Farmland close to urban areas has higher value, increasing pressure to take it out of production. Despite the bleak picture, he offered some suggestions for farmers to help them remain competitive. Price strategies, including adding value through processing, and strategic alliances or integration between producers and processors can work. For example, there's almost no money to be made growing winegrapes in California, Blank said. But there's plenty of money to be made making wine.
Wine becomes a differentiated, branded product.
Strategic alliances are increasingly important since only 8 percent of American income is spent on food, a percentage that economists expect to remain static, Blank said. Cooperatives are just one example of an alliance. They require enough capital to operate at a sufficiently large size, and expertise to do the job as well as the competition. Farmers have been good at adopting cost strategies, Blank said. Producers can reduce the cost per unit by increasing their scale of operation and by using new technology.