Amazon.com continues to make headlines. The stock price rose on Wednesday, which pushed its market capitalization into a highly exclusive $500 billion club which only includes Apple, Microsoft and Google (Facebook isn’t quite there yet). To put this in perspective, based on the last USDA production estimates and recent futures values, the combined value of the entire U.S. corn, wheat and soybean crops for 2017 would have a total value of approximately $110 billion. In other words, the full value of all of those crops would get someone a 22% stake in the company, barely making it the biggest shareholder ahead of founder Jeff Bezos’ stake at 17%.
Amazon’s recently splashed into the food retailing business with their purchase of Whole Foods. The $13.7 billion deal was big (‘merely’ 40% more than the value of this year’s U.S. wheat crop), although the rise in Amazon’s share price on the day of the announcement was more than purchase price. Analysts cite many wider strategic reasons why Amazon would get into the food retailing business, but there’s no doubt that this is expected to shake up this traditional industry. The fact that the share prices of traditional food retailers fell sharply on the same day reflects the general sentiment. Antitrust concerns may delay the closing of the deal, but the general feeling is that it is still expected to go ahead. Changes to the food retailing industry are coming, either directly from Amazon, and as the rest of the players up their game in an effort to keep up in terms of reducing costs, managing logistics, staying price competitive and introducing technology.
Agriculture is a huge industry. However, in terms of the financial markets, we are ‘mice among elephants’. But in many ways our importance far transcends our financial clout, not just in terms of the most basic function of feeding the planet, but also the multitude of other ripple effects, ranging from employing millions of people, being stewards of the land and keeping rural areas vibrant. None of these factors disappear even when the other downstream segments get shaken up. But we need to stay abreast of these changes and think about how these downstream events will eventually affect the day-to-day activities on our farms.