Many of the fundamentals that we traditionally follow in our industry are very good; however, short-term fuel and plastic prices will be affected by the recent flooding resulting from hurricanes Harvey and Irma. The floods have idled one-third of the U.S. refining capacity. Feed ingredient prices will remain low through the current growing cycle. While meat consumption and economic indicators are very good, there are certain things that could change the environment long term.
Animal-welfare special-interest groups will continue to put pressure on our industry by leveraging the court of public opinion to incrementally force us to be less profitable and less viable. These groups continue to dominate this field with their agendas ranging from all extremes of raising an animal (natural, hormone-free, cage-free, etc.) to banning the use of animals as a protein source all together. These issues forced our industry to raise costs without improving the revenue stream. The increasing number of vegans and vegetarians is a disconcerting trend that will continue to affect our business.
Marketing and branding
With a dramatic growth of the importance of Millennials as a percentage of the food-consuming public, marketing, branding and social media will continue to become more important. As their children grow, smaller packages, re-sealability and more convenience packaging will continue to escalate in importance. Certain key issues, such as locally grown and clean labels, will continue to escalate in significance. Convenience will continue to be king. Consumers have less time and will demand speed. I refer to them as the iGeneration — when they do not receive instant gratification they will go elsewhere. Be prepared to keep them satisfied or lose their business.
These consumers will continue to be more and more adventurous when it comes to spice levels and exotic recipes that might satisfy their ever-increasing desire to eat more flavorful food. Global food tastes will affect the market as people travel regularly to other countries and seek cuisines they experienced back here in the U.S.
Locally grown is the hottest trend in the food industry. Locally grown produce and protein sales are going through the roof. Restaurants sourcing items locally are doing exceedingly well. Issue-conscious consumers are more interested in buying locally grown products and many are switching from big-chain organic products. There is a phenomenal demand from Millennials to know where their food comes from and to be able to track it back to the farm.
Agri-tours/class field trips create an excellent opportunity to begin educating young consumers about the realities of farming and animal agriculture, helping them gain a better understanding of the common denominator that connects all living things than they get from press sources. This offers a great opportunity to educate schoolchildren to the realities of farming and what is required to feed all the hungry people in the world.
Future of farming and education
The future crisis in agriculture is on the horizon. Getting the next generation to succeed their families into farming is a challenge. As much as 70 percent of farmland could change hands in the next 20 years. The world population will continue to rise, creating demand for protein and food. We must educate our youth and continue to encourage our farm families to perpetuate the family business.
According to a report from Reuters in February 2017, one-third of U.S. adults are eating out less frequently than in the previous three months. Eating lunch out is down 2 percent overall with more people eating at their desk or working from home, making a lunch trip impractical. Recent minimum-wage hikes have caused many restaurants to restructure their prices, leaving fewer affordable options to some consumers who believe making their own lunch is the better option.
Walmart, Kroger and other larger national chains will continue to grow. Retail consolidation will continue in all sectors and there will be fewer suppliers of food products to the retail and foodservice industries, fewer grocery retailers, and regional players will get stronger or be consumed. Online retailers will continue to have an impact on all retail business as well as the food service/restaurant industry. I foresee a significant clash between the corporate culture at Whole Foods versus Amazon as they consolidate operations. Home meal delivery companies, such as Blue Apron, will continue to thrive as Millennials gain wealth.
We are in an economic bubble like the one we saw in 2008, which meant a record high for numerous industries across the board including ours. With hope, we can keep that bubble inflated for a series of years by keeping an eye on the ever-changing situations and adapting to them proactively rather than reacting to them in a down swing. My best advice: Put profits away for a rainy day and you will end up on top. NP