This mindset can get agriculture off the commodity rollercoaster
Today's U.S. farmers and agricultural businesses are navigating a complex landscape, with unique near-term and long-term challenges that include intensified global competition, record trade deficits, rising costs, and more frequent and extreme weather events.
These challenges have created economic instability across the entire agriculture sector with U.S. row crop farmer net income remaining persistently low for the third straight year. Estimates from the University of Illinois show that corn and soybean farmers could face a net loss of between $50 and $70 per acre this growing season. On top of this, global acreage has leveled off at 2.3 billion acres and the average yield for corn and soybeans has also slowed.
This uncertainty affects not only those who grow our food but also reverberates throughout the entire food system, threatening the stability we all depend on. It's clear that our sector must get off unpredictable commodity rollercoaster and create a more predictable future for farm families, agricultural businesses, consumers, and communities.
Drawing on Land O'Lakes, Inc.'s 104 years of experience as a cooperative, we have learned that collaboration is crucial for bringing stability and predictability to the food and agriculture sectors. The ag community represents only around 1% of the population but, by working together, we can capture efficiencies and reinvest in innovation, expand market opportunities, and support the communities and local businesses that are essential to our nation's food supply.
Become a student of the game
At Land O'Lakes we have a saying that 'Our success starts with our member-owners' success.' What this means is that our decisions and investments must be made with our cooperative owners in mind. This mantra has never been more important than today when external factors are pressuring our bottom lines and muddying the decision-making process.
In agriculture, we're seeing pressure on the supply side as a result of global trade dynamics, a reduction in demand due to dips in commodity prices, and a rising cost to serve. All of which results in a tightening of margins up and down the food value chain.
To be clear, these challenges are hardly unique to our sector, and I see the remedy as equally universal. Business leaders must double down on being students of the game, keeping a pulse on market dynamics and geo-political developments to stay on offense. And it's not enough to simply insulate your own business, we must think more collaboratively to identify solutions that serve partners up and down our value chains.
Inject predictability into our food system
To address the pressures facing American farmers, we must move beyond traditional methods and invest in modern technologies and data-driven solutions that provide detailed plans down to the acre and animal, help minimize risk to inject predictability into farm operations. By creating standardized, reliable, and secure datasets, the industry can provide insights that help farmers respond to environmental and market challenges, manage supply chains, and track production volumes with unprecedented precision.
As I look across this sector, I'm especially inspired by how Keystone Cooperative is working to drive predictability. This Indianapolis-based cooperative is using precise, field-level data to help growers respond to seasonal challenges and maximize their ROI by applying the right crop protection products at the right time and in a precise location.
For Land O'Lakes, data is the cornerstone of our innovation strategy. Through the WinField United Innovation Center, a leading agricultural applied research facility, we collect and analyze roughly six million data points annually to help farmers increase production, improve efficiency and optimize resource use. Those insights are then being delivered in a manner that reduces the risk farmers face each day. This includes low-interest financing, prescription programs with a performance warranty, and an AI assistant that provides real-time solutions to problems farmers encounter throughout the growing season.
The power of the cooperative mindset
In an era where traditional business models often prioritize short-term profits over long-term resilience, the cooperative model offers a compelling alternative. We like to say our capital is patient, meaning we can take a longer-term point of view—considering future generations as much as quarterly performance.
With a reach that touches 50% of the U.S. harvested acres, over 100 million animals daily, and 13 billion pounds of milk per year, the Land O'Lakes cooperative system also demonstrates the strength of collaboration and shared purpose. By working together with established business leaders that have earned local trust and demonstrated the ability to drive change, we can strengthen the economic prosperity of our shared businesses and communities.
The cooperative structure also fosters unique partnerships between stakeholders within and outside the agriculture sector. There's a deeper level of commitment to shared success that shows up in business initiatives and community building alike. For instance, Land O'Lakes is collaborating with CentraCare to help establish the University of Minnesota CentraCare Regional Campus where medical students receive education, training, and career development opportunities in rural communities where local medical services are desperately needed.
Going forward
As we look ahead, I want to challenge other organizations to adopt this collaborative approach. Think externally and selflessly. Think long term. Think evolution. Even if you're operating outside of the cooperative framework, this mindset can help solve the challenges we all face, enhance economic performance and uplift the communities we serve.
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