Over the course of time, the growth of the global agricultural industry has shifted from just a way for people to sustain themselves into an entire business industry that is booming in even the most advanced sectors of technology and science. There has been a great shift from small family farms, or small operations, towards large farming operations. A growth which has been necessary to feed a growing population.
“Growth and Transformation of the Agribusiness Sector: Drivers, Models, and Challenges,” by Vasant P. Gandhi more eloquently explains this shift.
“Agriculture is undergoing a huge transformation. In the past, agriculture was seen as a subsistence activity of farmers involving crop and livestock production. For centuries agriculture was the same as farming, and most people lived on farms or nearby and were largely self-sufficient. This is, however, changing substantially in the recent years. Today, agriculture is rapidly turning into a technology and market oriented “industry” which extends from agricultural production, to sophisticated agriscience, and agribusiness. It now connects strongly to the national and global economy. Many people who work in agriculture actually do not work on farms but are engaged in businesses of seed, fertiliser, agro-chemical, farm machinery, food-processing, marketing and trade. Many are engaged in finance, research, distribution, and marketing activities which provide services to the production agriculturalists. Agriculture has become a big business.”
Take Walmart for example. CNN reported the news in 2020 that Walmart had “opened a meatpacking plant in south Georgia that will cut, package and label its own brand of steaks and roasts to deliver to meat cases at 500 stores in the region. It is Walmart’s first meatpacking plant.”
Other large businesses jumped on the bandwagon as well. CNN shared in the same article how Costco has “developed its own farm-to-store poultry production operation in Nebraska to control some of its chicken production.”
“Costco in October opened a $450 million chicken plant in Nebraska that will soon produce roughly 100 million rotisserie chickens a year— 40% of its annual chicken needs-— to sell at the retailer’s food courts and poultry aisles.”
This was done because the company was having issues finding the size of birds they wanted for their rotisserie chicken supply. The retailer decided to integrate the production process from farm to customer and had control of key decisions from feed and nutrition to the type of eggs hatched. Costco did this in hopes to reduce costs by up to 35 cents per bird.
The shift in agriculture to agribusiness was in response to many things, but input costs, efficiency, and declining markets have been major players.
While small farming and ranching businesses are experiencing success selling local, direct-to-consumer products, thanks recently in part to the pandemic, there is a massive decrease in small businesses; the financial security just isn’t there anymore and large businesses are able to supply products in abundance, and more cheaply than a smaller operation whose efficiency isn’t as great.
CNN stated how Walmart’s decision to break into this area of agriculture is for the purpose of braking big processors’ “stranglehold over the beef industry, drive down costs and sell a higher-end line of beef at some stores.”
To prove the point that smaller operations struggle with efficiency, CNN shared Bob McClaren’s, a Texas Rancher, thoughts on why they are partnering with Walmart’s meatpacking plant.
“The new supply chain will be able to ‘pull some of those costs out of all these other middlemen along the way,” allowing the more than 600 ranchers Walmart has partnered with so far to receive a premium on their cattle.
“One of the things that has always hindered the cattle industry is the multiple, multiple hands that are involved in the supply chain,’ McClaren said. ‘We’re reducing some of that work.’”
While the article Gandhi wrote about the transformation of agribusiness is explaining India’s industry, it explains a lot about the factors that caused a shift globally:
- “Scarcity of Land and the Need to Improve Productivities
- Markets, Urbanisation and Increasing Commercialisation of Agriculture
- Need for Change in Scale and Reorganisation of Production and Marketing
- Economic Liberalisation, Reducing Government Involvement, Income Growth, WTO and Trade
- Changing Food Consumption Pattern and Demand for Quality and Convenience
- Development of the Rural Economy, Infrastructure, Rural-Urban Migration, and Globalisation • Information and Communication Technology Revolution”
If one considers the industry in the United States, the aforementioned bullet points would definitely fit the reasons why our industry has had to evolve over time. It’s not always practical to have a small business to meet the demands of consumers today, and less people are producing the amount of food needed to feed an entire world population.
North Dakota State University’s article, “Trends in Agriculture,” states that the shift of those involved in production farming has decreased exponentially since the mid-1800s. “…In the United States, 90% of the population were farmers in 1790. Essentially, people produced the food they consumed. See http://www.agclassroom.org/gan/timeline/farmers_land.htm. A century later (1890), farmers were 43% of the labor force. In another century (1990), farmers were 2.6% of the labor force.”
They claim that the main factor of this is technology. Due to the fact that there are less farmers and ranchers producing more amounts of food, technological advancements are necessary to keep up with the demands of society.
These adoptions of technology on production practices have shown to be beneficial and therefore an increase in use has been experienced by the industry. This has led more people to search for improvements in the technology. The world seems to not be able to keep up with the advancements in technology, so it’s not surprising that agribusiness start ups and innovative companies are constantly striving to improve upon this sector of the industry and continue to move agriculture forward in “agribusiness.”
Some technologies, according to “What Is The Impact Of Science And Technology In Agriculture?” by Willow Hayden, that have influenced the shift include:
- Urban Agriculture, Vertical farms, and Smart designs
Urban agriculture allows for the effective utilization of space. Vertical farming is one of the latest trends in urban agriculture. As these trends continue, we are beginning to realize yields which are almost 10 times efficient when compared to traditional agriculture.
Vertical farming simply makes farming more efficient and also utilizes lesser space. Smart designs are now being used to reduce weight and increase yield. - Drones and Bees
Climate change is a major challenge in the agricultural sector. If the climate condition continues to worsen, it would result in food shortage. Also, bees that play a major role in pollination are now disappearing.
This change would be a major disaster if bees completely go into extinction as pollination is vital to the sustainability of agricultural production. Fortunately, drones are now being used as an agent of pollinations to supplement the pollination efforts of bees.
Aside from being used for pollinations, there are several ways in which drones can be well utilized in agriculture. It can be used for aerial drone photography to take a good look at the field. - Artificial Intelligence, IoT, and Automation
With artificial intelligence and automation, driverless vehicles are being introduced to the farm to perform different operations on the farm.
An example is a driverless tractor. Also, with the evolution of the internet of things, we have connected devices and smart devices on the farm that can communicate with each other to enhance and increase productivity on the farm.
The reasons for the shift in agriculture since the mid-1800s has been caused by myriad reasons, from a decline in prices, increase in input costs, lack of efficiency, and adoption of technology. This was the industry’s answer to the demands of a growing population, and decrease of people in production agriculture, and a natural reaction to an advancing technological world to make farming and ranching more accurate, and efficient. However, this is leading to small farmers and ranchers struggling to stay afloat. While there are pros and cons to the change, we can’t stop the industry from growing further.
