Author: Dr. Thomas Field, Director of the Engler Agribusiness Entrepreneurship Program, University of Nebraska Lincoln
The year 2020 will not easily fade from memory and despite the challenges brought on by events associated with the COVID-19 virus; agribusiness in the U.S. remains standing after absorbing prize-fighter level body punches. In some cases, the pandemic heightened challenges which had existed long before it took the global center stage, including workforce availability, implementing automation in novel realms to increase efficiency and performance, and assuring supply chain resilience in the face of disruptive events. The pandemic also forced business leaders to reexamine long-standing practices and assumptions, leading to the introduction of several innovations and processes to deal with new challenges and changing consumer behavior.
As the pandemic forced shutdowns and reductions in throughput by the protein sector, many were convinced that the protein supply chain had suffered damage that might take many months from which to recover. However, the supply chain regained its footing. While packing and processing plant throughput was significantly impacted in the spring and early summer months, the addition of Saturday shifts and the scale-up of small, local harvest facilities reduced the backlog of fed cattle.
At the same time, according to the Beef Demand Index, 2020 had the highest beef demand of the last 30 years.[i] Cattle-Fax projected that prices for calves and fed cattle would begin 2021 with enough momentum to sustain a 5-year run up.[ii] Grain prices and the protein sector are both projected to strengthen based on strong export demand, so long as the new administration takes steps to assure a strong trading position for U.S. producers.
If there is one thing the COVID-19 pandemic revealed in short order, it’s the labor challenge confronting American agribusinesses. Dependent upon foreign workers, many producers of specialty crops faced labor shortages in early 2020 as borders closed to halt the spread of the virus.
Unfortunately, labor challenges didn’t stop there. As COVID-19 continued its spread across the country, viral illness also caused labor shortages in food processing plants and other industry sectors. These incidents, however, only exacerbated an already prevalent problem.
The USDA National Institute of Food and Agriculture anticipates an increase in the availability of agribusiness jobs in 2021, though numbers may be lower than originally anticipated, depending on how quickly the COVID-19 virus can be controlled. While job availability sounds promising for a struggling economy, the industry has struggled to attract qualified talent to agribusiness fields.
Even prior to the impact of COVID-19, challenges related to a shortage of labor were a top-of-mind discussion point across the production agriculture spectrum. To draw more people to agriculture in 2021 and beyond, industry participants will need to play a vital role in recruiting, training, and retaining a ready workforce. Showcasing opportunities in the skilled trades and advocating for skilled training programs offered via public education will be an important responsibility for agribusiness. Simultaneously, the industry must expand its reach beyond the traditional sources of talent for positions requiring high tech and advanced skills in management, engineering and the sciences. Building a bridge to those with high-level skills who did not grow up with agricultural backgrounds will become increasingly important.
Educational programs across the spectrum must develop curriculum and learning experiences that foster development of problem-solving with a combination of hard and soft skills; systems management, and the capacity to operate at the speed of commerce in a dynamic and volatile environment. In short, the focus needs to pivot toward training a generation of future leaders who are ready to engage the entirety of the global supply chain to provide for the nutritional needs for the world’s consumers.
Leaders of family-owned and operated businesses across the agricultural supply chain will increasingly need to address contingency and succession planning. COVID-19’s impact on the most senior members of society demonstrates the vulnerability of family businesses to the sudden loss of leadership and decision making. Developing more resilient strategies to address these challenges while dealing with the challenge of labor availability and retention suggest that agricultural producers should also be looking to diversify workforces, using creative approaches.
Emerging technological innovations, for example, could help farmers realize greater yields with fewer resources, but achieving results will require new collaboration between the tech industry and agribusiness. Tech solutions ranging from data-enhanced decision making to the automation of specific functions requires the merger of multi-dimensional knowledge that can best be accomplished via direct engagement between agribusiness and emerging technologies.
To meet the growing labor needs of the industry, agribusiness will need to come together in 2021 and take a focused approach to attracting a new workforce, using all of the tools at its disposal to create a vibrant industry sector capable of solving for world food problems.
In 2020, we learned that the agricultural supply chain is vulnerable in ways we hadn’t thought possible before. The strain the industry faced during the pandemic highlighted the importance of agribusinesses to consumers across the nation. In 2021, these learnings present an unprecedented opportunity for agribusiness to affect lasting change.
To do this, we will need to address the entire supply chain, not just how food is produced, but how it is manufactured and transported. The creation of trust via increased transparency, capitalizing on the shift to online grocery purchasing by consumers, reimagining the industry’s approach to talent attraction and development, and addressing the supply chain gaps that were exposed by COVID-19 all provide distinct opportunities.
There is a line from the “Apollo 13” movie that comes to mind. When assessing the challenges facing the mission, the NASA director fears the worst disaster the organization has ever experienced. Gene Kranz, head of flight operations, quickly interjects, saying, “With all due respect, sir, I believe this is going to be our finest hour.” Agribusinesses across the supply chain were battered by the events of 2020. However, these new challenges also provided a backdrop in which industry participants demonstrated their creativity, resilience and ability to problem solve in the midst of rampant uncertainty.
Despite the continued impact of the COVID-19 pandemic and other challenges facing the industry, 2021 could be the finest hour for agribusiness, as participants across the sector work together, building and reshaping the industry for tomorrow.
The articles in this blog are for informational purposes only and not intended to provide specific advice or recommendations. When making decisions about your financial situation, consult a financial professional for advice. Articles are not regularly updated, and information may become outdated.