The current economic environment in agriculture, characterized by low margins and extreme volatility, has set the stage for producers and beginning farmers and ranchers to adapt and adjust their business strategies. For some producers, changing strategies may mean partially or totally liquidating the business. The new decade is just around the corner and is destined to be one of accelerated change driven by consumers, technology and management. Particularly for young farmers and ranchers, what are the emerging business models as they carve out their future in agriculture?
A rapidly growing segment with young and beginning producers is the agricultural entrepreneur. This group of producers comes into agriculture at any stage of life and often brings skill sets that are honed outside the industry or in a business that serves agriculture such as bankers, agribusiness professionals, salespersons and even teachers. Some will completely relinquish their off-farm responsibilities, while others will continue some level of off-farm employment to ensure a base income, add diversification or earn capital to launch an agricultural enterprise.
Agricultural entrepreneurs are often multitaskers with diversified sources of revenue and net income. Working within what’s known as the “gig” economy, this group of producers aligns talents and resources with opportunity. They will leverage both time and capital to align the business with various segments of the marketplace.
The boomeranger, professional and blue-collar workers often bring in outside-the-box skill sets to a business that may not have been used on a farm decades ago.
Another group emerging in agriculture consists of women, minorities and veterans. The latest census data confirms a growing demographic among this group. This segment is often disciplined, process oriented, and very careful when thinking through the unintended consequences of business opportunities. Some will use past heritage and experiences to link to the market segments of the changing demographics of the general population.
The family business is growing much larger and more complex as structural changes occur in agriculture. Cousins managing with cousins, stepchildren and even non-family member ownership will sometimes populate this group. Business formality and well-thought-out transition plans that are executed are a call to order for this group.
Vertical and urban farming will be a new field. Taking advantage of abandoned stores, warehouses and rooftops will be much more prevalent in the future. Being close to the market often eliminates transportation costs, and transparency and freshness will be a distinct advantage over other agriculture competitors for this group.
This business cycle of agriculture is stretching the paradigms of new ownership. It should be an exciting decade ahead of us!
Dr. Kohl is Professor Emeritus of Agricultural Finance and Small Business Management and Entrepreneurship in the Department of Agricultural and Applied Economics at Virginia Polytechnic Institute and State University. Dr. Kohl has traveled over 8 million miles throughout his professional career and has conducted more than 6,000 workshops and seminars for agricultural groups such as bankers, Farm Credit, FSA, and regulators, as well as producer and agribusiness groups. He has published four books and over 1,300 articles on financial and business-related topics in journals, extension, and other popular publications.