What’s Next for America’s Agriculture?
The American agriculture market is full of contradictions. We revel in the farm-to-table phenomenon, in which diners pay a premium to restaurants that prepare dishes supposedly supplied from small family farms raising free-range cows and organic tofu. At the same time, four companies alone account for 84 percent of cattle slaughter and Monsanto produces more than 90 percent of soybean seeds in the U.S.
New technology has the promise to revolutionize agriculture, yet does not receive as much attention as it should and is stifled by poor policies and lack of government research funding. It’s long past the time for smaller and more innovative companies to take the lead when it comes to agriculture in the United States.
Congress Protects Big Agriculture at the Cost of the Taxpayer
The farm bill, passed in February 2014, subsidizes crops and the companies that insure them. These policies greatly benefit big agriculture and distort the market. About 75 percent of farm bill subsidies will go directly to the largest 10 percent of farm businesses. Because the new farm bill emphasizes crop insurance, insurance companies are indirectly subsidized as well. Between 2005 and 2009, insurance companies received $1.44 for every dollar that was spent on farmers.
Corn subsidies have led to all sorts of inefficient uses for this crop, ranging from fueling the obesity epidemic with high-fructose corn syrup to crashing the price of corn and displacing corn farmers in Mexico, who could no longer compete with U.S. prices after Mexico agreed to the North American Free Trade Agreement (NAFTA). Other subsidized crops, like cotton, will cost the United States $147 million per year in World Trade Organization penalties paid out to Brazilian farmers.
Overall, the new farm bill will cost U.S. taxpayers $956 billion over the course of the next 10 years. Conversely, agricultural research constitutes only 2 percent of federal research spending. The 2014 farm bill passed with bipartisan support, reflecting a political climate in which it is better to fleece taxpayers out of billions of dollars than it is to produce innovative or even commonsense agricultural policies.
The Future of Agriculture Lies in the Private Sector
New technologies in precision agriculture, like GPS-guided tractors and yield monitoring, offer farmers ways to optimize their farmland and increase their yields beyond anything we have seen before. Some companies are using probiotics instead of antibiotics to treat livestock, others have developed air compressor batteries to store renewable energy from wind turbines on farms, and tech companies would like to start using big data to monitor and optimize their farmland so irregularly shaped or otherwise difficult plots of land could produce great yields even in the face of climate change.
Even the defense sector is getting involved - some military manufacturers are refocusing on using drones in the agricultural sector, where they may be used to optimize irrigation systems and fertilizer applications.
These trends are on the upswing. Last year, agricultural technology companies received $4.6 billion in investments, almost 10 times the amount of investments they received in 2012. AgBiome, a startup, raised $34.5 million from investors like the Bill and Melinda Gates Foundation for its research on the plant microbiome. It’s hoping to use microbes to fight pests and strengthen the microbiome of plants. Bayer, the pharmaceutical giant, unsuccessfully attempted to take over Monsanto for $62 billion this week. The offer was rejected because the bid wasn’t high enough. We may be in the starting phase for a boom in agricultural technology investment.
We constantly hear about the taxi and hotel industries being disrupted by startups and new technology. After decades of massive corporations and governments creating glaring inefficiency in the sector, it’s high time the agriculture industry saw a revolution. We should be looking to big data, not big government, for the future of agriculture in the U.S.