Predicting Arizona Agriculture's Future
Consumer-driven demand appears to be creating a revolution in Agriculture today. Are You Ready?
By Julie Murphree, Arizona Farm Bureau
The greatest revolution going on in agriculture — going on in the world —is that the production world of our fathers is becoming the consumer world of our children. This is according to Dr. Lowell Catlett, regent’s professor at New Mexico State University and the Dean of the College of Agriculture and Home Economics, who spoke to attendees during the 86th Annual Arizona Farm Bureau (AZFB) Conference last month in Carefree, Arizona.
Describing the consumer on the national and global level, Dr. Catlett said, “As people move up and out of poverty and into the middle class, it impacts food and it impacts markets. It’s not simply a production world anymore; it’s a consumer world hungry for value-added products. And in a consumer world people will afford what they want.”
Arizona Farm Bureau’s First Vice President, Tim Dunn, sees the consumer-oriented world too. “Markets are changing faster than we recognize and consumers’ wants are wildly influencing this,” Dunn explains. “My wife Eileen called me from her cell phone the other day to tell me you can now buy organic Pam, the cooking spray. And if you go to the Origins skin-care counter they now sell a USDA-certified skin care line.” Dunn served on American Farm Bureau Federation’s “Making American Agriculture Productive and Profitable” (MAAPP) committee that studied American agriculture’s Future in 2005.
Dunn points out that the produce industry is recognizing this. “There’s opportunity for all sorts of things. It’s just a matter of tapping into what the consumer demands at the time. The produce industry is recognizing this by issuing new voluntary safety rules so that consumers can feel confidence that producers are making every effort to keep their food healthy and safe.
But why is this consumer world such a big deal and why does Dr. Catlett call it a revolution? In fact, the good Dr. calls it the biggest market frontier yet. He said, “It’s not only the wealth here [in America] but the wealth that’s finally being created in the world.”
Dr. Catlett calls it world wealth and highlights the power of it. “In the last decade 39 million Mexicans rose out of abject poverty into the middle class,” said Dr. Catlett. “40 Million Brazilians rose out of abject poverty into the middle class. 370 million Indians rose out of abject poverty into the middle class. 331 million Chinese rose out of abject poverty into the middle class. One billion people in the world in the last decade are now living in the middle class that once were defined by their country as being in abject poverty. And hang on folks because they estimate that by the year 2012 there will be another billion [in the middle class]. In 15 years there will be another 2 billion people in the middle class.”
Sure, the middle class of India, or China or Mexico is different than America’s middle class. But Dr. Catlett pinpoints what the world’s middle class is doing and according to the statistics agriculturalists cannot ignore the opportunities. He and other marketers insist it’s making a difference to us in agriculture.
“Let’s just talk about the Chinese,” suggested Catlett. “331 million Chinese rose out of abject poverty into the middle class. One of the first things these newly middle classed wanted to do was change their diet. And they did. They produced a three-fold increase in per capita consumption of meat protein. Most of it poultry.”
He continued. “When you rise out of abject poverty into the middle class you change your diet. And incidentally, it’s changing all over the world. Ten percent of the meat exports from this country are going to India because Indians, as they got wealthier started eating more meat.”
Dr. Catlett also pointed out that rising out of poverty creates a cultural change. “It happens to everybody. When you rise out of poverty into the middle class you get a pet. One half billion little dogs and cats now have a home in China and they’re not eating table scraps. And if you don’t think that’s important to American agriculture I invite you to walk through the baby food aisle at the supermarket and then walk through the pet food aisle in the same store and I guarantee you the pet food aisle on average will be 10 times larger. We have half a billion more mouths to feed in China. They’re four-legged, but they’ve got a mouth. It staggers the imagination.”
Anyone that’s lived in poverty will share his or her stories of the simple struggle just to survive. “When poor, 90% of life is maintenance,” said Catlett. “It’s just getting by. But when a people group rises out of poverty into the middle class and you get a little more disposable income, it changes everything.”
One of his favorite examples of changing consumer behavior once a people group rises out of poverty relates to the livestock industry. Dr. Catlett explains in this brave, new consumer-driven world that if we could raise the current two- to three-percent Prime production level by just a little, we’d add really big dollars to the cattle market. “The world wants it, they just can’t get it. If we could double the weekly beef slaughter that grades Prime from two to three percent up to just four or five percent in the domestic market alone, what the American consumer says they’d put in the pockets of the ranchers, another billion dollars ends up in the cattle market.”
Explained Catlett, “You see in this brave, new world, we’re not happy with just beef, we want Prime beef. It’s not wrong or right. It’s what the market wants. Take your cup of coffee at home. It’s six cents a cup. Coffee’s free! Starbucks isn’t. A friend of mine says, ‘It’s not Starbucks, it’s four bucks.’ You’re not happy with just coffee, you want a Starbucks.”
Newly elected Second Vice President of Arizona Farm Bureau, Paul Palmer, agrees. In the cattle-feeding business from Elfrida, Palmer says, “I think Catlett’s right. I think there are a lot of ranchers just now realizing the opportunity here. We’ll probably have to be willing to commit to genetic refinements to get to prime so that meat quality grades at prime and output of it increases and then keep stellar records to continue improving it. If such a large market wants it, why not do it?”
Catlett concludes that American agriculture can do it. Produce exactly what the domestic and world consumer wants. And it’s because we are good at what we produce, we can take the production world of our fathers and move into a production mode that customizes to exactly what the American and world consumer wants.
“Recently it was reported for the umpteenth time because nobody’s ever beat us that Americans produced more wealth per capita than any nation on the planet,” said Dr. Catlett. “Yes, I know, Luxemburg has a higher per capita income. All three,” he added to a chorus of laughter in the audience. “But in dollars per wealth which includes salaries and what you earn plus what American business people do, Americans have never been beat.”
We can do it then. We just need to figure out the constantly morphing consumer, right?
Says AZFB’s Dunn, “We’re in that transition period as agriculturalists because we’re seeing the opportunities. The changing mindset of the consumer is what needs to be tracked. Right now the consumer wants to feel like they’re doing the right thing. So, how does agriculture respond? That’s what we’re working on.”
AZFB President Kevin Rogers suggests that since most surveyed Americans don’t want to depend on other countries for their food basics that Arizona agriculturalists have tremendous opportunity to exploit this desire. “Based on what you already produce, investigate the market. See if you can segment and niche your product. Plus, build relationships with your local suppliers to help you with the process,” says Rogers. “Can they help you offer something new and different? The opportunities are probably beyond what we could imagine in agriculture.”
Indeed, many Arizona agriculturalists are catching the wave. The food industry panel that took place at AZFB’s conference featured James Porter, chef and owner of Tapino Kitchen Wine Bar, Scott Triplett, general manager and vice president of perishables for Bashas and Trisha Hart, lobbyist for the Arizona Food Marketing Alliance. After the engaging panel discussion several audience participants were found discussing marketing opportunities with Bashas’ Triplett and Tapino’s Chef Porter in the hallways.
