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CHALKIER 28 The Economic Context of Agriculture James L. Rainey Lairs J. Connor, Rapportew Agriculture is often praised as a special way of life by farmers, some farm organizations, and others who take comfort in the tradi- tion of American agricultures homogeneous past. Undeniably, there is much that is appealing about the freedom and rugged individualism that are at the center of agricultures soci- etal appeal. But the fact is that agriculture is also a way of making a living, and the imperatives of economics are a powerful force behind agricultures rapidly changing competitive environment. Change is never easy, nor is it popular. There is resistance to change, even when economic forces would seem to dictate its inevitability. Agriculture's leaders-producers, business managers, and cer- tainly educators-must therefore accept their role and responsibility to be in the forefront of efforts to build understanding and accep- tance of a rapid agricultural evolution. An evolution thatis fueled by economies of scale and global competition. Consider what is happening to U.S. agriculture: · The trend in consolidation continues, with fewer but larger farms and fewer but larger suppliers. It is estimated that by the end of this century, the United States will be provided with 60 to 70 percent of its agricultural products by less than loo,ooo producers. At the same time, there will be more hobby farms. The traditional, diversified midsize farm unit is disappearing. · Rural transition continues to occur as small communities shrink and regional market centers grow. · Agricultural policies are shifting to a greater emphasis on mar- ket orientation and lower subsidiaries, with greater regulations be- cause of environmental and food safety concerns. 245
AGRICULTURE AND THE UNDERGRADUATE · Technology shifts are occurring in the forms of computer and electronic transfer capabilities and larger, more efficient production and processing equipment. · Biotechnology is changing what farmers grow, how they feed and protect what they grow, for whom they grow, and the ultimate end uses of their products. · Agribusiness consolidation will continue, with a dominance of a limited number of large food system companies. if present trends continue, the top 50 firms will own No percent or more of food industry assets by the end of this decade. · Coordinated supply and marketing will continue to expand. With decreasing supply and marketing options, production contracts and food system integration will increase. · Revenues will be concentrated in the "farm gate-to-consumer sector. While the consumer's total market basket cost increased 65 percent from 1972 to 1988 (in 1972 constant dollars) and while the cost of food as a percentage of disposable income has continued to go down, farmers are receiving 4 percent less in total market basket revenues. With this kind of evolutionary, almost revolutionary, change tak- ing place, it is easy to understand how important our task is to find and empower through education the kind of people who can make the difference in the demanding agricultural arena. The sad fact is that business is finding it tougher and tougher to identify, retain, and reward people who are equipped to compete in a technology-driven world economy. The agribusiness industry can be hit especially hard. The U.S. Department of Agriculture projects an annual shortage of 4,000 college graduates for some 48,000 agriculture-related jobs into the lgoos. Many companies that have cut back over the last decade are starting to hire again. The problem is that they are simply not finding enough people. We need to get serious on why this is so and what we should do about it. we must persuade more young people, from the elementary level through college, to catch the vision and understand that we need their brainpower to manage change, solve problems, make decisions, analyze data, and create new products. Statistics indicate that, in the main, schools are coming up short. The reason may come easy for some of us, perhaps too easy. we can attribute it to the conditions in inner cities that put many minor- ity children at a disadvantage, poorly funded schools, and under- paid and, in some cases, underqualified teachers. whatever the reason, the fact remains that 1 million students quit school each year, and of the 2.5 million students who get through, one-fourth cannot read beyond the eighth-grade level. industry does have a role and an obligation to participate in the business of education by adopting schools, providing internships, 246
THE ECONOMIC CONTEXT OF AGRICULTURE and letting the schools know what types of skills workers will need. Some businesses are already pitching in. With that in mind, I offer eight points that I think are crucial to ensuring an adequate supply of people to provide leadership for agriculture in the years ahead. Perhaps these points will serve to provoke our thinking about the academic-business partnership that is needed to meet future educational challenges. First, we leave overemphasized the importance of academic per- formance as the key determinant of a students potential for devel- opment in the business environment. It is a {act that many good students do not progress in the business community. Quite often, there are two reasons: a lack of communications skills and an inability to get along with people. How do we emphasize the need for well-rounded people who are equally adept academically and on an interpersonal relationship level? In people-intensive businesses, the most important management challenge is people. If these otherwise gifted people cannot com- municate effectively or get along with their peers, great potential resources can be lost. Such problems might be eased if these bright and skilled people were given greater exposure to such courses in college as basic psychology, communications, and team building. Second, we need to do a better job of identifying people with managerial and technical developmental potential so that we can move them through a broader spectrum of experience in a shorter time and thus reward them more quickly and retain them in the process. Although job skills are becoming increasingly specialized and the natural inclination is for employees to become comfortable with their specialty, the need for broadening the skills of managers in an expanding menu of business disciplines is apparent. Perhaps busi- ness and academia can work together more effectively to identify, test, and confirm the developmental potential of key individuals and thus go on to expose them to specialized advanced training. Third, we need to identify more quickly the reasons why so many young Americans lose interest in pursuing careers that are so critical to the strength of our economy and our global effectiveness. Business and academia need to team up to learn how to identify promising people at an early point in their education and develop- ment and thereby help to steer them into rewarding and successful careers. It seems to me that it is feasible for industry and academia to find long-term programs to educate our youth, beginning in el- ementary schools, with respect to the opportunities that may be available if they pursue specifically identified training in college. Fourth, we need to acquaint undergraduate and graduate stu- dents with the reality of "combat duty" in the business community. We need a broader variety of internship programs to equip them for frontline hazards. 247
AGRICULTURE AND THE UNDERG~UATE Fifth, there is a desperate need to get youth in the United States more interested in what a global "one-worldn economy means and the significance of international trade. Despite the excitement that such a career could hold, the percentage of graduates from either high school or college who have some foreign language capability is very small. Why? How do we make available to our students greater opportunities for study and work experience abroad? Another challenge that merits our mutual concern is the fact that so many young Americans lose interest in subjects that are so crucial to the U.S. economy and our global effectiveness. I refer to the fact that we are graduating a declining number of engineers in comparison with other countries. And at a time when our food and agricultural system is open to great opportunity, enrollment in our schools of agriculture has declined steadily over the last 5 years. If the agricultural curriculum is to keep pace with the employment demands of the agricultural and food sector, it also needs to pro- duce graduates familiar with economics, business market analysis, sales and advertising, computer science, and business management. Points six and seven are mirror images. what can academia and industry do to improve executive education, both development and training. We have agreed, I think, that we must mutually support efforts to attract students, keep them in school, and prepare them well for their business careers. Is there not also a need and oppor- tunity for continuing executive education and for advanced training in business disciplines for corporate board members? Conversely, does industry have a role to play in improving the quality of educators? Is it too far a stretch to suggest that profes- sors might benefit from an introduction to the real-world business environment? Finally, industry and academia must more effectively finance and commit to basic research and development in areas that will best serve our industrial and consumer needs. Industrial spending on research and development rose only 1 percent in 1990, totaling $74 billion. We need these new minds to help us to get the most from our spending on research and development. More of it could be dedicated to that rapidly growing field known as Speed to mar- ket"_the reorganization of companies to accelerate the rate at which they can produce new goods and services. increasingly, profits are coming from new products. 1 close with an observation by human relations expert Ralph Stayer in the Harvard Business Review. "People want to be great," he says. "lf they aren't, it's because management won't let them be" (Stayer, 1990:82). I think enlightened management today is quite receptive to the fact that people want to be great. Companies that attract the right people reward them not with just money, but they empower them or grant them the directed autonomy to be great. 248
THE ECONOMIC CONTEXT OF AGRICULTURE Tragic but true, the millions of unmotivated American youth rep- resent a great waste to American agriculture. We must find better ways to tap and unlock their potential to deal with the forces of change that are reshaping the economic context of agriculture. Reference Stayer, R. 1990. How I learned to let my workers lead. Harvard Business Review (Nov-Dec):66-83. RAPPORTEUR'S SUMMARY James L. Rainey initiated the session by emphasizing the impor- tance that leaders in agriculture accept their roles and responsi- bilities in building an understanding and acceptance of a rapid agri- cultural evolution that is fueled by scale economies and global competition. He outlined developments that will have an impact on U.S. agriculture and emphasized the importance of industry in hav- ing a role and being obliged to participate in the business of educa- tion by adopting schools, providing internships, and informing schools as to the type of skills workers need in the marketplace. He em- phasized eight points that are crucial in ensuring an adequate sup- ply of people to provide leadership for agriculture in the years ahead. The subsequent discussion centered around students who enter the world of work in business and included the following items: · How does one get industry and academia to link and form relationships? Various alternatives were discussed, particularly the use of sabbaticals. It was agreed by all parties that a greater commitment is needed by industry. · Business firms need to keep a presence on campus, even when they are not hiring. During the agricultural recession in the early 1980s, many firms ceased recruiting efforts. it subsequently became difficult for them to resume their recruiting activities. · Agricultural graduates do a good job in entry-level positions, but they often have difficulties in competing for upper-level man- agement or chief executive officer positions. It was agreed that there is a critical need to identify students on campus and in busi- ness firms much earlier and help them move through a variety of disciplinary experiences in preparation for upper-level management positions. However, stiffer competition can be expected as indi- viduals move up through the various managerial levels. · How do students obtain the necessary~combat" experience in business firms? Various options were discussed, including the use 249
AGRICULTURE AND THE UNDERGRADUATE of mandatory and optional internships, the expansion of a college education beyond 4 years so that students may have business experience prior to graduation, or the use of cooperative education agreements between colleges and business firms (examples would be the programs at Rutgers University and the University of Califor- nia at Davis). It was also agreed that faculty can contribute by becoming more knowledgeable by spending some time in compa- nies and living in the Trenches." · There was a consensus that typical shortcomings are commu- nications skills in graduating agricultural students who enter the world of business. Suggested communications skills priorities were listening (what is not said as well as what is said)' writing, and speaking. The importance of faculty of colleges of agriculture in dealing with English and communications skills, and not just leav- ing these to the communications faculty, was strongly emphasized. · The last discussion item dealt with interpersonal skills for stu- dents who enter the world of business. How do students get along with other people without becoming "yes" people? The importance of college courses dealing with basic psychology, teamwork, and communications was again stressed. It was also suggested that students need to learn the "sphere of influence" needed to get a job done and work with people. Students must also learn that working effectively with others is a critical element of their accountability and success. 250
