CHICAGO - Bill Horan lives in the same Iowa farmhouse that his father built, surrounded by the same corn and soybean fields where he has been farming for about 30 years.
Like other farmers, he sees rapid change everywhere, which has been challenging smaller farmers throughout the U.S. Corn Belt as agriculture becomes increasingly globalized.
And yet, while technology has been a factor behind the drive to bigger, more corporate farms, Horan sees it as a potential lifeline for smaller farmers.
Biotechnology may soon yield new ``niche`` crops designed for specific uses in medicine or industry, Horan told Reuters in an interview.
``We think that agribusiness and biotech companies are going to be commercializing new products in the next two to three years that will enable us to gain a higher margin than we`ve got with commodity products,`` he said.
Horan headed a special task force of farmers, agribusiness executives and economists assembled by the National Corn Growers Association, which has concluded that many producers ought to turn away from the bulk commodity crops that have been their livelihood for generations.
One example might be a corn hybrid that pharmaceutical companies can use to slash the manufacturing costs of a drug for cystic fibrosis to one-fourteenth of current costs.
Its manufacturer is expected to need several thousand acres of the crop once it becomes commercialized, the task force`s recent report said.
Horan said the issues in the current farm crisis are bigger than the low grain prices that farmers in the Corn Belt have been struggling with for the past three or four crop seasons.
Modernization has made farming so efficient that relatively few producers are able to run ever-larger farms and churn out consistently enormous U.S. grain crops.
Meanwhile, growers in Brazil and Argentina are producing bigger corn and soybean crops too, creating stiff competition for U.S. exports, he said.
FOCUS ON CROP QUALITY, NOT QUANTITY
Horan and three others from the 14-member task force presented their report on Feb. 23 to an audience of farmers in Nashville at the Commodity Classic, the annual joint convention of the NCGA and the American Soybean Association.
The report said smaller-scale Corn Belt farmers should consider contracting, either in groups or individually, with food companies or other end-users, similar to the way beef networks partner with grocery stores.
Some food companies already rely on contract farmers to provide a supply of corn that meets their precise specifications, such as white corn for snack foods.
One farmer in the audience said he was suspicious of contract farming arrangements.
``Seems like every time we do that, that other half of the alliance ends up taking all of the gravy, and we still are just producers, at whatever we`re willing to sell for,`` the farmer said.
But Horan said growth in the biotechnology industry would soon generate demand for high-quality crops that would give farmers more leverage.
``We think that agribusiness and biotech companies are going to be commercializing new products in the next two to three years that will enable us to gain a higher margin than we`ve got with commodity products,`` Horan told Reuters.
``We were made privy to products in the pipeline that are coming, which are very interesting and gave us a lot of encouragement,`` he added.
SHOT IN THE ARM FOR RURAL COMMUNITIES
Seizing those new opportunities could be the key not only to re-energizing the farming sector, the task force said, but also to attracting investment that would provide a shot in the arm for rural Corn Belt communities that have been hemorrhaging population in recent years.
Task force member Mark Schwiebert said three out of four communities that depend on agriculture as a primary source of income lost population in the last decade, according to U.S. Census data. Young people in rural areas are seeking their futures elsewhere while America`s farmers grow older.
``We`re the only industry where 25 percent of the active members are past the age of retirement,`` Horan said. ``Margins are slim. And when that happens, bigger is better. We don`t like that, but that`s what is happening.``
Fundamental changes in U.S. farming look set to turn small- and medium-sized corn and soybean farmers into an endangered species unless they can find new ways to make a profit, according to industry experts.
U.S. farm programs, including crop subsidies, have added to the problem by allowing farmers to remain barely afloat.
``Government subsidies have actually stifled incentives for entrepreneurship among grain farmers by relieving financial pressure for them to adapt,`` the task force report said.
Some of the report`s findings, including the stance on farm subsidies, run counter to the National Corn Grower`s official views.
``This is not NCGA (corn association) policy,`` Horan said of the report. ``This is a think piece. It`s designed to make people think about agriculture, think about the direction it`s going, and decide if they want to do anything about it.``
But with small farms all but gone, those who remain in the business are trying to be open to new ideas.
Schwiebert, an Ohio farmer, said: ``We eat, breathe and sleep farm programs for our very survival. Perhaps in many ways, it`s anesthetized us to think that that`s our only hope.``
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