The U.S. Dairy Exporter Blog: Market Analysis, Research & News

  • Is This the Best Time Ever for Agriculture?

    By Mark O'Keefe October 25, 2017

    Agribusiness Academic Lowell Catlett sees three megatrends creating unprecedented opportunities for U.S. dairy exporters and others feeding the world.  

    Lowell Catlett has made a living observing megatrends in agriculture and says there is no better time than the present.

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    A former professor of agricultural economics and agricultural business at New Mexico State University, Catlett gives upbeat speeches filled with facts and figures to food and agriculture groups, including the U.S. Dairy Export Council. He addressed members at USDEC's Board of Directors and Membership Meeting in March and nothing has hindered his optimism since then.

    Not only is this the best time to be in agriculture, he says, but the best time to be alive.

    While some people look nostalgically on the past, the “good ole days” weren’t always that good, Catlett says. For many people, “life was really short and it was tough and it was brutal as hell.”  

    In 1900, the life expectancy for men in the United States was 46 years, on average. Today, it is 76.7 years. (And when the average for both men and women is figured, life expectancy in the United States is 79.1 years.)

    Despite today's problems, there has been much progress. Catlett sees at least three megatrends that make him optimistic:

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    1. Millions climbing out of poverty

    Look at the progress at reducing poverty around the world.

    In 1981, according to The World Bank, 1.9 billion people or 42 percent of the world population were extremely poor. By 2013, that number had dropped to 767 million people or just below 11 percent of the world population when population growth is factored in, according to this recent article in The Economist.

    The sharpest decline in poverty has occurred in China, points out this article in The Wall Street Journal.

    Increasing affluence, combined with greater agricultural productivity, is making food more affordable for people around the world―not just in poor countries, but affluent countries as well.

    Between 1960 and 2007, the share of disposable personal income spent on total food by Americans, on average, fell from 17.5 percent to 9.6 percent, says the USDA’s Economic Research Service.

    “Agricultural sufficiency gave you back (nearly) 10 percent of your income because you didn’t have to spend it on food anymore,” Catlett says. “That’s a pretty powerful statement. By the way, we don’t eat one meal a week away from home. Folks, we eat one out of every two.”

    And consumers have never had more choice when eating out, which creates new opportunities for dairy. 

    “If I’m eating one of every two meals away from home, I don’t want just American cheese anymore,” Catlett says, noting that besides traditional choices consumers can now choose from an array of artisan cheeses, organic cheeses and other market segments.

    Fifty years ago, consumers didn't have those choices, Catlett says. “Now we have them in abundance.”

    It’s yet another reason why this is the best time ever to be involved in agriculture, he adds.

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    2. Increasing capacity to produce food

    After 30 years of rapid growth in agricultural production, the world can now produce enough food to provide every person with at least 2,700 calories per day. There is enough food for everyone in the world, if we can secure the access and distribution to make it happen. This document from the Food and Agriculture Organization of the United Nations backs up Catlett's point.

    That wasn't always the case.

    In 1970, there were 3.7 billion people on the planet―half of what there are today―and we could not provide for all of those people, Catlett says.

    “Oh, we did quite nicely here and quite nicely in a few other countries,” he says, but in many countries people went hungry. Today, there are hunger pockets, but it has more to do with an inequity of distribution than whether the food capacity exists or not.

    By 2050, the world population is expected to grow to 9.7 billion. The question, of course, is whether food production can keep up with population growth. Many countries, inclluding China, cannot make enough food for their own populations. They must import.  

    USDEC sees population growth and rising income in developing nations as key factors driving global dairy demand in the future. Read more.

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    3. Technology creating efficiencies

    More and more farming decisions today are guided by technology.

    Precision mapping, including physical sensors and GPS information, allows farmers to monitor their fields for crop moisture levels, soil nutrient levels, crop yield and more. This allows the farmer to accurately locate areas of need, such as low crop yield or low moisture levels, and react accordingly.

    In the future “you will not plant a corn seed, you will not plant a soybean seed, you will not plant a wheat seed, you will not have an animal, you won’t have a tree that doesn’t have a sensor in it and they are going to be connected and somebody has a whole bunch of data to crunch,” Catlett says.

    In the dairy industry, a prime example is the advent of robotic milking. While no one has exact numbers on how many farms have installed robotic milking equipment, everyone agrees that it has quickly gained momentum in the past several years.  Read more.

    Not only are robotics creating efficiencies for farmers, but cows seem to love them as well, Catlett says.

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    Robotics infographic reprinted from "Robotic Milkers From a Cow's Point of View" by DairyGood.


    Robotics are also playing a bigger role at dairy processing plants.

    Farmers have never had more information at their fingertips than they do now with seemingly infinite computer capacity. This is another reason why they have become so productive and able to keep up with a growing world population.

    Just look at the new online resources available for the exporters of U.S. dairy products, shown here.

    A final note on the financial picture

    A final note: Agriculture is sitting on a net worth of $2.47 trillion and a very favorable debt-to-equity ratio of 15 percent, Catlett says. Across Fortune 500 companies, the average debt to equity ratio is 150 percent, he adds. “There isn’t a single industry on the planet that wouldn’t kill for the debt-to-equity ratio of agriculture.”

    “I’m not making light of lower milk prices, lower corn prices,” Catlett says. “I’m just trying to tell you it is the platform that is the best ever in history.”

    Mark O'Keefe is vice president of editorial services at the U.S. Dairy Export Council.

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    The U.S. Dairy Export Council fosters collaborative industry partnerships with processors, trading companies and others to enhance global demand for U.S. dairy products and ingredients. USDEC is primarily supported by Dairy Management Inc. through the dairy farmer checkoff. How to republish this post.  .

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