including,
G. Eric Raby, President & GM of CLAAS of America
Daryl Theis, Head of Marketing of CLAAS of America
Darren Siekman, VP of Water Management & Business Development, Valley Irrigation Trevor Mecham, VP of Global Technology Strategy & Industry Relations, Valley Irrigation Andy Carritt, VP of Product Development & AgSense General Manager, Valley Irrigation Willie Vogt, Executive Director of Content and User Engagement – Farm Progress
Dave Mowitz, Executive Editor of Successful Farming and agriculture.com
Tyrell Marchant, Editor-in-Chief of Potato Grower Magazine
Michelle Miller, The “Farm Babe” Ag Influencer
Machinery Pete, MachineryPete.com
The panel’s responses are randomized to preserve anonymity and to ensure if these predictions come true or not, no one’s feet will be held to the fire.
What is one thing you think will permanently change for the agricultural industry post-COVID-19?
Increased diversification, specifically more farm to table and less reliance upon biofuels (i.e., corn-based ethanol).
Certainly, agribusinesses will expand taking orders and then making delivery of products on a remote basis. This will continue to be utilized by farmers and ranchers in the future as it is so convenient. Also, the purchase of used equipment via online auctions will continue to be popular. But we should put these changes in perspective. Many agribusinesses have been taking orders and then supplying their products through telephone or online ordering for years. Two examples of this would be fuel or repair parts, for example. And online auctions of used equipment has been growing in recent years.
Food supply chain fortification – we have and may continue to see supply impacts at the grocery, while at the same time the news is peppered with stories of operators plowing under produce, euthanizing animals, pouring out milk. Certainly, total food demand has dropped and/or shifted with restaurant/school closures, but it seems to have overly affected the whole supply system.
Such a shortage of beef, poultry, dairy, and produce created by a break in the supply chain has caused more people to really understand the efforts of what goes into getting food on the shelves. While this awareness has grown and perhaps, in some devastating way, brought light to what “field to fork” truly means, I’ve seen more awareness and support efforts to understand the process and challenges our farmers go through to feed the world.
Food processing & the cost of food will increase. The food processors are being forced to change the way they process food as demand has shifted and more sq. ft. per person is being required. Additionally, more robots will be brought into processing plants to increase the distance between employees which will have large upfront costs. It is yet to be seen what type of “supply chain flexibility” the government will require food processors to maintain going forward – similar to how banks require certain financial measures to be backed by the FDIC.
Catastrophic backup plans. That’s what SHOULD happen, anyway. It would be very nice to see fewer regulations and more processors.
I think the industry will not be able to return to being blissfully ignorant of how their lives can be affected by things that started in a whole other country. I think everyone has a new understanding of just how fragile the world’s food supply chain really is.
I expect the next couple of years will see major innovations in packing and shipping, especially for the most perishable commodities, to make those facilities more flexible and able to handle a shift in demand. For example, from foodservice-sized bulk packages of frozen potato products to more consumer-friendly sizes that can be sold in grocery stores. This whole experience has proven that though the U.S. can more than adequately supply its food needs, the supply chain needs to be able to support a massive shift in where that product is demanded. And I expect the industry will, as it ever has, figure out a way to prepare for a possible similar occurrence in the future.
The WAY used equipment is sold, whether at auction, private seller, or off the dealer lot. COVID-19 has forced/brought Millennium Falcon light speed jump type of change/innovation to the space. More transactions will take place online. Online auctions will grow exponentially. But more powerfully, sellers of all types (auction, dealer, private) will begin to use technology tools in new ways to present their item(s) for sale to a wider pool of buyers. Not as local as in the past. Equipment listings will no longer be flat, 2-dimensional text-based descriptions. That = Not good enough now. Will be a lasting powerful GOOD for the whole farm equipment universe....more efficient/productive sales of used iron will have the effect of better conditions for NEW equipment sales.
I think we will undergo a significant review of our food system, and what will change (or have to change) is the distance from farm to table – processing capacity must be restructured. For grain farmers, there may be little change because this process is socially distant in most cases, though retail buying will be altered until there is a vaccine.
What’s one thing that will not change post-COVID-19?
Resilience of the agricultural world – if anything, it could get stronger. It’s amazing as I sat at a desk only to see online pictures and videos of planting or 1st cutting of hay going on as if nothing was happening. The world was shutting down, but one of its vital organs, agriculture, continued to keep going.
The need for trusted advisors and the importance of direct relationships with large growers. Consolidation will not change, and the market disruptions will only accelerate the ‘big getting bigger’.
Farmer relationships. Even from a distance, farmers will rely on their dealers to provide valuable information as needed, though it may come in many forms. But that relationship and need for support won’t change.
People still need to eat. The world has to be fed and Agriculture is as critical as ever.
The importance of person-to-person contact when it comes to major purchases of agricultural machinery. Farmers will continue to want to deal with a salesperson in person when purchasing a high horsepower tractor, combine or center pivot system, for example.
The demand for locally grown products will continue to grow – and maybe accelerate – as a result of the COVID-19. I also think the agriculture community will continue to improve its ability to communicate to consumers exactly what we do and who we are. That may be considered a change, but it's a trend that has really picked up steam in the last two or three years, and this is a fantastic opportunity to continue that.
I think consumer buying habits will go right back to the way they were. Buying local is important. People say it but often don’t put their money where their mouth is and care more about convenience than anything (i.e., ONE grocery store).
The farm equipment space has always been a very PERSONAL business. This will NOT change. Power of personal relationships, trust, HUGE in this space. Technology will in fact accentuate the personal nature of the equipment business.
A lot isn’t going to change…but in short, COVID isn’t going to change the macro trends and economic factors: consolidation will continue, people will trust people, the digital revolution will continue.
The farmer will not change. The farmer will continue to work. The farmer will continue to grow crops. The farmer will continue to take care of the land to make sure that no matter what the case, cause, or catastrophic event, they will continue to care.