MONTE VISTA — When Stephen Nicholson opened his keynote speech “Our Challenges and Opportunities: There is Much to Consider” at the Southern Rocky Mountain Agricultural Conference on Wednesday, he began with the challenges facing the San Luis Valley. He didn’t pull any punches. But no one in the room was caught by surprise, either. 

A native of Iowa, Nicholson is Global Sector Strategist at Rabobank and has spent over 30 years in cash grain markets, hedging, commodity/ingredient procurement, commodity risk management and commodity analysis. 

He started with SLV’s first challenge, water stress. Extreme weather was number two. 

“We’ve dealt with weather our whole lives,” he said, “but we’re dealing with things we’ve never dealt with before.”  

The third challenge is labor. 

“That’s a very simple one. Where’s the labor going to come from,” he asked. “We can hire somebody from town. They’ll work for maybe two days, and we never see them again. It’s hard work. It’s dirty work. And it’s really hard to attract labor and keep them.” 

Fourth, economic challenges in rural parts of the country. 

“You don’t see economic growth in rural America. That constraint means that people don’t invest there. Banks don’t want to invest, so there’s a capital problem,” he said. 

Nicholson praised the success of the 4-H program in the Valley. 

“That’s exactly what we have to do, but we have to do it ourselves to get the momentum going,” he said. 

Transitioning to a broader discussion of challenges, Nicholson said agriculture’s current problems are not related to demand but to supply. 

“We have too much stuff,” he said. “What are we going to do with all that we have? How do we increase demand but also include the discipline of supply so that we don’t have huge swings up and down in prices?” 

The population is also declining when, for years, the message has been agriculture must be prepared to feed 10 billion people. 

“Demographers predict that, by 2050, the population in China will be half of what it is today,” he said. “Other than Africa, we’re not replacing people who are dying. Birth rates are so low that we’re losing people. So, what does that mean in agriculture? We’ve built this production capacity to feed ten billion people. What if we don’t need it? What do we do to be viable and sustainable as we go forward?” 

He then addressed the impact of the current administration on agriculture, starting with tariffs - the “elephant in the room”.  

“Economists don’t like tariffs. In agriculture, we’ve flourished by trade that’s free. Think about the economic power we have in North America.  When you look at agriculture and the general economic pie and you have free trade and an economic engine like North America, that makes the pie bigger for all of us.  

“Tariffs shrink that pie. We may have a short-term gain, but long term, it doesn’t work. Tariffs are going to be a challenge for agriculture, and we need to make sure our representatives understand what that means,” he said. 

Deregulation was the next topic. 

“We all want less regulation, but deregulation has unintended consequences,” he said. 

He used the example of deregulation in the airline industry that resulted in only four major airlines today. 

“Maybe it’s not the regulation that’s the problem but the red tape and lack of common sense,” he said. 

Nicholson then quoted an unnamed congressman who predicted the 2018 Farm Bill might be the last Farm Bill to be passed. It’s a big bill, Nicholson said, with urban areas worried about SNAP and rural areas worried about crop insurance. 

“How do we negotiate that in this climate? The Farm Bill worries me,” he said. 

“Immigration is a huge issue for agriculture. How do we make sure we have enough of a workforce to pick our lettuce, our fruits and vegetables, animal husbandry, dairy and swine? The labor force that comes with immigration gets lost in all the rhetoric.” 

Inflation will still be with us, he said, probably driven by higher wages resulting from the administration’s immigration policy plus the impact of the avian flu on the price of eggs. 

“And RFK is a wildcard for food and agriculture,” he said.  

Nicholson ended the subject with a graph illustrating exports to Canada and Mexico and the impact of tariffs on agriculture. 

“Canada and Mexico are huge to us. They’re not an insignificant economy,” he said. 

He further noted that China is prepared for tariffs while the U.S. is not, ending the discussion the way he began. 

“We’re very concerned about this administration and these head spinning tariffs because we know that trade and agriculture will be impacted,” he said. 

Nicholson devoted the rest of his presentation to the complex relationship between supply, demand and the confluence of global factors on different crops ranging from war in Eastern Europe to the lessons China learned from COVID. 

Finally, acknowledging much of his presentation had been “doom and gloom,” Nicholson ended with a mixture of suggestions and opportunities. 

“Be open to new opportunities,” he said. “Consider technology and watch out for biases, which we all have. Embrace your crop rotations, and practice being open to crops other than what you’ve traditionally planted. There are also potential premiums for low carbon crops.” 

He suggested people take a tour of Whole Foods or Trader Joe’s. 

“What are people buying? Are there new branding opportunities for you,” he asked. 

Climate change regulations can also bring opportunities. 

“People are willing to pay more for low carbon crops and food they can trace back to see, for example, if it was grown on deforested land,” he said. 

Nicholson also strongly emphasized the importance of soil health, stating that, as water becomes scarcer, soil health is increasingly important. 

“It may take more work and that takes getting used to, but it’s actually more profitable in the end,” he said. 

Finally, he encouraged those in the room to cooperate and collaborate with the communities in which they live.  

Nicholson’s presentation was loaded with valuable information – too much to summarize or recall. In response to a request by Saguache County Commissioner Liza Marron, Nicholson said he’d be happy to email the graphs to anyone who asks. Email him at stephen.nicholson@rabobank.com.