The consolidation and integration of U.S. agriculture combined with quick adoption of new technologies is good for producers and is making the country's ag industry competitive globally. That's the conclusion of a new report from Rabobank's Food and Agriculture Research group. However, the new report also warns that to overcome challenges such as high land costs, rising environmental regulations and changes in government support, farmers much keep moving forward with growth and innovation strategies.
The report identifies key trends that will help ensure U.S. competitiveness in the years ahead:
- Consolidation will continue as U.S. farmers seek larger operations and incomes in order to spread their fixed costs, achieve greater efficiencies through the use of technology, gain access to lower cost capital, and strengthen their bargaining power.
- Integration and contracting with wholesalers, processors and retailers will allow even smaller farming operations to capture a market premium while reducing risk and locking in sales. While contracting is already well-established in the protein sector, the grains and oilseeds sector will see more integration in the future, as well as premiums for specialty crops such as low-linolenic soybeans.
- U.S. farmers enjoy several key advantages that will help them compete globally, including a relatively low cost of capital; access to cutting-edge technology; strong managerial skills; and a strong domestic market, as well as favorable access to Canadian and Mexican markets for U.S.-produced commodities.
New services offered
Rabobank notes it is repositioning its U.S. farm lending business to better serve the evolving financial needs of American producers. Starting this month, Rabo AgriFinance will strengthen its lending platform, expand its product offerings and increase its local presence in markets across the country in a number of ways.
First it plans to provide customers with a full range of ag lending products - real estate-based term lending, operating and input financing and crop and livestock insurance - through a single point of contact, a locally based Relationship Manager.
Second, by opening 15 new U.S. offices and increasing field staff by 50% over the next 3 months.
Third, by investing in systems and technology to increase efficiency, service and account management.
"Rabobank is committed to the success of American agriculture over the long-term," said Cor Broekhuyse, head of Rabobank International in the Americas. "By expanding our sales teams, opening new locations, and strengthening our systems, we will be more responsive and efficient in serving the financial needs of our U.S. customers."