A New Tech Story in Agriculture

A New Tech Story in Agriculture

Photograph by Aaron Packard/Bloomberg

Among its many harsh effects, the economic bust of 2008 briefly tempered a long-term rise in U.S. cropland values. It represents the only blip since 2005 in otherwise consecutive double-digit price gains for agricultural acreage. Theories concerning what the future holds for agribusiness touch on a possible correction in land prices. At Zurich, that risk receives serious examination and will continue to be weighed. Craig Fundum, President, Commercial Markets, Zurich in North America, is focused more on the valid, enduring reasons why American farmland as an asset class has enjoyed significant gains.

“In our estimation, the price movement is about proven value of farmland and how it can bring a reliable return on the buyer’s investment,” says Fundum, not flinching at $10,000-per-acre levels at recent auctions. “The value increases are a testament to technological advancements—in effect we are looking at a new capacity to feed the world.”

Midwestern-bred, Fundum follows the progress of agri-technology with more than professional interest. His Commercial Markets division has direct involvement with the transport, warehousing and logistics activity surrounding U.S. food crop production. And Zurich itself has been directly mitigating crop risk in the American Farm Belt for over a generation. To anyone charting this industry, it’s clear that bioscience research is accelerating toward new milestones of productivity and efficiency. “It’s a reassuring type of advancement, based on sustainability factors that are built in,” says Fundum. “There are new hybrid crop strains and new cultivation practices that increase yields, we see that. But those practices also have soil-preservation benefits built into them.”

Risk engineers at Zurich are acutely aware of climate-change factors that may be causing or exacerbating current drought conditions, which are being called the worst in 25 years. Rainfall stats are not the entire story, however, and reports pointing to a 20 percent falloff in U.S. corn and soybean production this season skip over contextual facts. “In agriculture today, the need for irrigation is greatly reduced,” Fundum says, “There can be poor growing conditions and nonetheless good yields.”

Staying keenly aware of per-acre yield potential, even under seemingly adverse climate conditions, is essential to understanding future land values and their implications. It is part of assessing how an economic factor like water use for crop irrigation might be intertwined with an emerging new water demand in the region. Obviously, one demand source is natural gas production via the process of hydraulic fracturing, or fracking.

As is customary, Zurich’s full suite of customer support tools are being put to use in this endeavor. “Some of our consultations will be in person,” Fundum says, “while in other cases the customer will get questions answered virtually through visits to our secure website for risk-engineering expertise.” With the pace of change expected to be up-tempo, and due to the domino effects that naturally characterize intense land-use scenarios—he expects that the need for “all our deliverables—bulletins, scenario planning and other tools” will be ongoing and likely unrelenting.