The Trouble with Agriculture
Part Two: The Profitability Crisis

By Al Eisaian, Co-Founder and CEO of IntelinAir

 

As we saw in part one, unprecedented demand will, over the next few decades, fall on the shoulders of those responsible for feeding the world. At the same time, the number of shoulders sharing that burden will shrink. Because there is a profitability crisis in agriculture, the farmers of today and tomorrow need a big technology edge to succeed.

 

Nobody gets into farming because it’s a get-rich-quick scheme. Growing is hard work that takes patience and skill, but sometimes even that isn’t enough. Once the costs of land and equipment are factored in, average soybean farms in Iowa last year made $9 an acre, barely breaking even as FarmProgress put it.1

 

Too often, the little guy isn’t turning a profit, and what’s the incentive to become a farmer when you can’t make any money? Profitability is a huge barrier to entry for the industry, and it shows. There are fewer family farms today than there were thirty years ago.2 In just the past five years, both the number of farms and the number of acres being farmed has dropped three percent.

 

Now the current impasse in the tariff situation is making it more difficult for farmers. With 1.4 billion people to feed and a less advanced agricultural sector, China had previously turned to U.S. farmers to fill the unmet demand. From 2008 to 2012, Chinese imports of food from the United States doubled to $26 billion.3 That money will no longer be on the table after the administration’s tariffs on $156 billion worth of Chinese goods jump to 15 percent on Dec. 15. You don’t have to be a psychic to guess what Beijing is going to do.

 

When the ten percent tariffs took effect, that nation’s buyers turned to South America as the Chinese government cut off most, but not all, agricultural imports.4 Surely the rest of the loopholes will close when the new tariffs take effect. Maybe a trade deal will be struck in the weeks and months ahead, but even so, the uncertainty has already taken a toll. Without knowing what the international playing field is going to look like, farmers can’t plan properly, affecting profitability.

 

So what can farmers do when the deck is stacked against them? The technology is out there to provide farmers with an advantage so great, you might even call it unfair. It’s AgMRI, a solution that offers farmers usable, easy-to-understand intelligence about their crops so that they can make timely decisions that improve yields per acre. It’s the sort of edge that can make the difference between a marginal operation and a profitable one.
And that’s exactly what America’s farmers need.

 

 


1 www.farmprogress.com/business/profit-projection-2018-grain-farms-will-barely-break-even
2 www.nass.usda.gov/Publications/AgCensus/2017/Full_Report/Volume_1,_Chapter_1_US
3 www.ers.usda.gov/webdocs/publications/43939/eib-136.pdf
4 www.bloomberg.com/news/articles/2019-08-05/china-asked-state-buyers-to-halt-u-s-agriculture-imports


About Al:

Al is passionate about leveraging data to solve problems. At IntelinAir, that means feeding a growing population, driving efficiency and improving grower profitability. Before IntelinAir, Al co-founded IconApps, Integrien Corporation, and CreationPoint Systems—all with successful exits, and held leadership roles at LowerMyBills and Minebea.

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