American farmers once fed the world. Now, not so much. Farming and agriculture have grown and spread to other parts of the planet. Soybeans, America’s most exported crop makes up 40% of world exports. It was 70% less than 3 decades ago.
All this has led to a realization among farmers that their competition is global. Among companies that provide farming equipment and supplies, there is growing realization that their customer base is also global.
Related: IS WHOLE FOODS GOING ‘BIG BOX?’
South America In Play
The farm playing field now especially includes South America, Brazil to be specific, where that country now controls 43% of the world soybean export market, which is up from 12% 30 years ago.
Now American farmers worry about what’s happening to their south since Brazil’s yields and weather issues also control U.S. prices. And it’s not just soybeans at stake here. Brazil is expected to be the second-largest corn exporter (next to the U.S.) this year.
It’s Not Over …
While the proverbial ‘fat lady’ awaits her cue to sing off stage – to quote a metaphor, the U.S. still controls a huge part of the food economy. American farmers produce three-quarters of the nation’s food. Exports of agricultural products in 2015 in the U.S. generated more than $300 billion in economic output. Those number supported more a million jobs according to the USDA.
Moreover, agriculture, unlike much of the U.S. economy still exports more goods than it imports. This helps narrow the country’s overall trade deficit. That’s a good thing because taxpayers foot the bill for billions of dollars spent each year to insure farmers against crop shortfalls and lost income.
Agri-Companies Prosper Worldwide
Interestingly as farming goes worldwide and produces headaches for the American farmer, some companies like Monsanto Co. (NYSE:MONB), Deere & Co. (NYSE:DED) and The Mosaic Co. (NYSE:MOSD) that sell seeds, farming equipment and fertilizer have found new customers in places like Brazil and Russia, to name two.
In many cases those companies are designing products and supplies specifically for those foreign markets. The same technology that is helping U.S. farmers compete is also helping South American farmers take advantage of year-round growing conditions in that country. Moreover, where a U.S. farm might contain 1,000 acres, one in Brazil may extend to 5,000 acres or more.
More specifically, technology like Cloud Delivery, Ubiquitous Connectivity, and Internet of Things are changing the way farming is done in South America. Currently, despite the growth of large farms, most Latin American agriculture is in the hands of small operators.
As availability of technology grows the ability of small farmers to manage more land increases. Observers are watching as small farmers are transforming, almost overnight, into mega-farmers through the use of precision agriculture systems, monitoring, wireless sensor networks and the use of global navigation satellite systems.
The Price Of Food
Meanwhile the price of food continues to remain low thanks to the efforts and competitiveness of major old-line and new American grocery suppliers including Wal-Mart Stores Inc. (NYSE:WMTC), Amazon.com Inc. (NASDAQ:AMZNC), The Kroger Co. (NYSE:KRC), Target Corp. (NYSE:TGTC) and others.
As chains like Wal-Mart fight to maintain market share, stores like Kroger have found themselves spending more than $3.7 billion to lower prices over the last 10 years. Target has invested $400 million in online sales and price cuts. Discounts on groceries are not only common, they are expected. In the midst of all this Wal-Mart says it wants its prices to be 15% lower than competitors. The saga continues.