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Oct 9, 07
I have been trying to think of a way to concisely explain what is
happening in global agriculture so a person with a non-farm
background can understand. I have read many articles and books by
Tom Freidman from the New York Times. He is known for using the
analogy of Version 1.0, 2.0, 3.0 et cet in trying to describe where
a given business or country is with regards to its position under
current globalization dynamics. I have come to the conclusion the
world is now in AG 5.0. Some of us are there and many of us are
stuck in a AG 3.0 mindset.
Let me explain:
Back in the 1890’s to the 1920’s immigrants came from Europe came to
both USA and Brazil. In the USA we had the Homestead act that helped
settle the Midwest and great plains. Generally all the work was done
by hand and horses. This was also the beginning of township
government. 36- 640 acre sections makes 1 township or about 23,000
acres.
In many areas of the USA 4 families occupied the 4 -160 acre tracts
in each section. Each family had a variety of livestock and crops
and for the most part they were self sufficient.
I call this Agriculture 1.0
From the 1930s to the 1980s we experienced the mechanization of
agriculture. We changed from HORSE power to Diesel power. Each few
years the equipment manufacturers made a new and improved tractor or
combine that made each man more productive per acre per year. We
tended to spend more time tilling our fields. We had summer fallow
and row crops that required tillage during the season. I call this
era Agriculture 2.0. In Ag 1.0 and 2.0 we farmed in hours per acre
per year.
Since the late 1980s to early 2000s we have been in Ag 3.0. Many of
us operate under this version today. During this time we have been
given freedom to farm. We can plant any crop we like depending on
what market forces are telling us. We saw the specialization of
raising one or two crops and doing so on a large scale. Many of us
are using no-till technology. Many of us are using air seeders and
multiple combines and grain carts in the field to maximize the
efficiency of each machine and man to its best capacity. We are
using GMO seed technology (i.e. round up ready seeds and BT corn).
Ag 3.0 gave us the ability to farm in minutes per acre per year. We
have the ability to load up equipment and farm in a different state
with ease. Even with large amounts of government payments we have
continued to see the disappearance of the family farm that was so
common under Ag 1.0 and 2.0. I would make the argument that
technology being applied on larger and larger farms has been the
major reason for the consolidation as the market tries to find the
most efficient application of these new technologies.
The past 10 years or so we have seen the advent of multi-stack seed
technology. We continue to see higher and higher yield potentials.
We have seen the expansion of local ethanol plants add value to our
corn. We now have precision Ag technology such as GPS field mapping,
auto steer guidance systems, and variable rate fertilizing and
planting technology. This is all being applied on the same fields
that were farmed by horse in Ag 1.0. I call this version Ag 4.0. The
question now becomes where does all this new technology get applied?
We all know a new combine costs $300,000 dollars or more.
The same is now true for tractors and state of the art ground
sprayers and fertilizer applicators. My question is will these
machines continue to be efficient on 80 and 160 acre fields? Do we
have to drive 20-50 miles to be able to find enough land to cover to
justify the ownership of these new machines with version 4.0
technology on board? We now have record high commodity prices
because of some global supply problems and the high demand for
ethanol feed stock and feed for our livestock operations. Version
4.0 agriculture will be around for awhile. In the next paragraph I
will try and explain what version Ag 5.0 might look like.
To understand what Ag 5.0 will look like, I think everyone needs to
visit Brazil; specifically Mato Grosso. I can also make an argument
that Argentina is well on its way to becoming a version 5.0 country.
The only thing lacking is the availability of the same GMO
Multi-stack seed technology that is so common in USA. For those that
read my Blog ,essays and newsletters, readers are aware of the large
farms in Mato Grosso. Many are 10,000 hectares ore more. This is
similar in size to a township discussed in Ag 1.0 and 2.0. One
family is in charge of that land. Possibly 1-3 foreman run a crew of
employees. Each foreman will be in charge of a given operation. For
example one will manage the crops,
another will manage the livestock, and another will manage the yard
or base operations.
The integration of crops, livestock (swine, chicken, cattle),
reforestation, bio digesters for manure, and the ability to sell
carbon credits is the model for the new family farm. The family farm
of AG 5.0 raises the same commodities as Version 1.0 and 2.0 but at
100 times the scale. Technology that includes no only large
machinery but computers with high speed internet and cell phones and
integrated systems management has allowed version Ag 5.0 to develop
in the middle of Mato Grosso. The cheap land and labor that were
abundant during Ag 1.0 and 2.0 in USA is now being used to its
maximum efficiency with the advent of version 5.0 technology within
Brazil.
The next step is how to process all of this production as
efficiently as possible. This is now happening in Lucas do Rio
Verde, Mato Grosso. I call this version Ag 5.1. This occurs when the
local community cooperates to find all the synergies between
multiple industries simultaneously. When local initiative, state and
federal government, and private industry get together, amazing
things can happen. When local industry can process locally grown
corn and soybeans and make them into feed stock rations for the
chickens and hogs, and then use the soy oil to make bio-diesel and
then finish the program by slaughtering all the meat locally for
export around the world in value added form, I think we are
witnessing the birth of Ag 5.1.
In summary, do we have to rethink how and where our food in USA is
produced, processed and shipped? We have such an efficient
transportation system that we tend to ship raw commodities long
distances without a second thought. We are very prideful of the
family farm in the USA. Ag 5.0 will require us to rethink what a
family farm is. I would make the suggestion that whoever can form a
coalition and link a group of townships together with a common
production and processing goal and incorporate that model with state
government and private industry in the USA will become the new model
for strategic production centers located in the Midwest. Developing
countries like Brazil and Argentina will actually jump ahead of us
in the next phase using the technology created in the northern
hemisphere.
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