Wednesday, March 27, 2013
The Only Sure Fire Industry for the Next Two Decades?
In 1967, Mike Nichols directed a now famous film called “The Graduate.” Nominated for a fistful of Oscars, it told the story of a young man named Benjamin who had just graduated from college. He was a little bit uncertain about his future. Nichols won an Oscar for Best Director that year and the film made Dustin Hoffman a star.
There are many famous scenes in the film but the one that is perhaps most frequently replayed takes place at a graduation party for young Benjamin (Hoffman).
It goes like this:
Mr. McGuire--“I just want to say one word to you. Just one word.”
Mr. McGuire--“Are you listening?”
Benjamin--“Yes, I am.”
Well, these days I meet with and talk with many young people in different settings. Invariably, someone will ask me where the prospects are best for their upcoming careers. I suppose that they expect me to say get a job at Apple or Google or suggest that they take the ultra-safe route and go into nursing. Nope. I take a page from the fictional Mr. McGuire and say just one word to them. That word is agriculture.
The reaction is one of shock, sometimes humor and occasionally disgust. Few want to hear my reasons. Perhaps you will take a moment or two and read them.
On October 26, 2011 I published a Media Realism post entitled “Seven Billion and Counting.” According to United Nation projections, the global population was about to hit seven billion people. By 2025, they forecast eight billion people. With 12 years to go, we seem to right on forecast with the eight billion people projection.
My question to you is simple--“How are we going to feed them?” Well, there is no question that there will be better technology over the next decade in seed, irrigation, and pest control, and, at the same time, fertilizer and farming methods will improve. The big challenge is that approximately 700 million people have entered the middle class around the world in the last decade and that trend particularly in Asia, Latin America and Eastern Europe is likely to continue.
When people join the middle class, they eat more meat whether it be chicken, pork or beef. And, significant resources are used to grow such products. Some say that at times the growth in grain demand as one jumps from subsistence to middle class can be 10 to 1 as compared to their earlier, humbler lifestyle. Some 441 gallons of water are used to produce a pound of beef. There are four pounds of soy and corn to produce a pound of pork. And, the newly arrived middle class around the world is not going to return to a meat free existence one they get used to the western diet.
So, it would appear logical that despite the gains in technology and farming methods that the price of grains would have to rise. Productive farmers such as those in America would have to be in a good spot.
Right now, the average age of the American farmer is 58. In Canada, I have seen estimates as high as 62. Young people need to get in to this industry if it is to meet its potential.
Someone wrote to me recently and suggested a good investment hedge for me would be to buy a farmette in Manitoba province in Canada. I could grow my own food on my five acre spread, live in an extremely safe location and occasionally make forays in to bustling Winnipeg. Well, at my age and personal lifestyle, that is probably not a good solution. Winter on the northern plains has little appeal to me. Farming, however, may be a viable and workable career choice for a great many young people.
You do not have to be a conventional farmer to get in on the action. Could a bright young man or woman sell equipment for John Deere and Caterpillar? Or, would a sales or marketing job at Potash, Agrium, Syngenta, or even controversial Monsanto make sense for young adults with marketing training? What about a job at Archer Daniels Midland, ConAgra or dozens of other companies across the globe that sell foodstuffs?
No matter what happens, people will have to eat and it appears that there will be a lot more people going forward. Agriculture seems nicely positioned given that many commodities still sell way under their all time highs. Sugar is a great example.
Some of these developments may not effect advertising but others will. Branded food companies will almost definitely have the wind at their backs as hundreds of millions join the middle class. Major food processors with global powerhouse brands will be in a very good place. They will spend billions in advertising and promotion, largely outside the U.S., to capture the new middle class. It will not happen overnight and commodity prices will fluctuate year to year but demographically it appears a certainty that smart farmers all over the world have a brighter future than they have had in many decades.
If you would like to contact Don Cole directly, you may reach him at email@example.com