Policymakers, Retailers Influence Production AgricultureFri, 20 May 2016 18:07:21 CDT
The U.S. agricultural community has and will continue to respond to consumers' needs. Regardless of whether it be changing specific management practices to fit market-driven programs (e.g., natural and organic) or adopting new technology to ensure added efficiency resulting in greater product availability for a growing population, the U. S. agriculture industry has always been poised and ready to meet a challenge. Yet the challenges the industry faces today are not as clear-cut as just producing more with less or keeping a few more records to broaden marketing opportunities. It is becoming increasingly apparent that in the not-so-distant future, a broader population of producers will be asked to respond to market signals that are even more dynamic and in many instances counterintuitive to previous mindsets and management practices.
An example of this conundrum is the fact that in mid-March, Whole Foods, a well-recognized natural and organic purveyor, announced it will begin replacing faster-growing poultry breeds with slower-growing varieties. This move, expected to be complete by 2024, will reportedly increase average broiler time to market by 23 percent or from the typical 42 days to between 56 and 62 days (potentially a 40 percent increase). After many years of selecting for improved efficiency, at least one retailer, regardless of total market share, is seemingly indicating to its industry partners to not only slow down but to stop chasing efficiency.
Furthermore, whilst this decision was being made, lawmakers in Congress debated legislation to regulate labeling requirements for foods incorporating biotechnology such as genetic modification. As a result, Vermont is slated to become the first state to implement a mandatory law effective July 1, requiring the labeling of all food containing genetically modified organisms (GMOs). Although Vermont is a relatively small market, the impacts are important due to overall supply chain integration and the inefficiency of production measures geared to meet specific regional/state requirements. As a result, larger food manufacturers are implementing shifts to production measures and labeling methodology that will impact nationwide distribution. The impact this legislation will have on specific product price points and consumer buying habits is difficult to predict. However, the fact that legislation is being implemented to differentiate these products is, again, counterintuitive to the agricultural community's previous rallying cry to feed the most people with the least amount of resources.
The intent in outlining these reports is not to debate decisions or judgments; time and a free-market will answer questions of whether increased demand warrants these differentiated products. Yet it's worth noting that inefficiencies accompanying a 23 percent increase in time to market couldn't be absorbed by most cattle producers without passing these significant costs to consumers. We are talking the equivalency of a cow-calf producer weaning a calf almost two months later or 100 pounds lighter. Further notable is the fact that for very important dilemmas we are facing, not only in agriculture but human health, advanced biotechnology will most likely provide a partial solution.
The true take-home message is the agricultural landscape is potentially changing in a way that is foreign to most producers due to decisions being made not just by retailers but by policymakers, begging the question of whether the cumulative impact will be mere "market differentiation" or result in a true "paradigm shift" on how agricultural products are to be produced.
Source: Evan Whitley, The Samuel Roberts Noble Foundation
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