Trends and Outlooks
K-State agricultural economists discuss trends, future of industry
Photo by Dan Donnert
Agricultural economists are an important part of the success of the U.S. agricultural and food industries.
“A lot of what we end up doing is looking at how people make decisions about food, whether or not that be purchasing or production or other factors,” said Allen Featherstone, head of K-State’s Department of Agricultural Economics. “But essentially we look at market signals and determine how people will react to economic situations.”
He adds: “Kansas products go all over the world, whether it be wheat, beef, pork or many other products. They're all demanded across the world. And so it's not only important to understand the preferences of consumers in the U.S., but consumers globally in relation to their interest in Kansas products.”
K-State Research and Extension’s news team recently sat down with Featherstone and fellow K-State agricultural economists Robin Reid, Jenny Ifft and Glynn Tonsor to talk about their work and future trends in agriculture.
Allen, you've been working in this field for nearly four decades. How have agricultural economics principles changed during your career?
Featherstone: The principles don't change, but the problems and issues and people's preferences change. One of the things that makes economics so interesting is that a study that was done 10 years ago may come up with a totally different conclusion today, simply because the way that people think about issues changes.
Robin, one of those areas that you've been talking about recently is the trend in land ownership. What are you learning, and what does that potentially mean for the future of farming, say, 10, 20 years from now?
Reid: I've been doing research since 2015 and comparing it to recent years on just who the landowners are in Kansas and where they are located throughout the United States. What I found in 2015 is that about 84.5% of our agricultural acres in Kansas were owned by people living in the state.
As we fast forward to 2022, that seven-year difference has made a small shift into more out-of-state ownership. And two things are driving that most likely. One, the baby boomer generation of farmers is currently retiring and will be for years to come. And as we see the ownership of that land change hands to heirs, a lot of them are not on the farm anymore. They might still be involved as a landowner at that point, but may not live in Kansas.
The other thing that's surfaced in recent years is Kansas farm ground is being purchased by out-of-state investors, or for hunting opportunities.
So there's a different demographic bidding on farm and ranch land that has not been in the pool previous to the last 5-10 years. I think as we have more landowners geographically and generationally removed from the farm, we're going to see more of a need for education for these landowners in working with tenants on the farm.
Jenny, you were recently appointed K-State’s Flinchbaugh Agricultural Policy Chair, which recognizes an icon in U.S. farm policy. In that role, you have your hand in a lot of topics, but one that recently garnered a lot of attention is a report in which you and your colleagues found that farmers could face as much as a 66% loss in income due to rising temperatures in Kansas.
Ifft: Risk is a big part of agriculture in Kansas. If you look over the past 20 years, total farm income from the state is in a range of $2-10 billion. For those in farming, it’s a major farm management challenge to balance cattle and crop markets, agricultural policy, weather and more. Farm income numbers affect rural economies and local businesses.
Specific to weather issues, crop insurance payments play a large role in farm income. You have other farm bill programs or disaster programs that also play a role in markets. (In the future), it is critical for producers in Kansas and the U.S. to understand what those safety net policies look like.
What exactly did your research on changing temperatures find?
Ifft: A one degree Celsius increase (about 1.8 degree Fahrenheit) in temperature leads to a 60% decline in farm income, which is a large number. You can look at state-level farm income statistics and it makes sense – the impact is consistent and large. In terms of lenders, they're modeling risk, so we hope this information can be used to quantify and manage risk in agriculture. Lenders play a role in keeping producers in business and providing capital for adaptation to weather and market challenges.
Tonsor: I can give an example specific to cattle. If we do see warmer temperatures going forward, agricultural producers will adapt in different ways. If we face a warmer world, the economics to invest in shade for Kansas feedlots goes up, right? And we don't need to get into the details of that here, but you know, there are large cattle producers in South Dakota that now calve in barns to mitigate cold winters.
That's the opposite direction of weather change. But it's the same economics signal that if you have a baby calf at risk at some point, it makes sense to mitigate that risk. Well, here you potentially have large animals that are more exposed to heat. We'll make shade or other types of investments to protect them. I have full faith Kansas producers will evaluate and make those investments going forward.
Glynn, we learned a lot during the COVID pandemic about the delicate nature of the meat supply chain, which is something that you've studied for nearly two decades. Help us understand the factors that impact the beef and pork industries in particular, and the challenges that these industries may face in the next 10 to 20 years in order to remain strong.
Tonsor: At the time of the pandemic, there was a lot of discussion about resiliency. The U.S. consumed more meat in 2020 than they did in 2019. So one could look at that as a testament that the meat industry was resilient because it found a way to get more pounds in front of the average American than it did the year before, despite the pandemic.
So we can learn from that. The U.S. consumer wants meat; more than 85% of the public is a regular meat consumer. Globally, U.S. beef, pork and poultry are desired. And then when you bring it back to Kansas, Kansas has a role in each of those industries as well.
I don't envision that changing in the next 10 to 20 years. There are actually some estimates that the rates of vegan or vegetarian demand rates have declined in the last three years. But I'm interjecting that because desire for meat is strong and I don't think that's going to disappear in the next 10 to 20 years.
Kansas and many other regions are experiencing labor shortages in agriculture, as well as population shifts. From your viewpoint, what impact will these trends have over the next 20 years?
Featherstone: I think farm labor is going to be a huge issue. It's one of the things that I think our university can invest more resources in to understand immigration policy, and helping Kansas producers understand what is and what is not legal.
Technology is going to be extremely important because there is a need for more Internet accessibility at a speed that is world class. It allows more individuals to locate in rural areas, whereas before there may have been a demand in rural areas, but people were constrained by technology.
I think much of production agriculture is going to be driven by satellites and Internet connectivity. As we move to drones and precision farming on a large-scale basis, Internet connectivity becomes very important.
Ifft: Part of the demographic shift took place before the COVID pandemic. Local businesses and state governments are adapting. The Kansas Department of Agriculture has programs. K-State has programs, such as collaborating to increase childcare throughout the state. It’s a multi-faceted challenge.
Demographics aren't going to change. There's the immigration aspect, which politically can be tricky. But, you know, a lot of producers in Kansas use guest workers from other countries, and they'll say they don't love everything about the program, but they couldn't do business without it. So that's going to be an ongoing policy issue moving forward.
So, looking at this from a broad view, what do think will be key to the success of agriculture in Kansas and the United States 20 years from now?
Featherstone: I think efficiency is going to be key. In terms of looking at the global population, we'll be looking at between 9-10 billion people on Earth, and we need to have the ability to produce enough food to feed that population.
The big issue I think that we will face is there’s going to be a mismatch between where production will be and where population will be. There's two ways governments can solve this: One is through trade, one is through immigration, and both of those currently are distasteful from a politician's eyes. There is no popular political answer at this point for that.
Ifft: Twenty years ago, we were worried about labor shortages in a very different setting. Twenty years before that, we were looking at resource problems.
So I think a lot of the problems you work on (today) are going to be problems in the future. And hopefully some of the tools we have now will still be useful, even though the context of the problems will be different. There's definitely going to be surprises.
Reid: One of the trends that was very evident in the 2022 census is we continue to have fewer and larger farms in Kansas and the United States. I think technology has a role in this, enabling us to farm more acres with less labor, but that labor has to be more skilled.
Also, there are efficiencies behind what it takes to support a family these days without off-farm income. It's going to take a larger farm than it did 20 years ago, and that will continue to be the trend in the next 20 years. We're going to need more acres and more cattle to support a family farm than we do right now.
Featherstone: Business skills will be much more important simply because if you're running 10,000 cattle as opposed to 1,000 cattle, one little mistake is catastrophic. It's always catastrophic, even with a 1,000 cattle operation, but from a societal perspective, a 10,000 cattle error is much more catastrophic than one with 1,000 cattle.