Written by Rachel Birch from Agriland
New insights into the global agricultural sector have been revealed in a report commissioned by McKinsey & Company, which demonstrate that farmers are increasingly challenged by increased input prices, extreme weather events and commodity price volatility.
“Given the current macroeconomic environment, the priority for farmers today is improving productivity, whether through agriculture technologies (agtech) for improving operations,
biological products, or sustainable practices,” the report stated.
The ‘Global Farmer Insights 2024’ report is based on information collated from interviews with over 4,400 farmers worldwide conducted by McKinsey between the January to March this year.
Respondents to the survey represented farms ranging in size from about 120ac or less (100% of India’s 1,031 respondents) to more than 6,000ac (15% of respondents from Canada and the United States).
In terms of the types of the types of farms surveyed, tillage predominated, representing 46% of the sample in India and 80% in Latin America, closely followed by specialty crops such as fruits and vegetables.
The report found 48% of farmers worldwide indicated that rising costs of production remained their main concern with 24% of growers reporting that fertiliser prices have risen more than 20% in the past year, labour costs increased by 14% and crop protection costs by 13%.
Extreme weather events pose the second most pressing concern for 41% of farmers surveyed and was the top concern for farmers in Europe and Latin America.
The report stated: “Growers who think that extreme weather is a top risk said they spend about 30% more on agricultural purchases than their counterparts and were about 50% more likely
to say they are planning to buy or lease more land over the next two years.”
This may be indicative of associative costs including insurance as well as purchasing land more suitable for production in harsher climates.
Volatile commodity prices are the third major risk to profits that farmers cited with 30% of farmers, mainly located in North America, viewing it as one of their top risks.
Farmers in the northern hemisphere are pessimistic about their outlook for future profits, with just 14% of European and 13% of North American respondents believing their profits will be increase this year.
This is in stark contrast with the positive outlooks held in India and Latin America with 65% of Indian farmers and 45% of Latin American respondents expecting higher profits this year and 76% of Indians and 58% of Latin Americans forecasting even higher profit margins in the next two years.
Varying supply and demand dynamics may be shaping these altering outlooks on future profits according to the report authors.
In the United States, prices of corn and soybeans have been declining due to a large global
harvest, a drop in export sales, and substantial amounts of crop in storage.
Meanwhile in Europe, the price of wheat has decreased by about 40% since 2022, with farmers expressing concerns over Ukrainian imports.
Rice is India’s dominant commodity and rice farmers are benefiting from record high price levels for their produce, despite their government’s restrictions on exports which were aimed at lowering domestic prices.
Despite the widescale crop failures and increased incidences of droughts and floods experienced by Brazilian farmers in 2023, farmers had high hopes for their future profits, which is likely due to the increased demand for soy and corn exports to China.
The report also found that efficiency and productivity ambitions are driving the increasing adoption of sustainable farming practices, with increased yield named as the key driver in Latin America and North America and additional revenue streams noted as the main motivator in Europe.
“When it comes to which sustainability practices farmers are implementing, the leading practices are crop rotations (68%), reduced or no tillage (56%), and variable rate spraying or fertilisation,” the report stated.
The volume of respondents currently involved in carbon programmes is low at 5% with just 6% planning on adopting such schemes in the future.
These figures are slightly higher in North American with 11% Americans and 14% of Canadians currently participating in carbon schemes.
Tech adoption on farms continues to grow with 52% of respondents surveyed currently deploying or willing to use technology in their farms.
North America and Latin America are paving the way in this context at 75% and 60% respectively and adoption is usually dependent on farm scales.
“Digital agronomy and precision agriculture hardware are the top two leading technologies around the world,” according to the authors.
This report is aimed at enabling organisations providing technology and services to farmers to better adapt their offerings to farmers as it gives them a more comprehensive understanding of the challenges and attitudes prevailing in the industry.
The post Global report: Farmers challenged by weather and input costs appeared first on Agriland.co.uk.
Continue reading on the Agriland Website...
“Given the current macroeconomic environment, the priority for farmers today is improving productivity, whether through agriculture technologies (agtech) for improving operations,
biological products, or sustainable practices,” the report stated.
The ‘Global Farmer Insights 2024’ report is based on information collated from interviews with over 4,400 farmers worldwide conducted by McKinsey between the January to March this year.
Respondents to the survey represented farms ranging in size from about 120ac or less (100% of India’s 1,031 respondents) to more than 6,000ac (15% of respondents from Canada and the United States).
In terms of the types of the types of farms surveyed, tillage predominated, representing 46% of the sample in India and 80% in Latin America, closely followed by specialty crops such as fruits and vegetables.
Global report
The report found 48% of farmers worldwide indicated that rising costs of production remained their main concern with 24% of growers reporting that fertiliser prices have risen more than 20% in the past year, labour costs increased by 14% and crop protection costs by 13%.
Extreme weather events pose the second most pressing concern for 41% of farmers surveyed and was the top concern for farmers in Europe and Latin America.
The report stated: “Growers who think that extreme weather is a top risk said they spend about 30% more on agricultural purchases than their counterparts and were about 50% more likely
to say they are planning to buy or lease more land over the next two years.”
This may be indicative of associative costs including insurance as well as purchasing land more suitable for production in harsher climates.
Volatile commodity prices are the third major risk to profits that farmers cited with 30% of farmers, mainly located in North America, viewing it as one of their top risks.
Farmers in the northern hemisphere are pessimistic about their outlook for future profits, with just 14% of European and 13% of North American respondents believing their profits will be increase this year.
This is in stark contrast with the positive outlooks held in India and Latin America with 65% of Indian farmers and 45% of Latin American respondents expecting higher profits this year and 76% of Indians and 58% of Latin Americans forecasting even higher profit margins in the next two years.
Varying supply and demand dynamics may be shaping these altering outlooks on future profits according to the report authors.
In the United States, prices of corn and soybeans have been declining due to a large global
harvest, a drop in export sales, and substantial amounts of crop in storage.
Meanwhile in Europe, the price of wheat has decreased by about 40% since 2022, with farmers expressing concerns over Ukrainian imports.
Rice is India’s dominant commodity and rice farmers are benefiting from record high price levels for their produce, despite their government’s restrictions on exports which were aimed at lowering domestic prices.
Despite the widescale crop failures and increased incidences of droughts and floods experienced by Brazilian farmers in 2023, farmers had high hopes for their future profits, which is likely due to the increased demand for soy and corn exports to China.
Sustainability
The report also found that efficiency and productivity ambitions are driving the increasing adoption of sustainable farming practices, with increased yield named as the key driver in Latin America and North America and additional revenue streams noted as the main motivator in Europe.
“When it comes to which sustainability practices farmers are implementing, the leading practices are crop rotations (68%), reduced or no tillage (56%), and variable rate spraying or fertilisation,” the report stated.
The volume of respondents currently involved in carbon programmes is low at 5% with just 6% planning on adopting such schemes in the future.
These figures are slightly higher in North American with 11% Americans and 14% of Canadians currently participating in carbon schemes.
Tech adoption on farms continues to grow with 52% of respondents surveyed currently deploying or willing to use technology in their farms.
North America and Latin America are paving the way in this context at 75% and 60% respectively and adoption is usually dependent on farm scales.
“Digital agronomy and precision agriculture hardware are the top two leading technologies around the world,” according to the authors.
This report is aimed at enabling organisations providing technology and services to farmers to better adapt their offerings to farmers as it gives them a more comprehensive understanding of the challenges and attitudes prevailing in the industry.
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The post Global report: Farmers challenged by weather and input costs appeared first on Agriland.co.uk.
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