By Kari Williams
From the November/December 2023 Issue
Agricultural demand will continue to grow over the next decade, but at a slower pace due to the “foreseen slowdown in population and per capita income growth,” according to the OECD-FAO Agricultural Outlook 2023-2032.
“Production of agricultural commodities is also projected to grow at a slower pace,” the report stated. “The reduced growth incentives are not only driven by a weakening global demand for agricultural products but by decelerating productivity growth resulting from increased input prices, notably fertilisers, and tightening of environmental regulations. The expected developments in global demand and supply will keep real agricultural prices on a slightly declining trend over the next decade.”
“Over the past decade, the number of farmer-facing agtech start-ups has ballooned. Farmers can now harness software, hardware, and service-based solutions that promise to increase efficiency, ease pain points, and lower their environmental footprint.”
— McKinsey & Company
However, in North America, crop production “is expected to grow faster than livestock production,” the report stated — reversing a trend that developed over the past decade. For example, the U.S. Economic Development Administration recently awarded a $1.8 million grant to Cass County, IN, to upgrade road infrastructure at the Cass County Agribusiness Park. Secretary of Commerce Gina Raimondo said in a news release that the investment will strengthen the park’s “role as an economic driver in the region for decades to come.”
Agriculture, food, and related industries accounted for 5.4% of the U.S. Gross Domestic Product in 2021 and 10.5% of the nation’s employment, according to the USDA. U.S. farms contributed nearly $165 billion of the roughly $1.3 trillion in U.S. GDP — or 0.7%.
Education also will be vital to the agribusiness industry, according to the USDA’s National Institute of Food and Agriculture. The 2017 Census of Agriculture reports the average age of an American farmer is “58 years and climbing.”
A December 2020 study from The National Institutes of Food and Agriculture and Purdue University forecasted 57,900 annual job openings for graduates who hold at least a bachelor’s degree in the areas of food, agriculture, renewable natural resources, and the environment.
“An average of 35,400 new U.S. graduates with expertise in food, agriculture, renewable natural resources, or the environment are expected to fill only about 61% of the expected 57,900 average annual openings,” the study stated.
Innovations in agricultural technology also are vast, despite slow adoption, according to a February 2023 McKinsey & Company insights report. Citing the 2022 AgFunders AgriFoodTech Investment Report, external capital in the agriculture food-technology industry was at roughly $18.2 billion in 2021, “an approximate 38% year-on-year growth since 2013.”
“This influx of capital has brought with it a plethora of technological solutions to the agriculture space,” the McKinsey & Company report stated. “Over the past decade, the number of farmer-facing agtech start-ups has ballooned. Farmers can now harness software, hardware, and service-based solutions that promise to increase efficiency, ease pain points, and lower their environmental footprint.”
Despite the slow adoption, European and North American farmers are at the forefront of “global agtech adoption” at roughly 61% using or planning to use an agtech product in the next two years, according to McKinsey & Company.
