The Future of Agriculture is Decentralized
How food production will shift closer to the consumer and produce radical changes in the economy
In the course of running Harvest Returns, I have the pleasure of speaking to a variety of farmers and agriculture entrepreneurs every day and learning about their unique business models. A trend that is becoming evident to me is that an increasing amount of American food production is migrating out of traditional growing areas. In some ways, American agriculture is coming full circle. At the turn of the 19th Century, our population was just shy of 4 million people, with farmers making up 90% of the labor force. Smallholder family farms were common place, with most Americans growing some percentage of their food. Today, 325 million Americans are fed by less than 2% of the population, and another 20% of food consumed is imported from overseas.
Though it’s unlikely that most Americans will suddenly wake up tomorrow with green thumbs and begin growing their own food again, changing consumer preferences, economics, and new technology may well increase the number of farms and their geographic distribution in the next couple of decades. The initial stages of this evolution is underway in the production of leafy greens and other vegetables.
Take for example, California, whose Central Coast is blessed with nearly perfect climate and soil for growing vegetables. In the Golden State, 970,000 acres are devoted to growing produce amounting to sales of $7.85 billion annually, or more than half of the of the United States’ $13.8 billion vegetable market. Yet, California’s agriculture industry also faces significant issues with labor shortages and increasing water scarcity. Technology will steadily erode California’s monopoly on vegetable production in this country.
Vertical farming, urban farming, hydroponics, aquaponics, and aquaculture, sometimes called “novel farming systems,” are growing rapidly around the world and making their way across the U.S. due to their many benefits. These systems allow producers to grow fruits, vegetables, and even fish in practically any climate, in both rural and urban areas. Some types of indoor agriculture use 80% less water than traditional soil-based vegetable farms. These operations can also produce a much wider variety of fruits and vegetables, tailored for local consumer demand. The facilities often use renewable hydrothermal or solar energy. Finally, production methods are less reliant on migrant labor, or at least labor pools concentrated in a single area, like the Salinas Valley in California. The benefits of novel agriculture production have also been noticed down the highway in Silicon Valley. According to AgFunder’s 2017 Tech Investing Report, investments in these systems increased year-over-year by 243%.
Fewer Food Miles, Less Energy
Decentralized growing decreases food miles — that is, the distance that a product has to be transported from the grower to the consumer — throughout the agriculture supply chain. Fewer food miles equal fresher produce and less likelihood of food contamination. Locally or regionally grown produce generally consumes less energy to distribute to the consumer and some growers are linking their operations to retail distribution in urban areas. Farm-to-table produce can become more affordable to those who cannot afford to eat in high-end restaurants.
There will likely always be a place for large-scale farming in the U.S. whether for domestic consumption or to supply the demand for the overseas export of commodity crops. The economies of scale of commodity farming operations have been enhanced for decades and these efficiencies are necessary to feed a growing world population. Sensing and irrigation technologies continue to produce increases in yields and profits per acre. That said, we will also see a major shift in production of food closer to population centers, and this change will result in large scale changes to farm labor while impacting both rural and urban land use. New farm jobs in suburban and urban areas will emerge. Eventually, some of the land used to produce specialty crops will be developed for other uses or revert to its natural state. More and more specialty production will come on line in non-traditional farming areas to meet the year-round demand for specialized consumer tastes.
