Will economy's malaise derail optimism for ag?

With the stock market hurtling downward like a runaway roller coaster, corporate America's reputation sullied at every turn (“business ethics” has become an oxymoron), and the economy mired in gloom and doom, one may find the optimism in USDA's latest Food Review publication a bit offputting.

“Tomorrow's America will be bigger, wealthier, better educated, more ethnically diverse, and older,” writes Susan E. Offutt, administrator of the Economic Research Service, in her foreword to the issue, “Consumer-Driven Agriculture.”

Maybe. But with a few more Enrons, WorldComs, etc., and trillions of dollars in economic value vanishing like a snowball in August, taking along jobs, savings, retirement plans, etc., consumers may be buying more Hamburger Helper and fewer upscale food products.

Nonetheless, the ERS is engaged in a major study to try to forecast what America's food system may look like two decades from now, and Offutt says, “More people to feed, coupled with added wealth and different food choices and eating patterns, means that by 2020 America will spend over $1 trillion on food annually — an unheard-of figure 20 years ago.”

This, she says, “will translate into opportunities” for the innovators in the food system. Giving consumers what they want “is the foundation of our agricultural system and the keystone of consumer-driven agriculture.”

Those who “recognize change and act swiftly will survive, and perhaps even thrive,” Offutt says. “The slow will miss an opportunity.”

Among the trends the ERS analysts see:

  • Over 50 million more people in the United States, many of them immigrants, a growing ethnic diversity that will affect the demand for food.
  • The proportion of blacks, Asians, and especially Hispanics will increase relative to whites. Hispanics are the fastest-growing population segment.
  • There will be regional population shifts, with the West and South gaining and the Northeast and North Central areas losing.
  • “One of the biggest and most important” changes — the graying of America, with the 65 to 74 age group increasing from 6 percent to 10 percent. This will result in more “empty nester” homes and more people living alone.
  • Consumption of fruits, fish, and some vegetables will see above-average growth, with French fries, beef, pork, and sugars growing more slowly.

A wealthier America will eat out more often and spend more when they do, Offutt says. “Growth in the food sector is expected to be strong, although tempered somewhat by the aging population. These changes “will have a major impact on the way the food system does business,” she says, including modifications to production practices, food processing technology, packaging, wholesaling, retailing, and food service.”

All this, ERS analysts say, “will likely require farmers to become more-interdependent participants in the food supply chain, perhaps giving rise to contracting and other forms of organization.”

You can read the Food Review articles on the Internet at: http://www.ers.usda.gov/Publications/FoodReview/May2002.

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