The fine folks over at Farm Journal’s AgWeb published a letter which they received from a viewer following a show that they aired about the U.S. Farm Report. I thought it was very well stated, and the unsustainability of today’s big ag trajectory is not discussed often enough. What is the cropland owner to do when caught on this hamster wheel???
In today’s U.S. Farm Report Mr. Phipps rightfully pointed out that we all constantly need to learn new skills. But if these skills are just employed in the same direction we have been going for many decades now, then will accelerate the downfall of even more farmers.
Relentlessly driven by economic competition, farming today is a high input game hunting the highest yield.
Ironically in the same shows which feature serious brokers and farm journalists warning the farmers to be prepared for the consequences of their own endeavors and pointing out the vicious cycle of great harvests and depressed prices, farmers are still admonished to be early adopters of the latest technology, i.e. yield enhancing chemicals, machinery and growing methods…as if the narrow band of specialization of row crop farmers was leading anywhere but disastrous ruin for most in the long run.
Only a few very large operations of that kind make it – not without help from the taxpayer, by the way.
Who profits most? The providers of said chemicals, machinery and growing methods.
I do not need to point out who suffers most from that kind of agriculture which has been in the heads of most farmers. On the other hand, there are a good number of examples of farmers who are breaking the mold, resorting to very different approaches to farming, but they are not featured.
Most of them can be found in the organic and/or horse-farming community. As long as farmers let themselves be talked into the afore-mentioned rat race the attrition of their numbers can be safely assumed.
How about forming organizations in which farmers for example discuss optimal yields for themselves and their communities, not maximum outcomes with their price-destabilizing consequences? How about organizations which help farmers to overcome the narrow specialization and give them tools for more diversified farming operations?
I could give more examples, but the idea should be clear: If we continue to be going in the directions we have been going for several decades now we should not be surprised that we will arrive there. Only a few people with deep pockets can even start independents farms, most will be hirelings and/or dependents of large corporations.
–Respectfully, (Missouri Farmer)
The ink was barely dry on my post “Less Corn More Shrimp” concerning the agricultural runoff which creates a Dead Zone in the Gulf of Mexico each year when headlines broke this weekend saying that residents of Toledo were without drinking water.
The reason? Again, agricultural runoff into Lake Erie, and experts tell us that it won’t be the last time this happens. Weather, rains, and poor farming practices all contribute. Better management of waterways would help a great deal.
PBS Newshour explains, here in “How weather and nutrient pollution create fertile conditions for toxic algae blooms”:
Productivity growth in agriculture enables farmers to produce a greater abundance of food at lower prices, using fewer resources. A broad measure of agricultural productivity performance is total factor productivity (TFP). Unlike other commonly used productivity indicators like yield per acre, TFP takes into account a much broader set of inputs—including land, labor, capital, and materials—used in agricultural production. ERS analysis finds that globally, agricultural TFP growth accelerated in recent decades, largely because of improving productivity in developing countries and the transition economies of the former Soviet Union and Eastern Europe.
During 2001-2010, agricultural TFP growth in North America and the transition economies offset declining input use to keep agricultural output growing. By contrast, declining input use in Europe offset growing TFP, resulting in a slight decline in agricultural output over the decade. In most regions of the developing world, improvements in TFP are now more important than expansion of inputs as a source of growth in agricultural production. Sub-Saharan Africa is the only major region of the world where growth in agricultural inputs accounts for a higher share of output growth than growth in TFP.
Flickr CC photo by Asad.
Though we always hear that there needs to be more investment in agricultural research, an agronomy student once told me that his professors are frustrated by the fact that nothing they can offer in the way of agricultural advice will be adopted by farmers unless it increases their profitability. And, usually that comes by way of reducing labor, increasing yields, or through policy.
We have a situation today where the efficiency of industrialized agricultural methods are being challenged because of ever rising input costs as well as ever growing global production competition as more and more of the developing nations adopt our industrial methods of production. Additionally, whereas the U.S. used to be the world’s corn exporting powerhouse, we’ve relinquished export market share since mandated ethanol policy went into effect.
In recent years, the agribusiness giants have done extremely well and many corn and soybean farmers have just ended a cycle of great crop incomes, too. We all know how well the S&P 500 has done in the past five years, but Deere has done even better:
In part recent farm-related profits have been due to government policies of direct farm payments and crop insurance, and in larger part, because of the biofuels mandates. But, it looks like that good time period is about to end. A recently released FAPRI study forecasts breakeven crop prices through 2023 for U.S. farmers.
Furthermore, during the five-year corn commodity price bull run we’ve just experienced, the profits went to the top half of producers, while the bottom half was left out; the top 10 percent of producers made 10 times the amount of profits than the bottom 10 percent.
Approximately 97 million acres of corn and 78 million acres of soybeans were planted in the U.S. in 2013. Let’s take a look at profitability from the farmer’s perspective by using data provided by Mike Duffy of the Iowa State Extension Service, who provides ongoing data updates for the input costs per acre to grow corn and soybean crops in Iowa. His data shows that the machinery costs for growing corn rose 420 percent in the 46 years between 1968 and 2014. The cost for seeds, chemicals, and fertilizers went up over 1000 percent. The yield in corn bushels per acre went up 77 percent for an overall cost per bushel increase of 347 percent over the past 46 years.
My chart below helps demonstrate the numbers:
And the following chart by Chad Hart of Iowa State helps us more in visualizing input costs versus returns of Iowa corn farmers (note the number of years that the average cost of production exceeds the corn price):
Hart included this commentary with the graph above, “When we examine the average return to a bushel of Iowa corn over the entire time period from 1972 to 2012, it is a positive 5 cents per bushel. However, if you looked at 1972 to 2011, the average return was negative.”
Whereas the input providers can set their prices, the farmer-producer is always at the mercy of the markets. What the farmer has the liberty to decide, however, is his/her choice of methods.
As for benefits, a major economic benefit for the corn and soybean farmer comes from taxpayer supported policy programs which help to ensure that production costs are met each year. The new farm bill offers even greater support to the farmer when prices fall, putting a high floor under prices. Unfortunately, today’s policy also encourages farming on marginal land because of a guaranteed profit to the landowner.
Then, there is also the labor saving benefit of today’s row-crop farmer. Compared to the old rotational grazing systems, the grain farmer’s time commitments have fallen dramatically, offering a better lifestyle and the opportunity to work off the farm for additional income.
What does this all mean and where is the corn and soybean farmer headed?
First, precision agriculture may be another method to increase production, but it comes with a large price both in dollars and in trust of the technology, creating a new set of risks and challenges. Second, integrating cover crops into cash crops can make row-crop farming more ecological and more productive in the long run. And, third, it is expected that by planting closer together, and by further improving genetics, crop yields per acre can continue to increase, but that, too, will come with higher input costs of seeds, fertilizer, and machinery for farmers – which brings us once again to the hamster on the wheel situation.
The farmer who can reduce his/her input costs and produce a product of value, such as providing organic products to answer consumer demand, may do well, and, the younger farmer demographic is looking into new alternatives and ideas which challenge the status quo. Perhaps this is all best summarized by a CNBC news headline that I spotted over the weekend, “There’s a growing discontent around farming in America.”