Agriculture is experiencing a dramatic transformation, characterized by what Dan Basse, president of AgResource Company, calls “two sides of the fence.” On one side, grain farmers are struggling, but on the other, protein producers are thriving. While grain farmers are facing rising costs and declining revenues, the beef industry is enjoying unprecedented demand and pricing power. Beef is projected to generate $113 billion in revenue this year versus $57 billion for the entire corn crop.
“That’s how important the beef industry has become to American agriculture,” he stresses. “We in the beef industry are domestically domiciled. We can’t get enough beef today for our own domestic consumers. Beef demand is almost insatiable.”
That demand level is driving significant economic opportunity.
Basse says beef prices have reached unprecedented levels without experiencing demand reduction, driven by rising disposable incomes and changing dietary preferences. The market has not yet found a price point that will significantly impact consumption.
Here are four additional points Basse shared during the Certified Angus Beef Feeding Quality Forum:
1. Global Economic Dynamics. The global economic landscape is dramatically shifting, which in turn is reshaping agricultural trade and challenging traditional market dynamics. The world is moving from a unipolar to a multipolar economic landscape, with a significant power shift between the U.S. and China. The rise of BRICS countries is reshaping global trade, with China’s Belt and Road Initiative creating new trade zones.
2. Agricultural Trade Environment. U.S. agricultural trade is facing significant challenges, with net imports of agricultural products reaching $54 billion. The country is becoming a high-cost producer globally, and traditional export markets are shrinking. China’s reduced agricultural imports and changing global trade dynamics are creating substantial uncertainties for U.S. farmers.
“China is irreplaceable in terms of demand,” Basse says.
“We believe China’s boom is over,” he says. “They have real problems economically in China. They’ve overspent. They’ve got real trouble. As you look at their food consumption, it’s plateauing. I don’t think China is going to be a driver of global food demand anymore.”
3. Technological and Demographic Transformation. The agricultural sector is on the cusp of a major transformation driven by technology and demographic shifts. With the average farmer age of 67.3 years, Basse says the industry is preparing for a significant ownership and operational transition.
Emerging technologies such as artificial intelligence, autonomous farming and robotics are expected to play a crucial role in addressing labor shortages and managing agricultural production.
“I believe we’re going to have companies like Deere send in tractors — robotically and autonomously — to farm our land,” Basse says.
4. Consumer Demand Trends. Basse says the retail price of beef has shocked the industry.
“If you would have told me last year the retail price of beef would be in the vicinity of $9.50 a pound, and we had no demand rationing, no shifting to chicken or pork, I would have told you you’re crazy,’” he explains. “This new generation today likes protein. They like their vegetables. They do not like their starches. The snack food industry is in a bad spot. And Make America Healthy Again is going to help cattlemen.”
The demand for beef continues to increase while disposable personal income continues to increase.
“People are making money and they’re consuming it versus saving it,” Basse explains. “I think that’s important to understand. This thing called ‘chicken fatigue’ is real — we can’t eat chicken all the time. When is the beef market going to peak? I can’t model it. I can’t tell you.”
His outlook for protein producers is optimistic: “If you’re a protein producer, the next two or three years look really good.”
However, he cautions the market is complex and unpredictable.
“This is a new world,” Basse concludes. “Someday, will there be a point where we do hit a level that causes some reduction in demand? I suspect it, but I can’t tell you where it is.”