Have you ever wondered what the food business will be like in 10 years? I certainly have, and I’ve been giving it some thought. So, based on my years of experience in the business, and the news and trends pulling on business today, the following are some of my thoughts and speculations on the various aspects of this industry and its inputs as they may evolve.
I think that the whole lifecycle of business will accelerate. I am an optimist by nature, and as a student of history, it is not beyond the realm of possibilities for the pendulum to swing to the right politically.
The regulatory situation we have in the United States continues to make more difficult the ability to conduct business worldwide in the future. The current administration continues to seek more government regulation without a clear understanding of how food is produced or any interest in allowing our industry to retain a competitive edge in the world market or maintain current standards.
European Union regulators are even more difficult, using regulations as a trade barrier to U.S. products to protect their own producers. I’ve spoken often about overregulation of our food industry; the problem will accelerate.
I believe food safety is good, but it has to be applied with some common sense and reason. If we eliminate all microbiological activity, we will put our consumers at risk, because they will not have the ability to fight off infection by building up resistance to the actual germs.
All that said, I am optimistic that, in spite of government overregulation and a leftist administration that lacks the knowledge to understand what we do to feed the world; we will still be very competitive in agriculture.
Because of the acceleration of the population in the world and the growing middle class income in developing nations, the demand for food will to continue to accelerate. Demand will force us to embrace technology to produce enough food to feed the many hungry mouths. If we continue to make it more difficult to apply technology to improve productivity, many will go hungry and starvation will accelerate. True sustainability will be necessary to feed this hungry population and keep them satisfied.
We do have some significant challenges to overcome because of shrinking natural resources. Energy will remain as an ever-increasing issue around the world. In the near future, we will be facing significant water shortages in places like the breadbasket of America, i.e. Nebraska whose aquifer is rapidly becoming depleted. California, a key produce growing states, has water supplies that are also stressed. At some point, we will reach a threshold where water is equally as valuable as petroleum. There will be major EPA land and water restrictions that must be honored — environmental restrictions will accelerate.
We will find a way to improve feed conversion significantly in poultry and pork. Beef will continue to lose market share to poultry because of its longer lifecycle and the inability to react to changing market conditions as quickly as the poultry producers can. I think we could see a one-to-one feed conversion in the chicken industry and other significant improvements in performance. We will continue to find more and more ways to make turkey and pork more convenient as well. Corn growers will find a way to produce 300 bushels per acre routinely. Globally, we will see more food exported. Whereas poultry is the most popular protein per capita in the U.S., pork is dominant elsewhere — because of this, the increase in demand for pork around the world will grow. Smithfield was acquired by a Chinese company with the intent of exporting pork. With that in mind, I predict the Chinese will buy a major American poultry producer in the future as well, in order to solidify the food supply for their own population.
We will continue to find new and innovative ways to turn what were formerly waste materials into products that are valuable to our pet food, feed, bio diesel, and agriculture industries. If you’re not constantly finding ways to improve your productivity and to eliminate all forms of waste, you will become noncompetitive and irrelevant in our new world. If you wish to sit on your laurels, the acceleration and knowledge, technology and the human spirit will eliminate your ability to compete in the world’s marketplace. Cost will increase for water, energy and transportation. The number of farmers will continue to decline and available land for farming will be reduced, forcing innovation to improve production. Everyone will have to do more with less.
The art of scratch cooking will continue to decline and consumers will celebrate their weekends occasionally by cooking special meals; meanwhile, during the week they will survive on convenience foods. The traditional family will eat in shifts even more frequently and not as a group. Snacking between meals and grazing will also grow. Obesity will continue to be a problem. It will be necessary to invest significant percentage budgets in R&D to meet the changing demands of our global consumers. We will continue to be more adventurous with flavors and varieties as well as adding multicultural food to our every day diet.
My belief is that consumers will become increasingly demanding and educated, challenging our industry to satisfy their needs and desires. Cooking for smaller families will require more sophisticated packaging systems and more convenience-oriented packaging. This will manifest itself in an acceleration of demand for convenience products and foods. We must make flavorful products that look very much like scratch cooking in convenient, easy-to-use, quick-cooking packaging.
I cannot see our big multinational companies going away; they may merge with other companies or they may splinter and spin off some of their less profitable assets in favor of higher-margin businesses. The recently reported interest by Tyson Foods in acquiring Michael’s Foods shows some real genius — why not invest in a higher-margin companies that can improve your bottom line, diversify your portfolio and accelerate growth in volume and in profits? As industries become oligopolies it creates an opportunity for small niche businesses to open up and gain market share from the big boys.
I do see resurgences in small niche businesses that meet the demands of consumers currently not satisfied by the big multinational companies that dominate our industries. The big will get bigger and new niche players will enter the market.
The foodservice business will grow because consumers will continue to eat out. Consumers have limited time, they’re very demanding, they want unique experiences and they want a great price. The niche players with specialty product lines will continue to have success entering the marketplace. Even though growth will occur, the marketplace will be very competitive but under the constraints of the fads and whims of the consumers. Great restaurant operators such as McDonald’s, Subway, Starbucks and others will continue to thrive in spite a host of competitors. With Safeway and US Foods soon to be acquired, the face of grocery retailers and foodservice distributors will continue to change. Walmart will maintain momentum in the grocery business, but regional premium grocery retailers such as Publix, Wegmans, H-E-B, Kroger, Meijer, Hi-Vee, and others will continue to thrive while some of the weaker players will continue to be acquired. Sysco will dominate the foodservice distributor space, but new niche players will rise regionally.
Workers over the age of 50, who have been discriminated against by employers in recent years, will prove to be key to companies that require their knowledge to improve performance. As the Baby Boomers continue to retire and the working population shrinks in the U.S., this age group is a great hidden treasure of knowledge and experience that smart companies will tap into to meet their future labor needs. Consolidation in our industry will continue by suppliers, producers and retailers. In order to continue the recovery that we are in, it will require more and more people to go back to work.
Regulation will continue to accelerate causing the food industry around the world to adapt to its environment. As the world population grows and natural resources diminish, technology and human creativity will be required to stay ahead of the curve. Agriculture will evolve through series of innovative technologies to enhance its ability to feed a growing population. Consumers will drive demand by their changes in lifestyle through convenience products, packaging and food service options. Companies will stretch farther to staff as a result of the changing population. New innovative concepts will grow, gaining popularity faster; however they will also become obsolete quickly — more like a fad than a lifecycle.
All in all, I feel the U.S. has a great opportunity to keep its agricultural edge, if we are willing to change with the times.