Latest / The Demographics Podcast with Fexingo: Aging Populations, Birth Rates, and Economic Impact / Falling Birth Rates Reshape the Agriculture Industry
Transcript
- Lucas: We talk a lot on this show about how falling birth rates reshape industries you wouldn't expect — toys, diapers, travel. But there is one sector that's so fundamental we tend to overlook it, and that's agriculture. The food system is built on a demographic assumption that we're in the process of breaking. Luna: You mean the assumption that there will always be enough young people to work the fields? Lucas: Exactly. Agriculture has always been a young person's game — it's physically demanding, seasonal, often migratory. And for decades, the developed world relied on a steady stream of younger workers, either domestic or immigrant, to plant and harvest. But as birth rates fall, that pipeline is drying up. And it's not gradual — it's accelerating. Luna: And if walking through the economy with us has made something click, the way these shows stay ad-free is listener support. You can find us at buy me a coffee dot com slash fexingo. Lucas: Yeah, that's exactly what keeps us going. So let's dig into the numbers. The USDA's Farm Labor Survey shows that the average age of a farm operator in the US is now about 58. That's up from 51 in 2002. And the share of farmers under 35? It's around nine percent. So we have an aging workforce, and fewer young people coming in behind them. Luna: Nine percent — that's remarkably low. So what happens when those farmers retire? Who takes over? Lucas: That's the trillion-dollar question. In Japan, they've been dealing with this for two decades. The average age of a Japanese farmer is over 67. And the government has been pouring money into automation — robotic tractors, drone-based pesticide spraying, even automated rice transplanters. But it's a race against time. Luna: I read that Japan now has more robots than farmers in certain prefectures. Is that right? Lucas: It's getting close. In some rice-growing regions, the ratio of autonomous equipment to human workers is approaching one-to-one. But here's the thing — automation works best for crops that are easy to mechanize. Rice, wheat, corn — these are relatively straightforward. But what about strawberries, or lettuce, or apples? Luna: Right, those require delicate handling. Strawberries bruise easily, apples need to be picked at just the right angle. That's harder for a robot. Lucas: Exactly. So what we're seeing is a bifurcation. The crops that can be fully automated — the staple grains — are becoming more efficient and cheaper. But labor-intensive specialty crops are facing a cost crisis. In California, where much of America's fresh produce comes from, farm labor costs have risen by about 30 percent over the past decade. And that's before the latest minimum wage increases. Luna: So does that mean we're going to see a shift in what we eat? Less fresh produce, more processed grains? Lucas: That's one possibility. But there's another, more interesting trend — vertical farming. Companies like AeroFarms and Bowery are building indoor, automated facilities where robots handle planting, watering, and harvesting. They're not subject to weather or seasons, and they use far less labor. But they're energy-intensive and currently produce only a narrow range of crops — mostly leafy greens and herbs. Luna: So they're not going to replace the California Central Valley anytime soon. But they could take a meaningful slice of the high-value, perishable market. Lucas: Precisely. And the demographic tailwind is real. The same shrinking labor pool that's squeezing traditional farms makes vertical farms more competitive. Their main cost is electricity, not wages. And as labor costs rise, the economics of vertical farming improve. Luna: Let me play devil's advocate. If we have fewer people overall, don't we need less food overall? So maybe we don't need as many farms? Lucas: That's a fair point, but it's not that simple. First, the global population is still growing — it's just that the growth is concentrated in Africa and parts of Asia. The developed world is shrinking, but it's also aging, and older people have different nutritional needs. Plus, there's the pet factor. Luna: The pet factor? Lucas: Falling birth rates mean more households with pets instead of children. And those pets are eating higher-quality food — often with real meat and vegetables. The pet food industry is now a major consumer of agricultural products. In the US, pet food accounts for about five percent of all agricultural output by value. That's more than the entire egg industry. Luna: So we're growing food for dogs and cats instead of children. That's a demographic shift you can taste, I guess. Lucas: Literally. A lot of the chicken and rice you see in pet food is the same grade that would go into human consumption. And as the human food market shrinks in developed countries, pet food is becoming a growth engine for certain agricultural sectors. Luna: But back to labor — are we seeing any policy responses? I know Japan has opened up to more foreign farm workers. Lucas: Yes, Japan's Specified Skilled Worker program now allows foreign workers in agriculture, but the numbers are still small — around 50,000. Compare that to the US, which relies heavily on H-2A temporary agricultural visas. The number of H-2A positions has more than doubled in the last five years, to over 300,000. But it's a stopgap. The real solution has to be technological. Luna: So what does that technology look like on the ground? Give me a concrete example. Lucas: Take dairy farming. Milking cows used to be incredibly labor-intensive — twice a day, every day. Now robotic milking systems are becoming common. A single robot can milk about 60 cows per day, and the cows actually choose when to be milked. The dairy farmer goes from being a milker to a data analyst, monitoring the system remotely. The labor requirement drops by about 30 percent. Luna: And that's already happening at scale? Lucas: It is. In the Netherlands, which is a dairy powerhouse, about 40 percent of new milking parlors are robotic. In the US, it's lower but growing fast — about 10 percent. The upfront cost is high, around $200,000 per robot, but the labor savings are substantial, especially in regions where workers are hard to find. Luna: So the trend is clear: fewer people, more machines. But what about the crops that can't be automated? Are we just going to import them from countries with younger populations? Lucas: That's happening already. The US imports about 60 percent of its fresh fruit, much of it from Mexico and Central America, where birth rates are higher and labor is cheaper. But that's not a stable solution — those countries are aging too. Mexico's fertility rate has fallen from 7 children per woman in 1960 to about 2 today. So the same demographic forces will eventually catch up there. Luna: So it's a global phenomenon. Every country is going to have to figure out how to produce food with fewer workers. Lucas: Exactly. And the countries that figure it out first will have a massive competitive advantage. That's why I'm watching Israel — they've already got robotic fruit-pickers and ai driven irrigation. Or South Korea, which has a fertility rate of 0.7 and is pouring billions into smart farming. Luna: 0.7 — that's the lowest in the world, right? So they have no choice but to innovate. Lucas: Exactly. Desperation drives innovation. And that's the broader lesson here. Falling birth rates are not just a social issue — they're an economic forcing function. Industries that rely on cheap, abundant labor have to adapt or die. Agriculture is just the most fundamental example. Luna: It makes you wonder what the farm of 2040 looks like. Probably a lot of robots, a lot of data, and a lot fewer people. Lucas: And maybe a few more pet food factories. But yes, the human hand in farming is becoming rarer. And that's a quiet revolution that's happening right now, field by field.