The following is an edited transcript of Tom Martin’s discussion with a panel of experts on the future of farming. Click below to hear the full discussion:
Tom: I'm Tom Martin, and with us to share their perspectives on what the future holds for agriculture and food production and consumption are Dr. Karl Dawson, vice president and chief scientific officer at Alltech — Dr. Dawson directs activities at the company's bioscience centers around the world — and Dr. Michael Boehlje, who will be joining us shortly. Dr. Boehlje is a distinguished professor of agricultural economics at Purdue University, where he conducts research and teaches in the areas of farm and agribusiness management and finance.
Mary Shelman is also with us. Mary is former director of Harvard Business School's Agribusiness Program and an internationally recognized thought leader on the future of the global agrifood industry. And Aidan Connolly, chief innovation officer and vice president of corporate accounts at Alltech. Aidan has been with Alltech for 25 years. I appreciate you all joining us this morning.
I'm going to pose questions to each of you. Once you've offered your views, your fellow panelists will have an opportunity to comment on those views. But let's begin with a very broad, very big question that could itself consume an hour — we also have some questions that have come in from media, and we'll try to get them in as well.
Beginning with you, Dr. Dawson, are you optimistic about the future of farming, and if so, why?
Karl: You know, it depends a little bit on what you call “farming” right now and the definition of farming, but I would say that I'm not very optimistic if we continue thinking about farming as we did a decade ago — as a typical family farm. The farm has changed a lot, and it's undergoing a revolution — or evolution — with more technology being in the farm, all the time.
To put this into context, I was thinking about a visit I had with my nephew, who runs a farm in northern Montana. He and his neighbors think about farming, using agricultural units, as thousands of acres. That acreage was inconceivable many years ago. We never even thought about using that much land or that many resources, so it's changed considerably.
Even just two decades ago, a 100-acre farm was considered a large farm. These farmers are ready to move to the next level and quadruple in size in the next five years. That's their goal. When they do that, they need the support of technology.
Even just two decades ago, a 100-acre farm was considered a large farm. These farmers are ready to move to the next level and quadruple in size in the next five years. That's their goal. When they do that, they need the support of technology. Whether it's data from the machines they drive, the harvest or crop materials, the seed stock used for animals or in plants — that support has to come from technology. Farmers are really a technology group now.
Tom: Mary Shelman, are you optimistic, otherwise?
Mary: I have to be optimistic. As a farm owner in Kentucky, I have to be optimistic about the future. I do think it's actually a great time. I'm a little more optimistic than Karl. It’s not just about the scale that we can achieve — and a lot of that through technology — it’s also about the ability to achieve more differentiations, to be able to address more consumer needs, and we see now that there are louder voices impacting the food system.
But if I look around the world — and we go back to those tremendous figures that the Food and Agriculture Organization (FAO) provides regarding the change in population and income growth — with the demand for agricultural products, the output of farms is only going to increase and will increase by maybe 60 percent or 70 percent in the next 35 years. That's a great time and a great need that needs to be fulfilled, and I completely agree with Karl that technology will help us do that.
On the other hand, I do think there's this issue of economic viability that we also need to be aware of: the dynamics of how pricing works at the farm level — the typical supply-and-demand economics — those don't tend to move in lockstep. At times — for example, crop farming in the U.S. today — prices are relatively low compared to other times within the last five years. So, we need to maintain that economic viability for farmers to survive and, in particular, to attract new, younger farmers to the system. As we all know, the average age of farmers in the U.S. is increasing. We're approaching the 60-year-old mark. We need new talent, and they will only come in if there are attractive returns in the agriculture sector.
Tom: Aidan Connolly, you work within the areas of innovation and ideas. What do you see in the future?
Aidan: I have the chance to meet the United Nations FAO group every year, and they, of course, have been quite pessimistic about the future of agriculture. We consider the numbers that Mary mentioned of 70 percent increase in food production over the next 35 years, but if you actually compound that out, Tom, you're really only looking at a figure of 1.7 percent improvement in productivity per year — and agriculture has actually exceeded that. I would be extremely optimistic about our potential for increasing and improving the amount of food we produce. I think farming is going to be very much part of feeding this population we've spoken about by 2050.
When you look at the gaps we have from the nutritional perspective in feeding animals, nutritional perspective in feeding crops — these factors that are holding back agriculture — productivity losses, the amount of food that we lose, the amount of fertilizer we waste and where food is lost, even within the food chain. I would be extremely optimistic about our potential for increasing and improving the amount of food we produce. I think farming is going to be very much part of feeding this population we've spoken about by 2050.
Tom: Okay, let's move into our questions and we'll begin with Mary Shelman. Consumers are being described as millennials, “prosumers” and “super consumers.” Do you think we're facing fundamentally new groups of consumers, and do you think this reflects a real change in the marketplace? And, if so, what are their needs?
Mary: Tom, I do think we are facing a fundamental change. We're in the midst of a fundamental change, and that's a very good thing, and I think it's very positive for the food industry and the ag industry. I think people overall — not just millennials — are asking more questions about where their food comes from and how it's produced. And it's not just in the U.S. or in first world countries. This is true around the world in areas, whether it's driven by food safety or whether it's driven by greater awareness because technology — the new digital media — has made information so available. So, I do think we're in the middle of a food movement. I think that this idea of engaged eating is a really attractive thought to get your arms around. A big piece of that, though, is this new millennial consumer that we talk about.
Tom: What is that?
Mary: “Engaged eating” is this idea that someone born between 1980 and 2000 has grown up at a time when technology is all around them — they get information in different ways, they have different values, they've grown up being fed products like Annie's Organic Mac & Cheese compared to Kraft. And now this group — the biggest demographic group with 83 million in the U.S. compared to 75 million baby boomers — are at the stage of having families and moving up in their income potential. So, they are very attractive to the food industry.
First, millennials have a much greater understanding of the link between what they eat and their health, and that's a very positive change. The second thing is that what they eat is part of their identity. It actually reflects who they are as a person. They enjoy taking pictures of their food and posting them on Instagram, sharing a meal with their friends and going out and seeking information about food in different ways — not just from mom or from an advertisement.
...not only do consumers want products that meet a certain price point and a certain safety point, they want products that have a purpose.
Food also reflects our values. This is the thing that perhaps poses the biggest challenge to the traditional food industry because not only do consumers want products that meet a certain price point and a certain safety point, they want products that have a purpose. They want products from an industry that has the same values that they do, and they're often willing to pay more for these products. As a matter of fact, I was at a meeting last week in New Zealand, and someone was presenting the results of a worldwide survey that was asking this millennial group how they thought they had more influence and whether it was through their vote for a political candidate. They say, “No, it's our vote with our dollars.” So, millennials believe that they “vote” for these types of products, and they’re willing to pay for this.
We’re actually at a time that there's kind of a bifurcation in the food system. The majority of consumers need safe, affordable food and accessible food, but yet this group that's a premium category is really growing in their needs and growing in their demands, and they like the stories, they want transparency, they need traceability. I think that’s putting a very interesting twist on the system right now.
Tom: Aidan, any thoughts on this?
Aidan: I would say that, as a father of two millennials, I question whether millennials are really that much different than prior generations. They are compared to the immediate generation before them. We consider whether their values and their beliefs are similar to those that we saw in people from the 1950s and 1960s, who were also very aspirational in changing the world. “Prosumer” is a word I like a lot because I think it grasps a little bit more the fact that they're people proactively making food choices based on their ethics and their desires, what they believe and what they would like to support. And that part, Mary, I think, has been described extremely clearly. That is definitely something that we have not seen before. We certainly haven't seen in the last 20 or 30 years. We provide food which is affordable, which is available, which is safe. Consumers or prosumers are looking for something more, and that's a fundamental change in our food system.
Tom: Dr. Dawson, do you want to add anything? I don't want to exclude anybody here.
Karl: I agree with the comments that have come out. I think you are looking at a different marketplace, and I think that that's something that will drive the overall agricultural system completely. So, as time goes on, it will be interesting how that evolves, but I think it's going to be a simple adjustment in the way markets look at the consumer.
Tom: Okay, Dr. Dawson, next question is for you and Mary, if you would respond. It appears that nutrition has not changed for decades, and we may be at the limits of what we can do given the ways in which nutrition is researched. Are there new tools that allow farmers to understand better how to feed their animals and be more precise in nutrition?
Karl: Absolutely, there are new tools, but I guess I would take a little bit of a different view on this. I really don't see that nutrition has been a stagnant science over the last two decades, or even the last century. We've had a lot of advancements that have really been responsible for a lot of the changes in livestock production we've seen. Particularly in underdeveloped countries, we're using lots of new technology with amino acid balances. Nutrient balances are new things that have come out of that.From our point of view, working at the very molecular level, we can see what effect food and food ingredients have on the basic physiology of an animal by looking at gene expression.
But we do have a lot of new tools that are coming out that are really going to change the way we've looked at this. Some of this comes from the ability to collect data and process that data, to integrate it into a very precise model. We've never had the capability to do that before. From our point of view, working at the very molecular level, we can see what effect food and food ingredients have on the basic physiology of an animal by looking at gene expression. This is a new tool that's progressing. We could probably talk a lot about this, but it's a very precise tool that tells you exactly what's happening and it has really allowed us to uncover a lot of the “hidden secrets” with nutrition.
So, as those new tools are becoming available, they’re going to allow for diagnostic tests. They're going to look at new ways of managing and looking at the way we train our animals to eat.
Tom: There are many tangential areas we could go off to here, and we're only two questions into this conversation. But let's go off on one: big data, because we know that it's having an overwhelming impact and is something of a latecomer to the agricultural world. Does anybody want to offer some thoughts on how big data is changing things and what the future holds in that area?
Karl: I would start off by saying you have a tool here to take millions and billions of observations, whether it's productivity, food intake, the way we grow our crops, how much rain we get — all of this can be integrated into very precise models, and that's going to be the big change in agriculture. If you would like, we're talking about moving to “armchair” farming. We're going to be making our decisions while sitting in front of the computer, looking to see what we can predict in the future. That's a tremendous tool we've never had before.
Big data — whether it be used in terms of diseases, performance of animals or crops, or whether it be used in the realms of a lot of these sensors and new digital technologies — can capture a lot of information we've never been able to capture before.
Aidan: I think, in particular, we've seen some of the bigger questions such as food safety — something which is extremely difficult to measure on-farm — and what can influence it, what causes it to increase or decrease. We at Alltech have been working with other programs where big data allows us to capture the factors that we have underlined — why that occurs — which we've never been able to analyze before.
We're starting to understand things in a very fundamental way, and I think that big data — whether it be used in terms of diseases, performance of animals or crops, or whether it be used in the realms of a lot of these sensors and new digital technologies — can capture a lot of information we've never been able to capture before. We can now interpret that information because we're able to use larger algorithms, larger systems to be able to understand what exactly we're looking at.
Michael: Okay, sorry for the problems here in terms of getting engaged, but I'm here now. To comment on big data: It seems to me that, specifically, we have had significant advances in this area, and the advances may be as much along the entire value chain as they are at the production sector. In fact, the production sector may be lacking and just starting to catch up. The whole issue of the opportunity we have here, in terms of both capturing the payoff of big data not only at the farm production level but also throughout the entire value chain, is really critical. We can now accurately receive the message from consumers of what they want in terms of physical characteristics of their food or their eating experiences and also get more feedback in terms of those credence attributes, which are really important but difficult to measure. Now we can get them more accurately with traceability through that value chain. So, that’s a big advancement.
Tom: Okay. Thank you for joining us, Dr. Boehlje. Let's dig a little more deeply into technology and the next question is for you, Aidan and Dr. Dawson. Let's look at the range of primary technologies that are transforming agriculture beyond big data. What else is happening out there?
Aidan: There's an awful lot happening, and it's very hard, I think, for somebody to capture the degree of change which is occurring. I think if anybody thinks that agriculture is going to be the same way in 20 to 30 years' time, they've got their head in sand. We've written a certain number of papers on the digital technologies and the rate that digital technologies are transforming agriculture at the moment. This includes robots, drones, blockchain, the internet of things, virtual reality and enhanced reality. These are technologies which, either from a hardware or software perspective, can fundamentally change the ways in which we understand what happens when we grow plants or grow animals.
There are other technologies, such as nutrigenomics. That's one that Alltech is invested in very heavily. We're the only ones in animal agriculture to do so. We are big believers that understanding how nutrients impact gene expression in animals and in organisms is going to be very important for maximizing their productivity. I wouldn't forget gene editing, either. This is an area — described as CRISPR — that is dramatically transforming what we can do, again, with the ability of plants and animals to resist disease, enhance productivity, achieve certain characteristics we're looking at from the food perspective.
I don't know how to capture it all in such a short way, Tom, but I'd certainly say the digital technologies, nutrigenomics and gene editing are the three major areas that are going to transform the way we think about how food is produced.
Tom: Karl Dawson, anything to add to that?
There are things that are happening in the area of biochemistry — findings that are really changing the way we think about processing feeds, handling feeds, the way we think about using feed additives.
Karl: I think I'd add a few other things: There are things that are happening in the area of biochemistry — findings that are really changing the way we think about processing feeds, handling feeds, the way we think about using feed additives. All of those are coming from very basic biochemical evaluation of what's going on in the animal systems and the way they eat. We're doing the same thing in plants today.
One of the things that comes up when you start thinking a little bit about this is that we always think about what we're going to do on the nutrition side and how we're going to change the nutrition. We can do that, and we're starting to home in on the gap between genetic potential and what the animal can do.
The other side of that issue that comes up is that we can start thinking about selecting our animals for specific nutrition. We talked a little bit about gene editing and the capabilities there. We have the capability of doing that and changing what those animals look like coming into the system, and we have the same capability on the plant side. That’s a very important thought process to keep in mind: that those two things are going to come together someday, and we have to be able to go forward with those in the future.
Tom: Okay, an open question to all of you: This comes to us form Irish Farmers Monthly, and it dovetails nicely with what you've just been talking about. From both the environmental and the productivity perspectives, how important will electric and autonomous vehicles be on the future farm? Will such machinery become more important in light of the increased need for sustainability as the world population increases? Any thoughts?
Aidan: Look, we're facing a world where we're talking about having planes fly themselves, cars drive themselves. It's perfectly logical that we would see the same thing on the farm. And anybody who's seen some of the injuries that can occur on a tractor and cause somebody to lose an arm or a limb understands that there are all sorts of safety issues that could be addressed by no longer having the potential for operator error.
From my perspective, I think it is difficult to find labor on-farm. When you find labor, you want labor to be well-trained and well-prepared. You have safety opportunities, also. I think there's just going to be a lot of factors that are going to drive for these autonomously driven tractors and harvesters to become part of our future.
Automation and robotics are going to be, I think, much more common and more rapidly adopted than many people think.
Michael: Automation and robotics are going to be, I think, much more common and more rapidly adopted than many people think. We have a debate here on the Purdue campus of how quickly we're going to see those happening in the field. The discussion is related to whether it's going to be five years or 10 years before we're going to see an adoption of automated tractors and other systems within crop production agriculture. We already see it in the dairy industry in terms of robotic milking. We're seeing it happen particularly in terms of harvesting, especially crops. It’s going to happen much more rapidly than we realize, and it has the opportunity to profoundly change the agricultural sector. It’s a really, really important development.
Tom: Anybody else?
Karl: I think that's true, and, quite frankly, it's not that far off. Some of it is already here. I've been on combines that essentially drive themselves down the row. You need a driver there to turn the combine around, but in the big fields, these 18-, 19-, 20-foot stalls can be driving themselves, and they're controlled by GPS. It's amazing to see how little manpower it really takes to run those.
Michael: And now they’re able to turn themselves around. So that's even changed.
Karl: They didn't the day I was there.
Michael: Oh, I understand, but that's how fast this technology is coming. It's coming very rapidly. My belief is we'll see this in the fields in five years — not 10 years — and rapidly adopted.
Tom: Aidan?
Aidan: I was just going to say I was with an ag-tech startup that obviously made too much money because the owner had just bought himself a Tesla. He just took his hands off the steering wheel and let the car drive itself, which gave me a little bit of heart palpitations as I watched it maneuvering its way through the city. But it shows you what's possible. In the fields, we've got a much more controlled environment — we have much less risk of things such as car doors opening or bicycles. It’s an inevitable part of our future, and we have the perfect opportunity to use this technology.
Mary: I just want to add an even finer detail around it: What happens when we get in the field and we have the sensors on and the sprayers operating and you're actually sensing which weed to spray or which bloom doesn't have enough pollen on it so you can provide supplemental pollination? We have this micro-level influence. Technology can help us get closer to achieving that potential.
Tom: We're talking about 9 billion people by 2050. Do these innovations get us to where we need to go to be able to feed the world?
The technology is developing fast and it will continue to keep up with the demand for the foreseeable future.
Karl: I think there's no doubt about that. I think the technology is developing fast and it will continue to keep up with the demand for the foreseeable future.
Aidan: I had the opportunity to talk to a cooperative this week that was asking for some ideas about 2050, and I said that 2050, for me, has become unimaginable in terms of what could potentially happen. I often wonder whether 2050 is the right number to use. Maybe we should just be focusing, as Dr. Boehlje mentioned, on the next five to 10 years, where we can concretely comprehend what will change. But if you say the number is 9 billion and Mary says the number is 10 billion and somebody else says, “Well, what happens if we start being capable of changing life itself and really extending life spans?” maybe the number we're looking at is 15 billion. Maybe we're looking at a much greater number of people that we're going to have to feed.
I think we need to be really cognizant of the fact that this technological thing is moving so quickly. Don't stretch yourself too far in predicting. Look concretely at what should be used and how it should be used in the foreseeable future, which is probably more like 10 years than 35 years.
Tom: These things are changing so much more rapidly these days. You mentioned nutrigenomics earlier, and I wanted to touch on that with Dr. Dawson. What are the main benefits that you see from a nutrigenomics perspective for farmers, and how will that change the way that they farm?
Karl: Well, if you think we're going to have a diagnostic kit tomorrow that solves all the nutritional problem of animals, nutrigenomics isn't going to deliver that right now. However, it is redefining nutrition. When we think about the value weight of feed material or feed product, the supplementation strategy, management practices, the way we feed calves or young chickens — all of those things are starting to change now because we have a tool that allows us to actually measure what happens when we make a nutritional change. That's a very powerful thing, and it's not only allowing us to look at productivity. We can now measure immunity in a bird and change that by nutritionally altering the young chick's diet. Same thing with calves: We can pass material information from one generation to the next using a nutritional strategy, but we can actually measure that and see how it's done.
Nutrigenomics is really going to redefine things. It's already redefined mineral nutrition. Trace mineral nutrition will never be the same...
Nutrigenomics is really going to redefine things. It's already redefined mineral nutrition. Trace mineral nutrition will never be the same as we view it from now on. We know that we can use less minerals. We can change and have less impact on the environment by using these tools. This tool allowed us to very rapidly understand that and change our nutritional practices.
Tom: Dr. Boehlje, I want to give you an opportunity to jump in here.
Michael: Let me just comment quickly. I'm not a scientist at the same level as Dr. Dawson, so I don't have that understanding at a granular level. But, we sometimes describe the technologies as moving agriculture from “growing stuff” to biological manufacturing. This biological manufacturing is very much in the context of what we've already been talking about: it's understanding the science and nutrigenomics. It's understanding biotechnologies and everything that has the potential to significantly impact the growth process of plants and animals at a much more scientific level. We’re getting sciences and technologies that are developing because of the interconnectivity between science bases previously kept in silos: nutrition, nutrigenomics and biology. We see some universities that have said, just as an illustration, that science is not only important, but is also essential. In fact, the required science increasingly in many universities is you have to take biology. You have to take biology to get an understanding because biology is increasingly driving the world.
Mary: You know, can I come back to that, Mike? I agree with you and Dr. Dawson that science and nutrigenomics is giving us amazing tools. But, Mike, you used that term “biological manufacturing,” and I put on my consumer hat, and I just think that that's a terrible term. Today’s consumers don't want their food manufactured in any kind of factory, and that's just kind of the picture that comes to mind (with the term “biological manufacturing”). We were talking about how we can be more responsive to consumers, have differentiation, we can give this credence attributes, yet you're proposing or using this term that's actually far from that.
Michael: I understand your perspective and I absolutely agree with that perspective. We aren't going to promote or advertise, we're not going to be saying to consumers, “This is a biological manufacturing process.” In fact, the word “processing,” generally, is not something consumers really want to hear relative to food.
It's interesting, though, that consumers are more than happy to hear the term “processing” relative to health issues or other things they buy, but they really are, in many cases, very negative about the term as it relates to food.
I'm not going to promote “biological manufacturing” to consumers, but it’s certainly a concept we in the industry, at the production level, must be increasingly mindful of. This allows us to adopt and facilitate the process of growing and producing food more scientifically and better than we have in the past.
Tom: Dr. Boehlje, a topic that we were discussing before you were able to join us is big data — or farming data — in the future. Actually, it's happening now. How does that affect the types of people who will choose farming as a profession in the future? Do you think it will change the attractiveness of agriculture in some way?
Michael: I think that, increasingly, what we're going to find in this industry is that those people who are going to be successful have some skills that maybe they need to enhance to be successful. Particularly, what we're interested in is analytical skills — analytical skills that are tied to data and information.
We see this particularly in the financial area, which is the area I work in. Some farmers abhor recordkeeping. They abhor this idea of having to keep financial information to provide to their lender, to understand their own business, to get the financial performance assessment that they need. We need to, increasingly, develop that skill and feel comfortable with that skill of looking at numbers, looking at information, trying to understand what the numbers say and the story they tell — not just crunching those numbers. Data assessment, data summarization, data visualization — those are going to be skills that we need to have more and more of our producers understand, and they will be the skills that might be very important differentiators.
And it's not just the stories that we need to have in terms of average yields. We see that, as we go across the fields with our yield monitors today, it's the distributions that count. It's what happens when you are in parts of that field where you have low yields as a function of a number of things that happened — whether they be weather or whether they be agronomic-oriented — and where you get those high yields as well. The same is true with animals. We're starting to see different animal performance even in the same pen in the same group as a function of their genetics, as a function of a number of things. We're going to get more granular in the data, and we need to understand the story there.
Data assessment, data summarization, data visualization — those are going to be skills that we need to have more and more of our producers understand, and they will be the skills that might be very important differentiators. Certainly, strategic thinking is another one of those skills, risk assessment, a lot of other skills. But the one specifically related to big data is this willingness to work with data and understand "the story" it tells.
Tom: Aidan, do you have thoughts on that?
Aidan: Yes, from a historical perspective, I think of what our system was for deciding who would become farmers. I suppose, originally, everyone is a farmer, and then gradually we decided that there would be land and that land would be passed from a farm owner to their eldest son. And over time, then, it seems, — at least in Ireland — it was divided amongst as many children as you had. Each one got a parcel of land, which created its own issues. Gradually, we seem to have moved toward a system where those who don't want to stay on the land go to cities or go and find other jobs, and we've been left with the people who really want to be farmers. Only in the last 20 or 30 years did we start to understand that being a farmer involves education as well. So, obviously, all the educational systems were set up through land grants and other systems around the world to try to create farming as a profession.
I think what we're looking at now is a fundamental change in what that farmer will look like. They won't necessarily grow up on a farm. They might grow up in the city. They won't necessarily have the skills of understanding animals or understanding plants. They'll understand data, they'll understand analytics, equipment, decision-making between all the various technologies, and what they should buy and what they shouldn't invest in.
I think what we're looking at now is a fundamental change in what that farmer will look like.
So, those are dramatically different skills and skills that were used for the last, I'd say, thousand years — you might say a hundred years — to select or to decide who is it that's a farmer, who is not a farmer, and that's very fundamental. And back to the same numbers we're talking about, I think those influence not who is going to be a farmer in 10 or 20 or 30 years' time. Probably even in the next five years, we're going to see dramatic differences in terms of who are the right people, who are the successful people who are going to take over stewardship of the land.
Tom: It seems to have broad implications for the entire culture. Are we talking about these attributes appearing mostly in large farming operations, or all the way down the chain to small family farmers?
Mary: I think they have to go all the way down to small family farmers. I would come back to this and say to both of you, to Mike and to Aidan, that you gave a great description. I agree completely. It's about understanding the data to use the data. But, again, what's missing is the typical production push, and we now have consumers controlling more of the acres.
It’s not just about producing at the lowest price, but producing what the market wants...
I would add to this list — and this is whether it's maybe more appropriate even for a small family farmer or the new generation that is very attracted to farming for different reasons — is being able to understand the market. It's about being able to understand how to deliver this differentiated product that has extra value. It’s not just about producing at the lowest price, but producing what the market wants — or different segments that the market wants — and being able to sell into those channels, connect with those channels.
This is a very big basket now — a very big ask — which is a great thing for family farming enterprises because, typically, you don't have just one person doing all the decision-making — you have a whole set of people. The whole family is around the table, and it's the husband and the spouse, even the children as they come into the family business. I see these enterprises, and they have different specializations within, and that's fantastic because everybody can bring their strength to the table.
Michael: Let me just completely agree with what Mary said. That's a really important issue. We have a tendency in agriculture to talk about supply chains. That's true in almost all industries and is reflective of the “push” mentality that we've had in a lot of industries, including agriculture: how we're pushing through the supply chain to the consumer. Increasingly, we're talking about “chain reversal,” and that's the whole idea: demand-driven change. We have consumers increasingly telling the entire chain what they want, how they want it and how it ought to be done.
An important skill that's going to be much more important for farmers is going to be this whole idea of understanding and a willingness to work in an interdependent system — rather than being independent — and be very focused on relationships, collaboration and interpersonal skills. Those are things that many farmers haven’t historically — if I take my own father, for example — liked to do. He wanted to be in his farming operation. He didn't want to do farm records, and he didn't want to have a whole lot of relationships with other people. And, increasingly, those skills will be essential to be a successful farmer in the future.
Tom: I have a question here from media that I think is appropriate at the moment. Let's just open it up for everybody. I think each of you can bring a perspective to this. This is from Owen Roberts. He's with the University of Guelph and is president of the International Federation of Agricultural Journalists, and he asks a very appropriate question because of what happened yesterday in Switzerland — the country renowned for its food supply. They held a national referendum yesterday designed to anchor food security in their constitution. It initially won approval by about 77 percent of the electorate. Globally, this was quite a groundbreaking exercise on their part, reflecting the growing interest by people everywhere in the production of the foods they consume, as you mentioned, Mary. He asks that we touch on some reasons why precision nutrition can give them confidence about the future of food supply and how they get that message to consuming public. If you'd like to begin with that, Mary?
Do we have the water? Do we have the land? How is climate variability affecting things? This precision nutrition piece is an important data tool that will enable us to do as much as we can with the resources that we have.
Mary: Wow, that's a tough one. I think this issue about food security is really important for everybody in the world, right? And you're talking about Switzerland here. The challenge is that in some countries you don't have the resources to do that. I don't know enough about this referendum or the backend pieces of it. But, I'd say that precision nutrition will be incredibly important to meet this global demand. At the country level — we have talked so much about the fact that we can enhance productivity, but we have to do it in a time of decreasing resources, decreasing natural resources. Do we have the water? Do we have the land? How is climate variability affecting things? This precision nutrition piece is an important data tool that will enable us to do as much as we can with the resources that we have. I think country by country you're not going to get the same answer.
Tom: Wheels are turning here, I guess.
Aidan: I think that we talk all the time about the need for countries to produce all of their own food, and in essence, that sounds like motherhood and apple pie — you have to agree with it. I don't feel that old, but I can remember days, or growing up, when there weren't oranges in the supermarket, when you couldn't find bananas all year round, when things were much more seasonal. We've all gotten used to the idea that there's an abundance of food. It's available relatively inexpensively. Its carbon footprint, even if it comes from Colombia or Kenya, is actually quite low because the systems of distribution have become extremely efficient. I'll even look at countries like China that want to be sufficient in food yet increasingly are consuming corn from Brazil and soybeans from the United States, and they are purchasing pork and chicken. These are countries that have said they want to produce everything themselves. It's clear that that isn't always that easy.
..the fact is that we have this increasingly interconnected global system, and consumers have an expectation of being able to have food available at a relatively cheap cost and all the foods they want all year round.
Mary and I have had this debate in the past about people storing food in cans in their houses. Is that what we should be doing? We imagine people would start to do that again. I struggle with that idea. I think the world has become increasingly global. It requires, of course, free trade and requires us to trust that other countries won't declare war on us — which maybe is a big thing to wonder about. But the fact is that we have this increasingly interconnected global system, and consumers have an expectation of being able to have food available at a relatively cheap cost and all the foods they want all year round.
Tom: Dr. Dawson, do you have thoughts on this?
Karl: I agree with the direction that Aidan is going, but the important things that are coming out today with agriculture boil down, oftentimes, to resource limitations — what do we have to work with? Whether it be the environment, land, water — those are the things that are going to drive the way we look at efficiency as we move forward. I don't know the initiative that they're talking about in Europe, but the idea that these are things that we can control right now is probably not right. We're going to have a limited amount of resources.
I look at an area where I grew up in southwest Montana. At one time, people died over water rights. For many years, it hasn't been that way, but I received something in the mail the other day that said I had to declare my water rights again on the property that I own there with the idea that that's going to go away pretty soon. It's going to be legislated. Maybe there are some security issues there we need to look at. One of the reasons that it's bad there is mining, which uses a lot of water, but the fact is that it's going to happen around the world. So, security does need to be legislated to some extent.
Tom: Dr. Boehlje, thoughts on food security?
It’s not just our ability to produce enough to have "food security." It's also our ability to protect the amount of production we get and make sure that it actually gets to consumers and, as a matter of fact, to be more efficient and effective in terms of consuming it...
Michael: Yes, I think the other dimension here is what kind of losses we have in the food chain, particularly in different economies in different countries. It’s not just our ability to produce enough to have "food security." It's also our ability to protect the amount of production we get and make sure that it actually gets to consumers and, as a matter of fact, to be more efficient and effective in terms of consuming it and not having such waste as we frequently have, particularly in the developed countries and developed world.
This whole issue of trying to reduce the amount of losses — the wastage — the amount impacted by storage losses, waste in the field, by not getting harvested adequately, by not getting transported adequately — particularly in many countries in the developing world. At the same time, in countries like the U.S., we have a lot of food wastage that occurs just out of our own refrigerators, out of our own food systems, where we buy food products, we don't consume them, we don't take care of them, we don't refrigerate them — and if we do refrigerate them, we lose track of them — we throw it out the back of the restaurant, we may try to donate it, but sometimes it's already expired in terms of its ability to be able to be consumed. There's a lot of waste in the system, and there actually are some major initiatives underway on the part of both corporate and university organizations to try to reduce the losses in the food chain, and that's an important part of this discussion.
Tom: Dr. Boehlje, I want to stay with you for this next question, and Mary, if you would consider this as well: Economically, the U.S. has been the best place to farm, as you have written, based on its strong infrastructure and on its open markets. Do you think that that will continue to be the case in the future or should farmers be seeking new places to conduct business?
Michael: We already see that occurring. We have significant expansion of production in agriculture, as everyone knows, in South America, Brazil, Argentina being particularly the case — significant expansion of agricultural production in Ukraine, and they are major competitors now to the U.S. We see it occurring in China, we see it occurring in Africa. So, we do see opportunities much more broadly in terms of farming than we used to. I can name a farming family here who has both a U.S. operation and a Brazilian operation. I actually know three families that have that kind of situation.
So, we are expanding agricultural production more globally. If you go back 30 years or longer, a crew chef from the former Soviet Union came to the U.S. to buy wheat to feed his people. Here we are in the middle of a cold war and he comes to the U.S. — his archenemy — to buy food. This has to be the ultimate indication of the failure of the system. Why did he come to the U.S.? Well, in a way, we were the only store in town. We were the only place where you had the opportunity to get the amount of wheat that he needed to feed his people. Now you can get that in a much broader base of geographies, in addition to corn, soybeans and other products.
Now, the interesting dimension is that we're going to see farmers who are more geographically diversified in their production systems. We already see it in the specialty crops, where farmers in California have Mexican production as well because they can't grow what they need there. We see it happening in terms of other parts of the U.S., where farmers are in different geographic regions even across the U.S. I've got a potato grower friend who grows potatoes in nine states, 15 locations.
We see it already happening in the U.S. We think it’s going to go into a more global perspective, and that's really an interesting question and issue because it has profound implications: If we geographically diversify production agriculture, how will the potential weather variability impact total supplies? Will we get diversification benefits? We don't know. But one would logically think that we do. So, will there be farming opportunities in other parts of the world that farmers — whether they be U.S., whether they be European, whether they be South American — ought to be seriously thinking about? The answer is yes.
Tom: Mary Shelman, thoughts on this?
Land probably isn't the unit of natural resource that we should be looking at. I think water is, in the future, the way that we're going to frame farming operations.
Mary: Well, I absolutely agree there are opportunities all over the world. Mike didn't mention Africa. I think that's the next frontier for farming, and they need a lot of strong technology and value chain development there to make that work. However, to come back to the opportunities in the U.S., I think they're still very strong, although it's a bit of a transition from the typical push mentality into one that's more based on getting the most value per acre, per animal, per unit of natural resource. Land probably isn't the unit of natural resource that we should be looking at. I think water is, in the future, the way that we're going to frame farming operations. You think about what happens with the tremendous growth of the Brazilian soybean industry — it's basically shipping water from Brazil to China. That's really how I think about agriculture in the world: removing water from one place to the other. There is also the New Zealand dairy industry, selling water basically through milk powders to China, to India, to other places in the world.
I think here that there are tremendous opportunities, but our farmers have to be much smarter in terms of all these technologies we were talking about, the different ways that they think about their business, and connecting to markets and figuring out where to get the most value from that water, from that land, and how to factor in the risks.
Tom: Karl? Aidan? Thoughts?
Karl: One of the things that we haven't touched on much here is the efficiency of animal protein production. If you start looking at things that are going on around the world right now, aquaculture is one that will really get your interest. The development of recirculating aquaculture systems is full-steam right now. More of them are going into Norway — their production of fish. These recirculating systems are going to grow tenfold in the next five years.
Tom: And those are land-based, correct?
Karl: Those are land-based systems, but they're very intensive when looking at protein production. We're talking about a system that's probably three to four times more efficient than any of the terrestrial animals we're used to working with. They're better than chickens, they're better than pork, they're better than beef by a long way. So those kinds of impacts are going to be tremendous when it actually comes to looking at animal protein and the way they're being developed. For us in the feed industry, the implications are gigantic.
Tom: Thoughts, Aidan?
Aidan: No.
Tom: Nope. Okay. I do have one that I think you might like to address: Blockchain. This, by the way, comes to us from Simon Duke of Feedinfo.
Aidan: You can thank him personally from me.
Tom: What’s your opinion of blockchain and its potential for the animal nutrition industry?
Aidan: Blockchain is one of the most exciting of the digital technologies. It's also one of the most difficult to get your head around. I suppose the bitcoin example is the one that most people are most familiar with, and it's the one that probably makes it easiest for people to understand: You have something which is this digital ledger where you can understand what's happening in the chain, but not see the individual actors or the individual people who are involved in the chain. I think that has tremendous implications for agriculture. Typically, as farmers, we have not liked people knowing exactly where our cattle come from. At the same time, when there's a disease, we want to be able to trace it back. We've not liked knowing who the people are who transform our food from when it's grown on the land to when we consume it. And, yes, again, if there's an E. coli outbreak and a child dies, we want to know where it occurred and how it happened.
Traceability is a fundamental part of our future. Recapturing the confidence of consumers is extremely important, and I think blockchain is the technology that allows us to do so in a manner that keeps us comfortable.
I think when you see companies like Walmart getting behind blockchain and using it in countries like China and being so impressed by its potential — and then they start taking it to the United States and elsewhere — I think you can see what the possibilities are. Traceability is a fundamental part of our future. Recapturing the confidence of consumers is extremely important, and I think blockchain is the technology that allows us to do so in a manner that keeps us comfortable. We're not giving away all of our secrets and, therefore, perhaps not trading our margins to the end food retailer, but at the same time making sure that something does occur. How fortunate that is that we can actually find out where that occurred, what it is that we need to do to stop it happening again.
Michael: I think this issue of blockchain is a really important issue — sorry for interrupting — but let me just leverage those comments on food safety and traceability just a little bit further. A lot of people, when they talk about blockchain, think about it in terms of the financial markets and some other breaches we've had recently in the financial markets and personal security, et cetera, are really important. So that's where a lot of the common perspective is. But it's interesting how some industries are actually quite ahead of us in terms of using blockchain traceability. For example, the diamond industry is using it as a mechanism to try to trace and make sure that those diamonds that they're sourcing not only are true and accurate diamonds, their location and — back to Mary's points — are with the right credence attributes — that they are mined in the right way with the right work pros, with the right people. So, I think that this whole issue of traceability and food safety will be probably the biggest impact that blockchains have on the agricultural sector.
Tom: Okay. We have time for one more question before we wrap things up, and let's begin with Mary, if you would. What are the opportunities for farmers to change the way they sell food? Are there specific ways in which farmers can view this as an opportunity to be more profitable or to gain even new markets?
Mary: We talked about this growing fragmentation on the consumer end of it, that it's moving beyond just wanting cheap and accessible and safe food into things that align with values and other things around the specialty side. I think that does provide some opportunities at the farm level, first of all, just to be much more market-oriented and know where that profit potential is and basically growing what the market is interested in buying rather than what you want to sell. But not everybody can be direct-to-consumer. There are opportunities with technology now. We see the rise of some brands from the farm level. It starts out like a Laura's Lean Beef or Creekstone Farms or Pete and Gerry's Organic Eggs — things that come with some specialty proposition — that actually move all the way to the brand level. When I was in New Zealand last week, McDonald's had big banners in their stores saying, “We sell 100% free-range eggs.”
These types of changes are coming. If you look at the AmazonFresh website, you can buy hamburgers from a single cow. When you think about the implications of the supply chain for that and that differentiation, not everybody, clearly, is going to be able to deal with the market at the consumer level. But even at the customer level, the processor level that's buying in, the sustainability pushes inside of these companies, and also better understanding. Again, if you don't satisfy their consumer needs, it will be more about providing these products that have the exact kind of value or attributes that market wants.
I think, though, the challenge is that there's tremendous resistance to making those kinds of changes because our system has been set up to move big quantities of relatively undifferentiated products. I was speaking with a buyer of U.S. soybeans in a Southeast Asian country. He said, "We want to buy soybeans based on their oil content because we know how that breaks down in the value proposition." But the big processing companies want to sell soybeans based on whether it's, basically, color and size and the fact that it's this kind of bean and they really don't want to tell. So, it's finding these unique opportunities that are able to match that scale and finding those buyers that are willing to pay.
Tom: Aidan, what do you see out there?
Apps on phones, websites, digital technologies, the ability to be able to see through cameras what's actually happening on the farm, to be able to see through blockchain what has actually occurred in terms of the way your food is processed — these are all just tremendous opportunities for farmers to engage directly with the end consumers of their food...
Aidan: Well, Mary summarized it extremely well, which makes it difficult, but I'll maybe take a slightly different approach. I think that we are seeing very large changes in consumer behavior. You see that when they go to the grocery stores or supermarkets and they’re not going to the so-called “center aisles” anymore. They're not choosing to purchase the cornflakes, they're not buying food that, traditionally, was perhaps the macaroni and cheese that was extremely processed, for example, and they're looking for the “mom and pop” — as I call them — brands. These companies may not even have commonly recognized names. Consumers are looking for these companies they perceive as being more organic, more local and fitting with their ideals for food and the way they “vote,” as you put it earlier, Mary.
From my perspective, I think that's a massive opportunity for farmers to engage directly with consumers. Instead of farmers going to big food companies or medium-sized food companies, they can go directly farm-to-consumer. They can have a relationship directly with a consumer of their food. That can allow them, hopefully, to capture more value, so they can charge a higher price or just capture more value within the system and to, hopefully, adapt to what they find consumers are looking for. Maybe consumers are asking for questions that larger systems can't accomplish.
The massive opportunities, particularly, through apps on phones, websites, digital technologies, the ability to be able to see through cameras what's actually happening on the farm, to be able to see through blockchain what has actually occurred in terms of the way your food is processed — these are all just tremendous opportunities for farmers to engage directly with the end consumers of their food, and I think, eventually, that makes potentially a more profitable farming system.
Tom: Dr. Boehlje?
Michael: Yes, I think Aidan and Mary have really, really synopsized this issue quite well. Let me just put a broader context on it with some keywords. We're increasingly seeing this entire food production and distribution industry move very dramatically from a commodity orientation and a supply chain mentality to a differentiated product orientation and a demand-driven system. Those are very dramatic shifts in terms of what people have to do and how they do it, and the technology is increasingly available to get that done. Consumers are not buying food products. They want food consumption experiences, and that's a really different perspective on this industry than what we’ve had with the traditional producer commodity and what I sometimes refer to as the “produce and peddle mentality”: If I produce it, they will come. That is not the industry of tomorrow.
Tom: Karl Dawson, thoughts on this?
Karl: Well, I guess I would agree with the whole concept here, but there is still a large change needed. I've been involved with programs for the last 15 years producing high-quality beef products with very specific attributes that we felt were of interest to the consumer and receiving good reviews from the consumer. But from a commercialization point of view, to date, those have been failures. We are not getting the story across in a way that allows us to get the feedback from the consumer and get the middleman to buy into the concepts we're making at the producer level or in the production. Alltech Angus was an example of a meat product: Succulent, very good reviews, and, quite frankly, we never could make that go because there was a barrier there between us and the consumer.
I see where that's coming from and the potential for doing that, but there's still a big hole in the middle in that commercialization chain that we have to take advantage of. Believe me, I'd love to see it go, because if you tell me what attributes you want in your beef, we can work on those things with our tools today.
The existing system is set up to be more commodity push, and that includes the processing sector. But we see now the advent of these nontraditional actors here: the investors.
Mary: I might just come back to that because I think that's the same resistance that I was talking about there: Why we can't sell soybeans based on oil content rather than something else? The existing system is set up to be more commodity push, and that includes the processing sector. But we see now the advent of these nontraditional actors here: the investors. You have Bill Gates basically investing in Beyond Meat — alternate protein sources. You have Sergey Brin, founder of Google, investing in tissue culture beef. You have Jeff Bezos of Amazon now completely disrupting everybody's thought pattern by buying Whole Foods. So, hopefully, Karl, I think we're just at the breakthrough point on getting through. There are people in the system now that look at this and say our traditional food system is broken. Now, that's a rough thing, but they're coming with very innovative ideas, very disruptive ideas, and see a new future. And I think we're talking about what that new future is. Hopefully we're close to getting past that.
Tom: Okay, we have just a few minutes remaining. What I'd like to do to conclude is to go around the panel and ask you to give us your closing thoughts on what viewers of today's discussion might want to consider their main takeaways from what they have heard. We'll begin with you, Dr. Boehlje.
Michael: We’re certainly talking about an industry that's in a major transformation. In fact, we do programs called “Disruption” and “Chaos,” and that's where we are in this industry. It's been pretty tradition-bound in many cases. As just indicated in the previous conversation, parts of it are still tradition-bound. But there will be a profound transformation from outside the traditional players in the industry when we start doing more — putting together the pharmaceutical and the health industry within the nutrition industry. Maybe we're going to find that what happens is outside forces are going to be shaping up more than they have. When we put sensing technology out there, when IBM decides, which it has, that agriculture is the space where they ought to be spending some time and energy, not just at production, but across the value chain, that makes a big difference in this industry.
We’re going to see a lot of both big and small firms and organizations outside the traditional sources or the traditional players in the industry have a very disruptive impact on this industry.
Tom: Dr. Dawson.
If I had to sum it up in one sentence: It's not your daddy's farm anymore.
Karl: Well, I think it's obvious from the conversation today that technology is going to drive a lot of different things. If you look at how we refer to the farmer today, I would change that to “agricultural technologist” rather than “farmer.” We're going to be bucking tradition, and that's one of the things that is a huge problem for a very conservative industry as we're moving forward. But if I had to sum it up in one sentence: It's not your daddy's farm anymore.
Tom: Mary Shelman, takeaways?
Mary: I think it's been a great discussion. In particular, the consumer has a much stronger vote today than ever before about what's happening on the farm. Therefore, you have to be market-oriented, and market-oriented not just in terms of thinking about the price of soybeans or the price of beef, but about the fundamental segments that can meet with the different value propositions around it.
So that's one piece, and the talent piece is absolutely essential. There are tremendous challenges, but even more importantly, there are tremendous opportunities in the next few years, and I think it's incredibly exciting time. But you have to be a little bit patient because, as Karl said, you can come up with a great product and a great proposition, but time might not be quite right yet. So how do you navigate this transformation that we're in and actually be able to balance looking toward the future while remaining very grounded today and having a successful business?
Innovators are the ones who are going to be successful — they're the ones who are going to survive and thrive. That's the farming of the future for me — innovation.
Aidan: I think farmers of the future will be innovators. Until now, farmers have been good at learning from others, embracing technologies that others have, learning what methods they use and doing so successfully. In the future, my recommendation to farmers would be to buy yourself a passport, go travel the world, read as much as you can, learn as much as you can, and when you see innovations within reason, embrace them as quickly as possible. I think innovators are the ones who are going to be successful — they're the ones who are going to survive and thrive. That's the farming of the future for me — innovation.
Tom: Aidan Connolly, Mary Shelman, Karl Dawson, Dr. Michael Boehlje, thank you all for joining us. It's been a fascinating conversation. We appreciate it very much and thank you for joining us.
Farming the Future was a live video panel discussion. To watch the recorded video and learn more about our panelists, click below:
