From growers to supermarkets and restaurants, along with technology, infrastructure to development—it’s important to understand what is going on in the Agribusiness industry and how it will affect the production and distribution of food. Agribusiness is a wide-ranging concept used to describe the combination of agricultural and corporate enterprises individually and collectively. Agribusinesses companies involved in one or more stages of crop and livestock production or the technology and workforce powers the industry as a whole.
Agribusiness encompasses research and development of new agricultural resources and methods, ownership and management of agricultural production facilities such as farmlands and livestock facilities, manufacturing and/or distribution of agricultural supplies as well as equipment such as machinery, feed, and fertilizers, processing or distribution of agricultural products. Providing food or fibers is a fundamental outcome of all agribusiness operations, and the economic impact of is significant. The industry is almost two times as large as the sum of all manufacturing enterprises (measured in total assets); it represents 40 percent of all consumer spending; and it employs 37 percent of the labor force.1
The U.S. encourages innovation and has always been at the forefront in science, technology, advancement, and management practices that support a safe, rich, plentiful, and sustainable food supply and distribution sector. The industry is well-positioned to lead in addressing and improvising many of the biggest challenges faced by the world today, including food insecurity in the U.S. and worldwide, increasing nutrition and sustainability and continuing to address the economic fallout related to the pandemic.
U.S. agriculture remains the global leader in supplying food to the world by exporting relatively more production than most other countries. As the world’s number one beef producer and the largest beef exporter, the U.S. exports more cotton and corn than any other country in the world, exports the second most wheat and soybeans, and remains a major global exporter of pork, poultry, and ethanol. The strength of agribusiness export markets is clearly becoming increasingly more prominent, as witnessed in the second half of 2020 as global demand for corn, soybeans and many other commodities surged, increasing prices to multi-year highs.
The U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS) estimated 92.7 million acres of corn would be planted in the United States for 2021, up two percent from last year, according to the Acreage report just recently released. Soybean crop production is estimated at 87.6 million acres, which is up five percent from last year.2 Following up from the Prospective Plantings report released in late spring of 2021, NASS surveyed more than 90,000 farm operators during the first two weeks of June to gather information on what farmers planted including the following sectors:
Corn
- Growers expect to harvest 84.5 million acres of corn for grain, up two percent from last year.
- Ninety-three percent of all corn acres planted in the United States are biotech varieties, up one percentage point from last year.
Soybeans
- Soybean harvested area for 2021 is estimated at 86.7 million acres, up five percent from 2020.
- Producers planted 95 percent of the soybean acreage using herbicide resistant seed varieties, one percentage point higher than in 2020.
Cotton
- All cotton planted area for 2021 is estimated at 11.7 million acres, three percent below last year.
- Upland cotton is estimated at 11.6 million acres, down three percent from 2020.
- American Pima is estimated at 142,000 acres, down 30 percent from last year.
- Ninety-seven percent of Upland cotton planted acres are biotech varieties, up one percentage point from 2020.
Wheat
- Wheat crop production and area acreage for 2021 is estimated at 46.7 million acres, up five percent from 2020. This represents the fourth lowest all wheat planted area on record since records began in 1919.
- Winter wheat planted areas are estimated at 33.7 million acres, up 11 percent from 2020. This marks the first year of increasing acreage since 2013.
- Other spring wheat planted areas are estimated at 11.6 million acres, down five percent from 2020.
- Durum wheat planted areas are estimated at 1.48 million acres, down 12 percent from last year.
Dairy
- The milk production forecasts for 2021 and 2022 have been raised due to higher expected milk cow numbers.
- For 2021, the USDA forecasts milk production to reach 228.5 billion pounds, up 600 million pounds from last month’s estimate. If realized, 2021 production would be up about 2.4 percent from 2020.3
Global Demand
Global agribusiness trends for 2021 are predicted to set the stage for many years going forward and beyond. The market size, measured by revenue, is on pace for $2.7 trillion in 2021. Just as technology has transformed many areas of the economy, it will continue to have an impact on the world of agribusiness. Businesses, farmers, and researchers are progressively rising to the challenge and discovering new ways to put their use of broadband and other forms of technology to work.
As the U.S. is a major competitor in the global market, due to its strong workforce, market size, and infrastructure; the agribusiness industry encompasses subsectors such as agricultural chemicals, crop production, aquaculture, forestry and logging, and livestock, which influences many subsectors of the economy locally as well as internationally including:
- Agricultural Chemicals: the manufacturing, mixing, formulation, and preparation of fertilizers, pesticides, and other agricultural chemicals.
- Agricultural Commodities: crop production, which produced $194 billion of goods and includes some of the top agricultural commodities like corn and soybeans.
- Aquaculture: the cultivation of aquatic organisms in controlled aquatic environments, both in marine and freshwater environments. Most U.S. aquaculture (70 percent) pertains to the freshwater farming of catfish and trout.
- Forestry and logging: the establishment, management, use, and conservation of forests, trees, and associated resources in a sustainable manner to meet desired goals, needs, and values.
- Livestock: the production of animal goods such as meat, dairy, wool, and leather, with all livestock commodities accounting for half of U.S. agricultural products with a value of $195 billion. Cattle and calves are the top livestock commodity followed by poultry and eggs, and milk.
Global consumption of beef, pork, and poultry is projected to grow 8.9 percent, 17.3 percent, and 16.3 percent, respectively, between 2021 and 2030. China accounts for the largest single share of increased consumption of all three meat commodities and a dominant 73-percent share of the projected increase in pork demand. Projected demand growth for all meats is fastest among middle-income developing regions, including Southeast Asia, Latin America, Africa, and the Middle East. Growth in poultry consumption is the most broad-based, including significant gains in lower income developing countries.5
World soybean imports are projected to increase by 26.7 percent between 2021/22 and 2031/31, with China accounting for about 79 percent of the projected increase, and Brazil’s ability to expand area and double cropping meets about 70 percent of the increased demand, followed by the United States, South America, and Argentina. Soybean meal import demand is projected to expand 10.4 percent and is broad-based, including gains by the European Union, the largest global importer. Argentina, Brazil, and the United States are projected to remain the major soybean meal exporters. Soybean oil imports rose 13.1 percent over the projection period based on demand by India, the world’s largest importer.6
Agribusiness Workforce, Development and Education
The Ag sector can assist considerably in generating capital income for a country in many ways. Several colleges and universities offer all-encompassing education in agribusiness and agribusiness degrees. Graduate programs lead to an MBA in agribusiness or a Master of Science in agribusiness. Typical classes in graduate programs deal with agribusiness management, agricultural industries marketing, financial management, commodity trading and technology.
Agribusiness development is a requisite for economic development of a community, state, or country. Economic development agencies continue to work with colleges and universities along with the local workforce to create programs, training, and incentives by promoting economic growth and workforce development for a nation by contribution to the national and global income, the creation of infrastructure, and the capability of foreign and domestic trade. When there is a surplus demand for the raw materials, it will, in turn, lead to the production of more commodities supporting industrialization and increasing workforce development and ultimately employment.
Sources:
1 https://www.referenceforbusiness.com/encyclopedia/A-Ar/Agribusiness.html
2 https://www.nass.usda.gov/Publications/Todays_Reports/reports/mkpr0321.pdf
3 https://www.nass.usda.gov/Newsroom/2021/06-30-2021.php
4 https://www.selectusa.gov/agribusiness-industry-united-states
5 https://www.jstor.org/stable/1812786
6 https://www.referenceforbusiness.com/encyclopedia/A-Ar/Agribusiness.html
