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Agricultural Business Innovation Deserves our Attention

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The current economic meltdown and the potential downfall of large sectors of our manufacturing base should give everyone pause to reflect on one of our nation’s greatest strengths: agriculture.

It’s been a long time since we first put plow to soil in this country. A lot is still the same. A strong work ethic is woven into agrarian America and the food supply system, but much has changed. Technology has leveled the playing field between the United States and other nations in terms of production agriculture. But we still could make some noise in areas of agriculture-related biotechnology (healthcare, building materials, and aerospace) if farmers, financiers, and politicians paid attention.

Advances in composite materials made from grains and other agricultural materials have led to the creation of components to solve all sorts of problems, from sick building syndrome to artificial joint replacement. Not everyone in the food and agricultural business community has awakened to this potential. They give it good lip service, but their actions betray their true stance.

As my father-in-law would say, they have voted with their feet by trying to retain a commodity mindset and business model in a industry that demands innovation. That is to say, it is less admirable to produce more corn for less money than it is to get more money for the corn we grow by being innovative.

There has been a good deal of discussion and a fair amount of action at many levels of government to create innovative momentum, particularly at the farm level. These have met with at least some level of success, but the energy and motivation must continue to come from farmers and other agricultural business entrepreneurs.

The stimulus package from the Obama administration includes tax benefits for existing small businesses that choose to invest in themselves. This should help some companies expand, but this isn’t enough.

If we are going to have a chance to cement our position in the new agricultural world order, we need regular and aggressive investment from the government, farmers, corporations, and financiers in value-added agriculture and agribusiness innovation. The law of comparative advantage tells us to do what we’re good at doing – and that is agricultural business.

Agriculture is criticized for receiving too many subsidies, but investment in agribusiness innovation would be much easier for the public to swallow — and a much more effective use of our resources — than bailing out failing industries.

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