Trends for 21st century agriculture

1. CHAPTER 1:
FARM MANAGEMENT IN THE 21ST
CENTURY
AGRI 4411 Farm Management - Chapter 1

2. Objectives
 Discuss how changes in the structure and
technology of agriculture in the twenty-first
century will affect the next generation of farm
and ranch managers
 Identify the management skills that future
farmers and ranchers will need to respond to
these changes

3. Decision Making
 Manager
– Makes decisions
– Using economic principles, record summaries,
investment analysis, financial statements, etc..
 Decisions:
– Input and output levels
– When and how to acquire resources
– Analyze risk and returns from new technology,
adjusting farm size, changing enterprises

4. 21st Century Manager
 Technology
 Management information
systems
– Aided by electronic
innovations
 More competition with
Non-Ag Businesses for
land , labor, and capital
NO3-N Pre-Season Residual Map resources
from 0 to 12 Inches of Soil Depth

5. Structure of Farms & Ranches
 # Farms decreasing
 Average farm size increasing
Why???
 Labor saving technology
 Employment opportunity off-farm
 Cost of labor increasing faster than cost of capital
 Desire for higher standard of living (off-farm income)
 Cost of new technology requires spreading cost over
more production
 Also fixed costs to learn new skills in
production, marketing, and finance

6. Alternative paths for farm and
ranch businesses

7. Trends
 Farm sizes will
continue to increase
 Sophisticated
management skills
 Centralized production
(poultry industry)
 Management
segregated into more
layers
– More specialized

8. Information Age
 Decision making tools and
budgeting tools underused
in the past because data was
hard to get or to complicated
to analyze
 GPS in crop production
 Miniature electronic sensors
(Animals)
 Portable computers
– Increase speed,
accuracy, and availability
of information sharing

9. Financial Management
 Sources of farm credit more vertically
integrated
– Increased competition with non-
farm sector
– require detailed documentation of
financial performance and credit
needs
– Conformity to generally accepted
accounting principles (GAAP)
– Cash accounting will not always
be acceptable
– Audits
– Controlling assets more important
than owning them

10. Financial
 electronic banking
 standardized financial statements
 electronic accounting

11. Human Resources
 Team of employees
 Need to offer wages,
benefits, and working
conditions comparable to
non-farm
 Increased regulations with
chemicals and equipment
 Specialized responsibilities
 Paid consultants and
advisors

12. Producing to Meet Consumer
Needs
 Ex: Livestock with uniform
size to fit processing
equipment, standard
packaging, and quality
levels
 Foreign markets important
 Niche market important
– Ex: organic farming

13. Vertical Integration
 Farmers may fill one niche in the supply chain.
– e.g. raising dairy replacement heifers,
– producing bedding plants for home gardeners,
– buyer supplied inputs such as pigs or broilers
finished in contract facilities on independent farms
 Highly specialized, highly skilled.
 May have contracts up and down the chain.
 Quality and timeliness are critical.

14. Environment & Health Concerns
 Food quality
 Food safety
 Present and future soil
condition
 Agriculture waste (air and
water quality)
 Successful managers will
generate profit while
conserving resources and
minimizing environmental
problems

15. New Technology
 Biotechnology
offers production
efficiency
 Precision
Farming
 Genetic
characteristics
and growth
stimulants

16. Flow of Information
 more automated collection of information
 easier to classify and analyze
 how much can the human mind comprehend?
 what information is relevant?
 electronic communication is fast but
impersonal

17. More Differentiation
of Raw Materials
 genetic engineering
 product identification and separation
 specialized markets
 advance contracts

18. Globalization
 World economy is more integrated.
 Trade barriers are being reduced.
 Farmers from all countries will compete for
markets.
 All countries will compete for resources.􀁡There
will be winners and losers.

19. Smaller Farms Will Continue to
Form Alliances
 achieve efficiencies
 specialize
 less independence
 more difficult to coordinate
 cooperatives

20. Rural Communities
 Farmers will be scarcer
 More rural residents
 May be residential centers
but not commerce centers
 Quality of life will be more
important

21. Agriculture must learn to serve an
affluent society

22. Final Thoughts
 As long as people eat there will be a living in
agriculture.
 Agriculture is a mature industry.
 Extreme economic conditions tend to turn
around.
 Good managers will take advantage of the
good times and protect against the bad.