ChangingStructure

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         The Changing Structure of
Agriculture Independent Insurance Agents of
Iowa Rural Agents Conference January 26,
2006       Michael Duffy Director, Beginning
Farmer Center              
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The Changing Structure of Agriculture Outline

• Farming
• Agribusiness
• Consumption

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The Changing Structure of Agriculture Farming

• A farm is defined as any place that sold or could
  have sold 1,000 worth of agricultural products.
  This definition has been used since 1974
• Case of the disappearing middle
• Tight margins
• Increased reliance on government payments
• Aging population
• Changing rural environment

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General Characteristics and Demographics
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Income and Enterprises
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Land
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Next Generation
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The Changing Structure of Agriculture
Agribusiness

• Disappearing middle
• Increasing concentration

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Agribusiness Concentration

• Changes and increased concentration have occurred
  in almost all phases of agribusiness support
• Seed
• Machinery
• Fertilizers
• Pesticides

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Consumer Patterns
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Changing Structure of Agriculture Concluding
Thoughts

• Agriculture is changing and will continue to
  change at the production, processing and
  consumption level
• Production is dominated by a dual system with a
  large number of very small firms and a small
  number of large firms.
• These trends have been continuing for a number of
  years

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Changing Structure of Agriculture Concluding
Thoughts

• Concentration in agribusiness is resulting in
  fewer large firms with an increasing share of the
  market provided by fewer companies.
• U.S. consumers spend a decreasing amount on food
  as such they are able to spend more away from
  home buying more of the attributes than the food

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Changing Structure of Agriculture Concluding
Thoughts

• Consumer preference do change over time some
  indication that other attributes besides
  convenience and price are important
• Energy price increases could slow or reverse some
  of the trends
• Very little is inevitable the questions are
  should the U.S. be concerned with these trends
  and what could be done

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Changing Structure of Agriculture Concluding
Thoughts

• Increasing concentration leaves the U.S. more
  vulnerable to supply disruption, bioterriorism,
  environmental impacts and pest changes
• Strategies could be pursued at both the national
  and state level policies such as controlling
  anti-competitive behavior, internalizing the
  external costs, and supportive policies could all
  be enacted

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Possibilities for Income for Beginning Farmers

• Farm with tight margins with a lot of volume
• Widen the margins through management and
  marketing
• Alter production for non-commodity commodities or
  alternative crops
• Supplement income with off farm employment (could
  be on farm)
• Full time employment, farming part-time or wait
  to start farming

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Changing Structure of Agriculture

• Change is inevitable the direction of the change
  is not
• We must decide as a society what type of
  agriculture we want and what we want from it
• Individuals have to decide how they are going to
  fit in the structure and operate accordingly
• The choice is ours

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Thank you!

• For more information contact me
• mduffy_at_iastate.edu
• [phone]
• www.econ.iastate.edu/faculty/duffy