Demographic Storm Hits U.S. Farmers

For years now, many have been pointing out a developing trend in the U.S. farming industry: the number of farmers continues to stagnate. Though the United States was once dominated by agriculture, the nation has simply grown beyond its once economic staple and put its focus elsewhere. As this happened, farming became less of a lucrative industry, leading to fewer and fewer people who choosing it as a career path. The trend has led many to proclaim an agriculture crisis in the country, but the situation is probably less dire than many paint it [for more agricultural news and analysis subscribe to our free newsletter].

The Agriculture Industry Sensationalized?

Some are quick to point out that agriculture as a percent of GDP has been shrinking in the last few years, which is true. But that anomaly is simply due to the economy finding growth elsewhere; farming simply isn’t the priority that it once was.

Another major focus is the declining number of farmers around the country. While that certainly is not a great sign for the longevity of our ag world, keep in mind that farms are much more efficient today than they were just a few decades ago.The EPA notes that there has been an “increase in agricultural labor efficiency – from 27.5 acres/worker in 1890 to 740 acres/worker in 1990.” Today, the average U.S. farm feeds 155 people versus the same farm that could only feed 26 in 1960 [see also 50 Ways To Invest In Agriculture].

One Nagging Issue

FarmingBut there are a few trends that are slightly more pressing in the industry. Perhaps the biggest issue facing U.S. farming and agriculture is the graying of the workforce. As the farm population of the country has continued to dwindle, it has also aged. The EPA calculates that over 40% of the farming labor force is over the age of 55, a stat that does not bode well for the long term. If the United States is to continue its exporting dominance, there will certainly need to be some new blood in the industry, as retirement is an inevitability for much of the current labor force.

The United States is currently one of the most significant grains producers in the world, as the country is a net exporter of a number of important commodities like corn. But the global population is showing no signs of slowing, and the demand for food products will only jump in the coming years. “To keep up with population growth more food will have to be produced in the next 50 years as the past 10,000 years combined,” notes America’s Farmers, a Monsanto-backed resource [see also The Best Agriculture ETFs of 2012].

Jim Rogers has famously stated that he feels that farming is one of the best career choices a young person can make these days, as they will be entering an industry that will be fueled by growing global demand. The issue, for the time being, is not so much that the United States is in any danger of not being able to feed itself, but rather of missed opportunities to feed others around the world. However, if the industry continues to age in the coming years, we may be discussing a potential problem in the economic makeup of the country.

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Disclosure: No positions at time of writing.

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Commodity HQ is not an investment advisor, and any content published by Commodity HQ does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities or investment assets. Read the full disclaimer here.

2 Responses to “Demographic Storm Hits U.S. Farmers”

  1. [...] several commodity producers’ fourth-quarter reports as global economic uncertainties and demand concerns continue to plague the market. Earnings results thus far have been mixed, while lackluster economic [...]

  2. [...] Monsanto’s fiscal Q2 earnings rose an incredible 22%, driven largely by strength in its global corn and herbicide business as well as increased demand from emerging market [...]

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