Through the Windshield: Part 3
With global markets changing and major players like Cargill downsizing, farmers must rethink what—and how—they grow for the future.
This is the third and final installment of a three-part opinion series by Ben Voss and Ron Lyseng, exploring firsthand insights from a 14-day drive through rural America.
Let me start with this; our industry is not growing. Our industry is shrinking. Birth rates are dropping. The population is aging. Amongst a variety of other factors, these two trends are pushing food consumption down. And dependence on biofuel demand is a shaky strategy. For the last 40 years, I was one of the people who talked about food shortages and feeding the world. I no longer believe that mantra.
Current petroleum production is easily keeping up with demand. Will government policies shift to keep gasoline prices low? Lowering inflation is popular. President Donald Trump just announced executive orders to increase oil output to drive down energy costs. He also withdrew from the Paris Climate Accord. Both decisions will impact biofuels. Keeping ethanol prices high is not popular with consumers who are eager to see pump prices drop. If ethanol is priced low to match oil prices, corn prices will also stay low or ethanol production requires massive subsidies to be viable. The market will come to grips with the fact that ethanol consumes 30 per cent of the US corn crop. We try to export our current surplus production.
In the 1980s a hungry expanding Chinese population was the solution to our grain surplus by way of exports. But their population is now shrinking, and their older population is eating a lot less food. If China does need to buy grain, they’ll get it from Brazil. Brazil will continue growing corn and soybeans cheaper than anyone else in the world. This is all new. We’ve never been in this situation before.
Ozempic (GLP-1) - Glucagon-like peptide 1 (GLP-1) is another major trend farmers should consider. One of the main brands, known as Ozempic, is a prescribed drug that causes people to eat less food. GLP1 can cut a person’s calorie intake by 25 per cent or more. Once a person loses weight and adapts to a new eating style, they generally continue eating less even if they go off GLP-1.
145,000,000 (145 million) Americans, or 42 per cent of the population, have significant health problems related to being overweight. A recent discussion with a senior internal medicine physician from Detroit corrected me. She said its closer to 55 per cent. The obese population eats an estimated 60-70 per cent of the food, most of it ultra-processed. A potential 25 per cent drop in calorie intake must be incorporated into any significant long-term food strategy.
The Biden government proposed free access to GLP1 drugs for eigh million Americans on Medicare and Medicaid. Other obese patients are eligible from their private insurance plans. Reducing obesity reduces healthcare costs from secondary diseases caused by obesity such as Type 2 Diabetes, heart disease and kidney disease. U.S. Health and Human Services Secretary Robert F. Kennedy, Jr. and President Trump are unlikely to move against GLP-1 strategies given the popularity with their voter base.
If half the ‘official’ obese Americans are prescribed GLP-1, the total US food consumption will drop by 7.5 per cent. I don’t know of too many players in the food industry planning on a shrinking food market. Everyone is planning for growth. Who wants to see their food sales shrink if 72 million Americans eat less food? What food will they eat? What should farmers be growing? How is this supposed to work anyway? Walt Duflock recently posted a great article on this exact topic.
Cargill recently announced a five per cent reduction to their global workforce. That’s 8,000 jobs. Cargill is a private company, so we don’t know much about their inner workings. However, I don’t think it is unreasonable to suggest they have a lot of smart people crunching data. They have insights well beyond what I saw driving across 10 states. If Cargill is downsizing by five per cent, maybe they see something we don’t.
Beyond this, there are opportunities on the horizon for our sector, they are just sometimes difficult to see given the current situation. Farmers are very resilient and can adapt to growing different crops. One might reflect just how much farming has changed in the last 50 years with different crop options and markets evolving to see what the next 10 years might look like.
Ben Voss is a seasoned executive, board director, and engineer with over 20 years of leadership in agriculture, manufacturing, and technology. He also runs a fourth-generation grain and forage farm in Saskatchewan, bringing hands-on farming experience to his strategic business expertise.
Ron Lyseng spent 25 years as a Technology Analyst at The Western Producer, covering cutting-edge innovations in agriculture. Now retired in Birds Hill, Man., he is working on several books and is available for freelance work.