Agriculture in the 21st Century

Significant changes are occurring in the relationships among the stages of the food and fiber systems from input supply to retail. Changing end-use markets and technology are primary drivers of what is often characterized as the industrialization of agriculture. The fundamental research issue is what structural changes and realignments will occur in the agricultural production and distribution system to efficiently and effectively supply various end-use markets, and how these changes, combined with the increasing role of knowledge and information in improving physical and financial performance of the system, will affect the relative efficiency of traditional impersonal markets compared with personal negotiation in coordinating the production and distribution chain. Analysis is based on observation of trends in the food sector and the integration of world markets for agricultural products. Deductive reasoning is used to infer changes in agricultural business practices needed to accommodate consumer demands in a worldwide market. The industrialization of agriculture will result in a significantly different industry-one characterized by a manufacturing approach to creating specific products for unique end-uses, and negotiated coordination of the stages of the production and distribution chain from genetics to final consumer. The manufacturing mentality will emphasize intensive scheduling and use of resources; alliances with others to reduce costs, lower risk, and capture value; and total systems rather than stage optimization to increase efficiency and reduce losses. Negotiated coordination in the form of contract production, vertical coordination, and strategic alliances will replace much of the impersonal open markets coordination that has dominated commodity markets in the past. Information will be a major driver and determinant of the form of coordination as well as who has power in the food production and distribution system.