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April 2006

North America enjoys highly efficient livestock production systems that have adapted and evolved to meet changing conditions.  The industry is competitive in the world market, but faces significant opportunities and challenges both in North America and abroad, according to an 18-month study released Tuesday, April 18, 2006, by Farm Foundation.

The study is believed to be the first to take a comprehensive look at the opportunities and challenges facing the major species of the animal agriculture industry in Canada, Mexico and the United States.  The project involved more than 150 individuals from the three countries, representing producers, industry, government agencies and academia.

“Farm Foundation undertook this study to engage individuals and organizations in discussion of the challenges and opportunities facing animal agriculture, and in so doing, to provide public- and private-sector leaders with comprehensive and objective information to use in their decision making,” says Farm Foundation President Walter Armbruster.  “This study does not make policy recommendations.  The report highlights commonalties, differences and areas where future work may be needed.”

“This is a critical time for animal agriculture in North America,” adds former Congressman Charlie Stenholm who co-chaired the Project Steering Committee with Armbruster.  “If I was still on the House Agriculture Committee, I would welcome a study of this type—it is very comprehensive.  It outlines the challenges and identifies some of the choices that need to be made.”

Study participants examined the industry’s challenges and opportunities in seven basic areas:  economics of production, processing and marketing; consumer demands; global competitiveness and trade; food safety and animal health; environmental issues; community and labor; and animal welfare.

Cross-cutting themes, strategies and policy issues which emerged include:

• Markets, structure and competition: Current production and marketing technologies allow significant economies of scale so production and processing units are getting larger.  Smaller producers have potential to flourish if they position themselves to provide products that command premium prices in the marketplace.
  
• Value in integrated markets:  There is value in an integrated North American market.   Strategies need to be identified to deal with border closings, including procedures to re-open borders and to settle disputes more effectively to prevent long-term economic disruptions.
  
• Demand is increasing:  Global demand for animal protein is increasing, particularly in developing countries as incomes increase.  In high income countries, there is growing demand for products with specific attributes.
  
• Environmental regulations:  Environmental regulations increase production and processing costs, but it is difficult to precisely measure these costs on particular firms or producers.  Regulatory differences across countries, states and provinces will have some impact on the future location of the industry.  In the United States, regulatory uncertainty caused by litigation is also a problem.
  
• Immigration and labor: Some segments of animal production, and most animal processing in the United States, are dependent on a workforce that includes many undocumented immigrants.  This creates uncertainty for the workers and employers.
  
• Animal identification and traceability systems: Animal identification and traceability systems are emerging rapidly and will be a key to the future of the industry.
  
• Communities and communication: The industry has a complex relationship with the rural communities where it operates.  These relationships require cooperation and clear communication.
  
• Knowledge gaps and research:  In each of the seven working groups, project participants identified knowledge gaps and areas where additional research is needed.

Farm Foundation works as a catalyst focused on economic and policy issues facing agriculture, the food system and rural communities.  Unlike many nonprofits and nongovernmental organizations, Farm Foundation does not advocate, lobby or press a point of view.

The full report, including an executive summary are posted here.  Print copies of the full report will be available in early May. For a print copy of the executive summary or the full report, e-mail the Foundation.

Project Structure
Farm Foundation developed an initial white paper to summarize the challenges facing the industry and provide background information for project discussions. Through a workshop in December 2004, and subsequent discussions with government, industry and special-interest group leaders the issues, oppportunities and challenges that needed to be examined were further refined.

The project was directed by a Steering Committee organized by Farm Foundation and representative of the broad spectrum of those interested in and concerned about animal agriculture. The project was organized around seven Working Groups:

• Economics and coordination of animal production, processing and marketing
• Environmental issues
• Food safety and animal health
• Animal welfare
• Consumer demands
• Community and labor issues
• Global competitiveness and trade

Each Working Group was comprised of individuals representing a broad spectrum of interests in the animal agriculture industry, government and community/non-agricultural interest groups. An academic chair served as the lead writer/researcher of each Working Group.