US farm crops and today's market

By Howard Halderman

11 /18 /19

 

Meeting global food demand in the coming decades promises to be a complex challenge. Estimates for the world's population by 2050 are as high as 9 billion, a gain of nearly 2 billion compared to 2019.

To meet the additional nutritional demands of that population, farmers will have to either expand or become more efficient or both. And that expansion is not proportional: to meet the additional demand, experts believe that double the amount of food volume will be needed for the population.

Increased farm yields in recent years have offset lower crop prices, and we believe that farmers will continue to have pressure to increase yields and diversify their crop offerings to be successful in the next few years.

Population plus more income equals lots of new demand

Not only is the population growing in the developing world, it is growing wealthier. As disposable incomes increase, people shift demand away from grains and sustenance crops like cassava to more calorie-dense protein like poultry, pork and cattle.

The compounding effect of a greater number of people and an improving diet work together to create demand that is not strictly linear, based on the additional population, but changing in a variety of ways since those people will require food products that are higher up the food chain. Livestock requires grain, so the demand for grain will rise substantially as well.

Limited supply of land requires technology for productivity

When people drive through Midwestern states like our home state of Indiana, it may seem like there is an infinite amount of farmland. But in the U.S., Canada, and the E.U., the supply of farmland has basically been exhausted. There is additional capacity in sub-Saharan Africa and parts of South America, but it is apparent that meeting future crop and livestock demand will require technological advancement.

Feed, pesticides, equipment and new robotic tools are the inputs that can be developed and improved to meet new demand. Technological advancements can improve the yield per acre for crops. At present, many important crops like corn do not deliver nearly their potential yield from seed. Paying more attention to inputs like capital, labor and fertilizer is something farmers can control as opposed to crop prices.

Corn that potentially can produce 600 bushels/acre in actual practice delivers about 175/acre. The attrition is due to loss from pests, weeds and suboptimal weather. Technology has the potential to gain back some of this loss in productivity.

Improved analysis and targeted inputs

Hybrid crops hold promise for increasing yields as well. New crop strains have been developed to deter pests by killing bugs that eat them. The discipline of precision farming provides a micro-analysis of a farm down to the square inch. Using this level of granular analysis enables farmers to target the exact amount of fertilizer and pesticide to maximize yield.

In the past, farms were treated as a single entity, and as a result, excess fertilizer and pesticides were used, in turn creating unnecessary runoff and negative environmental impacts. We have seen that by refining farm management techniques, not only do yields improve, there is a net positive impact for the farm's future potential and the overall environment.

Halderman Real Estate and Farm Management has helped farmers and owners get the most out of their farms for several generations. We are farm management experts who can assist you with all of your operating and land stewardship needs. Please call us to discuss any questions you have about crop management and trends in the market.