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Speeches

2009 Speeches

David C. Everitt     David C. Everitt Charting a Sustainable Future for Production Agriculture
Keynote Address by Dave Everitt
DTN/Progressive Farmer Ag Summit
Chicago, Illinois
December 9, 2009

Good evening and thank you Urban for the opportunity to address this group of top producers on a subject that is foremost in all of our minds. In thinking about my comments for this evening, I was reminded of a clever t-shirt that won an annual contest at the FFA national convention in Louisville a few years back.


Its message was simple — a bit flippant perhaps — but at the same time, pretty darned profound:


"Naked & Hungry: What Would You Be Without Agriculture?"


That about says it all, don't you think?


Today, I would suggest that global agriculture faces challenges unlike anything we've seen in the past. First and foremost, we must prepare to feed a world whose population is predicted to climb from 6 ½ billion to 9 billion by 2050 — just 40 years from now! And we must do that without an abundance of new resources, especially land and water, while respecting society's desire to minimize agriculture's impact on our environment.


Now 40 years may seem like a long time — but 40 years ago, in 1969, I was a high school junior in Concordia , Kansas . I thought the coolest thing in the world would be to own a 1969 Camaro SS. Frankly, that seems like only yesterday....and the next 40 years will go by just as fast.


The world we live in is undergoing a fundamental shift in its demand for food. To feed those additional 2 ½ billion people by 2050, we must double the food supply. Think about it: double what we produce today! If forty years seems too far away, consider this: In just 20 years, 2030, we must produce 50% more food! And at the same time, we have to help reduce the world's dependence on fossil energy by providing renewable fuels!


Then, we must also take into account climate change — both its effects on production agriculture around the globe, and the effects of measures that worldwide governments will likely adopt to improve conditions.


Twenty years ago, in November 1989, the Berlin Wall fell. That same year, we produced approximately 1.5 billion tons of grain. Today, just 20 years later, we produce over 2 billion tons of grain. By 2030, just 20 years from now, we'll need to produce 3 billion tons or more on approximately the same amount of land, with increasingly scarce water and labor, all while respecting society's desire to clean up the air, preserve the land, and maintain viewscapes.


To say we've got our work cut out for us is a bit of an understatement — kind of like saying the Chicago Bears better keep winning football games if they expect to keep their post-season hopes alive.


Seriously though, one of the greatest things I've noticed about ag producers is the tremendous pride many take in working the land, maybe, working the same land as their fathers, grandfathers and even great grandfathers did so many years ago. Just a show of hands — how many of you live on a century farm? Congratulations! And how many of you are planning to keep the tradition going by passing on your farm to a son or daughter?


I believe that unless you're taking action today to chart a sustainable course for your operations, you could leave your children not a legacy, but a liability. And I firmly believe the path to sustainable agriculture and feeding a hungry world is through improved productivity.


While I'm confident of agriculture's ability to feed and fuel the world, the fact remains: We have a lot of work to do if we are to produce twice as much with essentially the same amount of inputs, in just 40 years.


Economist and Nobel Prize winner Paul Krugman hits the nail on the head when he says, "Productivity isn't everything, but in the long run it is almost everything." He goes on to say that compared with the problem of slow productivity growth, all other long-term economic concerns like foreign competition, lagging technology and deteriorating infrastructure are minor issues — they matter only to the extent that they have an impact on our productivity growth.


Now I understand that Mr. Krugman is considered a pretty liberal guy to most in the ag industry. But feeding the world transcends politics. Feeding the world is essential to maintaining an orderly society and helping every person reach his or her full potential.


With that idea in mind, I'd like to share some thoughts with you this evening on how we can meet this productivity challenge through, first: innovation and technology advances that are environmentally-friendly; second: through favorable trade policies, and finally: through investment in rural communities, especially here in America.


Before I go any further, let me describe why we must change the "business as usual" mindset. The premise is that we have a potential food production shortfall that will almost certainly occur if we don't significantly accelerate our historic productivity growth rates.


What factors are driving this premise?


First, a decreasing global fertility rate — defined as the number of children an average woman is likely to have during her childbearing years — that will cause the world's population to stabilize in 2050 after reaching approximately 9 billion. This is not a theoretical projection: The girls who will give birth to this future larger generation have already been born.


While population growth will most definitely fuel the demand for more food in the future, rising incomes will accelerate that demand. As an example, in the next two years, some 2 billion people, or nearly a third of the world's population are expected to join the middle class, with most of the projected growth occurring in urban areas of developing countries. Rising incomes mean improved diets, with much of that additional income spent on increased protein intake. These two factors — population growth and improved diets — are the fundamental reasons we have to double our output (and greatly accelerate productivity growth to do so) during the next 40 years.


Our challenge is to do everything we can to minimize or close this pending productivity gap. That is, we must address the difference between our current growth rate of food production and the more rapid rate needed to meet future requirements.


Ignoring this looming productivity challenge or not acting quickly enough has perilous risks that should not be underestimated. At its most basic, it means additional human suffering through hunger and malnutrition. Beyond that, it means widespread social turmoil and unrest that undermine the political stability of large parts of the world — not to mention eroding our own national security.


Just think back a year or so ago when commodity prices spiked, causing significant increases in food prices in many countries of the world. The ensuing political unrest in Egypt , for example, sent shivers down the spines of many developed countries, including the U.S. It was frightening to imagine how a toppled Egyptian government could shut down major shipping lanes, cause a spike in oil prices and bring massive political instability across one of the most volatile regions of the world.


This event and several others like it illustrate a few basic givens we must never forget. People must eat. People need to be able to afford food and fuel. And the world depends on agriculture to be the foundation of global security.


So back to the question at hand: How does our industry produce more with basically the same global resources that are available to us today?


Well, no one person or business can do it alone. For example, John Deere is proud to be a founding member of the Global Harvest Initiative, an organization dedicated to spurring agricultural development and encouraging agricultural innovation by those who need it most.


The Global Harvest Initiative supports a multifaceted approach to expanding agricultural production, realizing there is no single solution to closing the productivity gap. Together with Archer Daniels Midland Company, DuPont, and Monsanto, we've created a unified voice to promote dialogue that we believe will encourage positive change through expanded investment from both public and private entities.


It is our hope that the Global Harvest Initiative can promote national and international policies that support agricultural research, continued liberalization of food and agricultural trade, and more effective policies and actions in developing countries where diets are least adequate.


Increased Productivity through Technology/Innovation
As members of the Global Harvest Initiative, we agree that above all, innovation and the application of technology, from ag production all across the value chain through distribution, is key to feeding the world of 2050. This will affect all production practices, including conventional and organic agriculture. It will also affect producers of all sizes, from subsistence farmers to large modern producers like yourselves, in both developed and developing countries.


You're probably thinking a representative of an agribusiness company like me would naturally mention innovation. But I can assure you that we're practicing what we preach in this regard. Innovation is one of Deere's core values and even in these days of economic recession, we've remained committed to bringing more and more advances to our customers.


Last year, Deere spent more than $2 ½ million a day on research and development. That's each day, including weekends and holidays! And we're not alone in that commitment. Collectively, the four founding members of the Global Harvest Initiative invest more than $9 million daily in research and development.


That's great news, because if there's one thing farmers need more than warm sun and steady rain, it's innovation!


I'm actually very optimistic we can rise to the challenge and that we can double production through investment in innovation in the years ahead, because we're already well on our way.


Overall, ag productivity has been increasing for years, with the equivalent of 45 million "virtual" acres of crop production created since 1981. Here in the U.S., we're producing 2 ½ times more than we did 60 years ago, with the same amount of resources.


Let me give you a more specific example: Between 1997 and 2007, U.S. corn production increased more than 40 percent. Today, because of productivity gains, we can produce a bushel of corn with nearly 30% less land than was required just 10 years ago!


Meanwhile, nitrogen fertilizer application rates have remained relatively flat over the same period. Advances like this have occurred thanks to dramatic investments in the areas of plant breeding and biotechnology by companies like Monsanto and DuPont, fellow Global Harvest Initiative members.


In addition to advanced seed technology, innovations in ag equipment and related services also can be credited for boosting productivity, while increasing farmers' efficiency and lowering their costs. At Deere, we are charting a sustainable course through improved products and services that contribute to expanded agricultural output everywhere in the world in an environmentally sustainable way.


For example, today, our smallest U.S.-made combine is more productive than our largest machine was in 2000. We're seeing a single John Deere combine replacing as many as three outdated, less fuel-efficient machines in growing ag economies like Russia.


Then there's reduced tillage equipment — both low-till and no-till — that cuts costs, improves water management and increases yields. Back in 1985, many farmers used three tillage passes per year to raise corn. On average, farmers like you have eliminated one tillage pass on every acre of corn grown, using today's technology. In fact, many field crops today are often planted with only one or no tillage pass, saving at least 1.5 gallons of diesel fuel per acre and lowering your costs.


I don't have to tell you that reduced tillage is a good thing. It means reduced soil erosion, improved soil health, conservation of water, and less carbon emissions. A recent U.K. study found that in the past 4 years, conservation tillage practices in our industry have reduced carbon emissions by 22 billion pounds — or the equivalent of taking 6 million cars off the road.


We also continue to make major improvements in engines and power trains. Deere's 8430 row-crop tractor, with Tier III technology, emits 50% less particulate matter and 30% less nitrogen oxide (or NOX) than its predecessor, introduced back in 2002. At the same time, this tractor set an all-time record as the most fuel efficient row crop tractor ever tested at the Nebraska Tractor Test Lab. The new 8R series, introduced for model year 2009, continues to utilize this advanced and field-proven technology.

 

Guidance systems today enable true precision farming by eliminating overlap in the field, minimizing fertilizer and pesticide use and thus providing enormous environmental benefits while reducing farmers' costs. That's your costs! Recently we've added products to our line-up that automatically turn individual planter and sprayer components on and off, based on their specific position in the field. Farmers are seeing yet another 3% reduction in seed, fertilizer and pesticide use per acre as a result.


With GPS and our new nutrient management implements, producers can more accurately manage the placement of fertilizer, potentially unlocking even higher yields with minimum waste, minimum run-off and minimum impact on the environment. New tape and drip irrigation systems help farmers carefully safeguard precious water supplies by applying water with pinpoint accuracy.


Finally, the next wave of technology will enable our customers to link yield data with agronomic information, seed varieties and other key input information to increase their profitability.


Sustainable biomass solutions provide another opportunity for the ag and forestry industries to participate in low-carbon markets in innovative ways. For example, our energy wood-harvesting system collects woody biomass and forms it into compact bundles for immediate use. Woody biomass holds great promise as an environmentally sustainable and beneficial energy source that can provide renewable energy for businesses, schools, and homes.


Climate Change
No discussion of the agricultural industry over the long term — let alone increasing productivity — would be complete without mention of the important, yet controversial issue of climate change.


To start with, we must acknowledge that as good stewards of the land, farmers are the original environmentalists! It's in your best interest to take care of the land on which your livelihood depends.


As we're doing as a member of the Global Harvest Initiative, Deere feels it's necessary to have a strong and engaged voice as governmental policy is crafted on this subject, if we are to protect our interests and those of our farmer customers. We are doing that through our membership in broad-based organizations such as the EPA's Climate Leaders program and the U.S. Climate Action Partnership.


While I understand some may not agree with that approach, we feel that it is vitally important to be engaged in this important discussion and to have a prominent seat at the table.


Recognizing both the science and political realities, we support a comprehensive energy and environmental framework that addresses greenhouse gas reductions. And, if there is to be any climate change legislation — and we believe that is almost a certainty — we think it best for our customers and our business to ensure the approach is as market-oriented and as agriculture-friendly as possible.


Therefore, we support strong, effective action to reduce carbon emissions and address climate change if it is global in scope, technology-based, and compatible with the imperative of benefiting our entire economy, while assuring we are able to meet the food needs of 2050.


Trade
Another necessary component of meeting the global food security challenge is the need for strengthening the global trading system and I'd like to briefly touch on that subject. To put it bluntly, we simply cannot successfully feed 2 ½ billion more people by 2050 unless countries participate with open economies and expand trade. Interconnected global markets affect virtually everything John Deere does — from supplier sourcing to manufacturing and distribution, to recruiting a diverse workforce. But just as important, it affects your ability to prosper.


The U.S. Department of Agriculture reported U.S. exports of agricultural commodities reached $115 billion in FY 2008. That means that more than one-third of U.S. farmers' sales — or the output from more than one of every three acres — goes to foreign markets. Without this market access, U.S. agriculture would be significantly affected through over-capacity in farm production. Quite simply, this would mean lower annual incomes and declining asset values.


The new wave of protectionist actions spawned by the current global economic downturn threatens recent modest progress made in opening markets and facilitating commerce worldwide. Unfortunately, global trade talks remain stalled and the voices of anti-trade advocates are getting louder. This is a dangerous trend that could undo the beneficial gains made thus far.


As the world's population increasingly moves from rural to urban areas, the global trade potential in agricultural and food products will most certainly grow. To facilitate this increased global demand, a strong rules-based global trading system will be essential. We support the need for governments around the world to re-examine their trading policies, remove barriers and quickly conclude the ongoing multilateral negotiations.


Rural Development- Ensuring Rural Communities' Prosperity
As we've discussed this evening, supporting productivity growth entails more than just expanding research and development. We need national policies in many countries that promote open markets, political stability, and investment and trade.


But we cannot hope to close the productivity gap without significant strategic investments in rural communities throughout the world. It is not enough to promote the revitalization of rural economies — we must work to ensure their long-term prosperity.


In developing countries of the world, where "rural" and "agriculture" are almost synonymous, a majority of residents are engaged in some aspect of agriculture. Investing in hard and soft infrastructure for these rural areas will help improve the lives of large segments of the global population while also expanding agricultural output.


By "hard infrastructure", I mean farm-to-market roads, electrical power facilities, storage, water management facilities for flood control and irrigation, inland waterways, locks and dams, as well as rail lines to facilitate distribution and trade. "Soft infrastructure" on the other hand includes appropriate policies and the elimination of legal, financial and social barriers to land ownership, property rights delineations, definitions and protections.


Conversely, in developed countries like the U.S., where less than 2% of the population are still engaged in farming, the needs are somewhat different, yet just as important.


Economists suggest that in the future, producers like you will need different levels of expertise and skill sets than your predecessors. While mechanization, automation and technology can help, more training and education will be needed to maximize your potential and that of those who follow you. And what about the technicians needed to service all this new technology? Our dealers tell me it is getting more difficult to find qualified candidates to fill technician positions — positions which are good paying jobs and help maintain a vital rural economy, while supporting and sustaining a desirable quality of life in rural America .


Ag-based energy can play a huge role in helping rural America prosper by creating new jobs, increasing the tax base, and diversifying local economies. Energy also offers important new markets to commodity producers, which improves their own profitability and, in turn, further stimulates rural development.


Wind energy is another way to help our rural communities capitalize on investments and contribute to clean renewable energy production. For example, John Deere Wind Energy invests in projects that provide an additional source of income growth for producers and other ag-related businesses. John Deere Wind Energy's portfolio currently includes 36 wind farms in operation or under construction in eight states — another example of our efforts to create rural sustainability at all levels.


Further, the development and deployment of information technologies is essential to fully capture the benefits of economic development in rural communities. In an increasingly "flat world," rural access to information technology is needed to educate our youth to compete globally, and to develop the skilled workforce on which rural communities and businesses will depend. Bringing enhanced telecommunications and broadband technologies to rural communities will enable them to more fully develop value-added business opportunities.


Maximizing the benefits of rural development will require commitment, innovation, investment and leadership from all of us: farmers, businesses, governments, educators, civic and public interest groups. Together we must work to define and prioritize the needs that best lead to rural communities' prosperity.


Conclusion
Ladies and gentlemen, we are all privileged to work in the agriculture industry. We share an unquenchable desire to work the land. And we are humbled by the prospect of improving humankind by feeding, clothing, and fueling the world.


There is still much uncertainty as we prepare to double our world's food supply in the next 40 years. There are no easy answers to closing the productivity gap that lies before us.


This I can say, however: Amid the enormous needs of the future that will likely strain the global agricultural system...amid serious resource limitations, the global agriculture industry has a unique opportunity — and in fact, a unique capability — to improve the lives of untold millions. And we must do this together — you, me, and our competitors, wherever they are throughout the world.


Just as some of your great grandfathers made the giant leap from horses to tractors — just as John Deere abandoned the trusty 2-cylinder Johnny Popper after 40 years, in favor of the "New Generation of Power" four- and six-cylinder tractors, we must all embrace change in nearly everything we do, in order to ensure a sustainable future for production agriculture.


With the help of innovation that benefits the environment, open trade and healthy rural communities, I'm confident we can meet the challenge and create a healthier more prosperous world for all.


Being successful in this effort is in the interest of each and every one of us.


Thank you.