A 'frontier of opportunity' ready to present itself to Missouri

JEFFERSON CITY - Ready or not, Missourians who earn their income from agriculture are about to come face-to-face with what some have called a "frontier of opportunity." Futurists and others involved in farming have called this approaching transformation "an exciting frontier of opportunities," while others who have spent their lives planting and harvesting traditional crops may view their predicted future somewhat differently.

At least two principal components are being viewed by farm experts as inevitable consequences of the new era in their industry:

1. The first is the introduction of a new "crop" that is today known as pharmaceuticals, and

2. The second is the production and delivery of fresh food products straight to grocers' shelves.

As revolutionary as these prospects may seem, however, they must still be adopted by farmers accustomed to growing commodities and responding to public policies overwhelmingly directly at commodities.

Both state and federal farm experts agree the new frontier will require big changes by policymakers and policy provisions alike. Farmers must go beyond a long tradition of independence to a new business model founded on partnering, while policymakers must shift from subsidizing commodity production to supporting new ventures in product agriculture.

The state's farmers and those involved in one of the many facets of what is known as Missouri agriculture must become more aware of the potential consequences of the new era, most recently outlined in considerable detail by the recommendations put forth by a representative task force commissioned by the National Corn Growers Association. This group included farmers, industry and technology experts, university economists and Federal Reserve Bank officials.

U.S. agriculture has long been a commodity powerhouse, but this very success has created a dilemma for the future. Twin forces point to much bigger farms in the future, offering the opportunity of growing commodities profitably for a relative handful of elite commercial farmers. One force driving this trend is technology, which continues to advance and reduce the need for farm labor.

The adoption of no-till cultivation practices alone is estimated to have liberated about 500 man-hours a year on a typical 1,000-acre Missouri farm, or about 11 weeks of time for the farmer. Put simply, growers can now farm more land with the same amount of labor. This increase in productivity also means that full-time crop farmers who elect not to expand are effectively underemployed parts of the year.

The second force behind the trend is intense global competition in commodity production. The farmers on the task force were especially aware of the competitive threat of low-cost production in South America. Corn and soybeans are being grown at very low cost in Brazil and Argentina, and there is great capacity to expand production in both countries. This competition promises to help profit margins for Missouri and U.S. grain farmers razor thin for the foreseeable future.

As a result of these twin forces, corn producers envision a future in which 10,000-acre farms (about 16 square miles) may be needed to generate satisfactory returns. This scale of operation holds little appeal to many within the current industry, leaving the vast majority of grain producers wondering what the future holds for them. The trend also carries profound impacts on Missouri's rural communities if left to evolve on their own. Quite simply, farming units of this grand scale will sustain significantly fewer rural towns and cities.

Commodities also pose a huge dilemma for public policy. They remain the overwhelming focus of farm policy, with most government payments flowing to commodity growers. Yet producers are increasingly aware that commodity payments have failed to revitalize their communities or even stem economic erosion.

Despite the $104 billion spent on farm payments in the 1990s, three of every four farm-dependent rural counties had economic growth below the average for all rural counties, and one of every two lost population. An even bigger dilemma arises from the growing recognition that seizing new opportunities in agriculture will be much more difficult if policymakers continue to emphasize income subsidies instead of focusing on new strategic investments. That is, regular subsidy payments for growing commodities stifle enterprise and shifts to new opportunities.

Even as pressures mount on commodity production and policy, experts believe farming stands on the edge of an exciting frontier which has been given the title of "product agriculture." Two features are included in this area: an exceptional range of new opportunities -- from growing pharmaceuticals in cornfields to selling fresh foods directly on grocery shelves. The other is the common thread that comes with these opportunities: a business model founded on interdependence rather than of independence.

While some major corn growers might easily assemble 10,000-acre farms, little movement in this direction has been made; instead they and many other large crop producers are already turning to opportunities in product agriculture, which fortunately can be available to both large and small farms as a part of what is being called "product alliance."

Perhaps the most spectacular of these alliances if the process of growing pharmaceuticals in fields. This past fall, the first field of "farmaceutical" corn in North America was harvested in Iowa. The corn was generally engineered to produce a protein used to manufacture a drug to combat symptoms of cystic fibrosis. There is a compelling reason to grow the protein in a field rather than a laboratory or factory - farm costs were 7 percent of factory costs. This squares with more general estimates of cost savings of growing drug materials in plants and animals.

Federal Reserve Bank studies reveal that the rural economic impact of more widespread plantings of farmaceutical crops is potentially great. To the producer, these fields represent what are in all likelihood the highest value crops ever grown. In the case of the Iowa-grown cystic fibrosis corn, it is estimated that several thousand acres might be needed to meet market demand, and this is a small-market drug.

Worldwide, an estimated 400 plant-based drugs are currently being developed, with another 1,000 under consideration. If such drugs reach the market, plantings of farmaceutical crops could expand significantly in the next few years, with such units ultimately scattered throughout Missouri's farm counties.

A second major impact from this concept is the location of processing facilities near where the crops are grown. The National Corn Growers Association estimates that such plants could require investments of more than $80 million, and the plants would provide high-skill, high-wage jobs.