Excellent Article on the Future of Agriculture

Purdue released an outstanding paper on the future of agriculture.  The article is written with emphasis on Indiana agriculture, but it pertains to agricutlure as an industry in the U.S.  I wholly agree with everthing written and have pulled out some key points from the article.

On risk:

The business climate and financial outlook for crop agriculture are favorable for the next 1 to 2 years. However, the greatest risk to this sector is the rising cost structure of the industry. In this year alone, production costs for corn fertilizer, seed, chemicals, etc. have increased 58 percent. In addition, land values and particularly land rents are expected to increase from 10 percent to 25 percent this year. Thus, while crop prices are very high, the rapid increase in costs of production and land is quickly eroding the increased margins that many producers experienced in 2007. While prices appear to be strong enough in the near term to offset the higher costs of production, the issue is the impact that continued rises in costs of production will have on the producer’s margin risk.

A strain on natural resources:

Land is not the only resource being placed under pressure. Water is a critical resource for direct human consumption, crop production, livestock production, and even biofuel production. While the issue of water is not as intense in Indiana as it is in the western U.S., it will continue to be an increasingly important factor even in Indiana. The other critical resource is clean air. More research is necessary to understand better the externalities from agricultural activities that affect air quality and to design alternatives for managing these externalities.

I personally think water will surpass land as the scarce natural resource throughout the U.S.

On biotechnology:

Many of the technological advances that increased productivity and contributed to growth and overall economic development in the past 50 years have had their science base in the physical and mechanical sciences. These advances will continue to be important in the future, but more of the science base for future technological advance, productivity growth and economic development is likely to come from the biological sciences. This places agriculture in the mainstream of productivity growth, and economic development in the developed as well as the less developed economies.

Full article:

Purdue: AgEcon: Programs & Publications: Programs: PAER.