Farm Consolidation: First They Came for Poultry

In the 1940's our family farm was small, small dairy (12 cows), small poultry (1,000 hens), but with our garden we got by. I remember my mother fussing, she was a good fusser, about people from the city (a milk deliveryman, IIRC) buying a nearby farm and building a two-story henhouse.  This must have been during a peak in egg prices, possibly tied to a war, WWII or Korea. (This has a chart of inflation and deflation in egg prices since 1947.  Note how the prices vary from year to year.)  She'd gripe that people would see good prices and would jump into farming, expanding production (of eggs, in this case), resulting in overproduction and low prices.  This would hurt the established producers, like us, while proving the naivete of the city  folk.

My mother had German ancestry, so when she experienced schadenfreude when Hurricane Hazel in the 1950's came through and caused the collapse of that henhouse, she was doing what Germans do.  By then egg prices had dropped. Our neighbors never rebuilt.  After dad died, mom kept on with the hens into the 70's, but the infrastructure, the trucker, faded away.

I think poultry  was the first agricultural commodity where there was a turn from small farms to vertical integration through contract farming and large operations. The first, but not the last.  Dairy has followed, as have hogs.  Don't know about beef.  In field crops there's been a somewhat similar process of consolidation, though I think not with vertical contracts. Instead I think there's been a move to more sophisticated marketing, futures, etc.

What's the trigger for this post?  This dailyyonder piece discusses the impact of these trends in Iowa, including the observation that hog farms have decreased by 90 percent since 1977.

My title is from the mantra about the Jews from Martin Niemoller. He was saying to act early.  I'm pretty sure there was little or nothing anyone could have done to stop these trends. 

Newbie Farmers Risk Life and Limb?

From the Rural Blog:
"Bill Field, who has tracked farm fatalities for almost 40 years, says that almost a quarter of Indiana's farm fatalities over the past four years were on hobby farms, Rick Callahan reports for the Associated Press.

USDA map; click on the image to enlarge it

Part of the problem is that hobby farmers tend to be amateurs who were lured to farming from other careers, and don't have the experience to avoid common farm accidents

Those Life-Long Farmers Aren't

Nathan Yau at Flowing Data has data on people who change jobs/careers.  Interesting, but what I found worthy of comment is the position of farmers--they're the second most likely occupation to change careers.  Only 30 percent stay farmers.  I suspect that's a combination of people pushed off the farm because of adverse economics (i.e., not enough available land, etc.) plus, as I'm a cynic, people who try farming and fail (i.e., hobbyist types).  

New Farm Bill Discussions

Uof IL extension has discussion of 2018 farm bill:

Separately, Doug Rich reported earlier this month at the High Plains/Midwest Ag Journal Online that, “Economic conditions are much different today as Congress begins to work on the 2018 farm bill than they were in 2014 when the last farm bill was passed. Farm income this year will be about half of what it was in 2014. However, most farmers would be happy if Congress passed a bill that is very similar to the 2014 legislation with just a few changes.
“This was the consensus of many who attended the 2018 Farm Bill Summit held Oct. 18 at the University of Missouri Bradford Research Center in Columbia, Missouri.”

I've commented elsewhere on the increasing size of family farms.  I suspect, without thinking about it, that there's increased volatility in farm income correlated (as a result of?) the increased size.  The big farms back in the salad days of the the middle Obama administration were raking in incomes well above average, so cutting income in half while painful still leaves a substantial profit.

Super-Sized Family Farms

Wall Street Journal had an article on this.  It's now gated, but the gist is that farms keep getting bigger and bigger in order to make a profit and keep the kids on the farm.  The same article could have been written in 1967 and 1917.

See the associated video here.

The Dutch Are Beating Our Plants Off (in Ag Research)

In line with my previous mea culpas about underestimating the Dutch, via Marginal Revolution here's a National Geographic long article on Dutch research and implementation of sustainable farming techniques, and spreading them to the developing nations.

Methinks ARS (Agricultural Research Service should provide a copy to each Congressional representative).

Very interesting.

Dutch Agriculture

Recently saw an article/tweet/blogpost/something which made great claims about the productivity of Dutch agriculture.  I think maybe it was claiming they were the top exporter of agricultural products.  Immediately my contrarian nature kicked in, and I was sure someone was in error on the Internet.     My logic was that the Dutch export flowers, a high value crop, perhaps the highest value legal crop, so the claim was misleading.  Dairy products would also be big, and high value.  However I didn't challenge it on line, just in mind

Now comes FiveThirtyEight with their significant digits, and this fact: 

144,352 tons of tomatoes per square mile

The Netherlands has been investing in new and improved ways to maximize the efficiency of humane farming. Acre for acre, the Dutch are the best on earth: using greenhouses they get 144,352 tons of tomatoes out of every square mile, with the closest runner up — Spain — getting a fraction of that. Essentially, the Dutch decided to be a food R&D lab for everyone else — the secret seems to be greenhouses — and the outcome is they export more food, judging by dollar value, than every country except the U.S. [National Geographic]

So I guess I need to apologize to the Dutch--they aren't just a one-trick pony.

The Magic of the Free Market

Legalizing pot means lowering the barriers to entry and creating a more open market.  The result, as Kevin Drum links, is lower prices.  With producers' energies now focused on more efficient production, rather than evading law enforcement in distribution, I predict this trend will continue, at some point driving the least efficient startups out of business.

Death Panels Exist: For Strawberries

A NewYorker article: (Varieties are made obsolete based on the decisions of an internal group called the Dead Variety Society.)

Technology on the Farm

Interesting NBCnews overview of new technology on the farm.

A Bubble Bursting--the Farm Economy?

It's probably been years since I posted about the possibility of an agricultural depression, like the 1980's.  Farm commodity prices have fallen and been low for several years, and the value of ag land has fallen as well.  In the 1980's those two factors meant those farmers who had overextended themselves in an effort to cash in on the 70's boom in prices started going bankrupt.  But not so this time, at least according to this article.

The factors at work:

1. farmers built up their net worth during the boom better than they did in the 70's
2. interest rates now are low, in the 80's high
3. lending on real estate was more rational 
4. better safety net due to more crop insurance coverage.

Not really qualified to question any of these, though I would observe no. 4 conflates insurance coverage for weather and coverage for economy.  We did have some bad years during the 80's weather-wise, but I don't recall much crop insurance coverage for economy.

I'd also observe there are a lot fewer farmers today than in the 80's, which IMHO reduces the likelihood of any one farmer going bust--there's fewer marginal players in the game. 

Irish Farming--Custom and Rentals?

Got a hint that maybe Irish crop farming has a different model than the U.S., or maybe it's just my imagination. 

In the U.S. I imagine that farmers own and rent land, but own equipment.

In Ireland, I'm not sure about the land, and think maybe they do more rental of heavy equipment and/or hire custom harvesters than in the U.S. 

My pictures may be distorted because I'm thinking more of MW corn/soybean than of Great Plains wheat harvesting.

All the Farmers Are Above Average?

It's hard to be above average.

Blast From Past: Tractor [Cades]

Interesting piece here from FiveThirtyEight, comparing the upcoming science march with other collective action protests, especially the "tractors on the mall" protests.  I remember them well.  This was the time period when I moved from directives to programs, specifically the "normal crop acreage" concept (i.e., a base for the whole farm rather than crop specific, intended to give more flexibility to farmers) and a disaster payments program which was, in effect, competing with crop insurance to see which approach would become the one for the future (crop insurance won over the next 15 years).

It's significant, I think, that the 538 post links to the American Agriculture Movement website; the AAM was the organization behind the tractor cades, but in fact the website is defunct, with nothing updated since 2015. While commodity prices are down and have been down for the last few years, the farmers who are left aren't in as bad shape as they were at the end of the 70's.

[Tweaked the title and fixed the link]

Why Big Farms

This Successful Farming piece on big farms:

A quarter-century ago, small farms generated 46% of U.S. agricultural production. Today, the powerhouse of production is the large family farm with more than $1 million a year in gross cash farm income (GCFI). They represented 2.9% of the U.S. farm total in 2015 but were responsible for 42% of ag output, say USDA economists James MacDonald and Robert Hoppe.

 And the midpoint for cropland has moved from 589 to 1234 in the 30 years from 1982 to 2012.

Why is that?   Illinois extension has interesting graphs, relating the cost of machinery per acre to the size of the farm; in other words the way increasing the land farmed spreads machinery costs over more land.

This has been true since farming began, and more so the more farmers invest in equipment.

Immigrants and Produce Production

When I was young during the summer when we'd drive to Greene for livestock feed, we'd see an old bus parked by the fields bordering the Chenango river, fields in which grew green beans, a bus which provided transport for those Negroes (as we said then) who picked the beans.  It was a moment of quickly passing contact with another world, strange to a child of dairy/poultry farmers. I've no idea where the pickers spent the night, presumably a tent or the bus.

These days the people who harvest our fruits and vegetables are almost all immigrants, mostly undocumented.  That leads to multiple issues, as described in this good Tamar Haspel piece for the Post.  If undocumented immigrants are deported and Trump's wall is built and is effective (big "ifs"), will citizens fill their places?  Could higher wages attract enough workers? Or would innovation come to the rescue, providing machinery and robots to do the harvesting, perhaps at the cost of changing the nature of the produce?

Innovation in Farming: Software and Tractors

Farmer populism shows its face in a revolt against John Deere's attempt to protect its software running its tractors.  See this piece.

Trump and Agriculture

Trump's got problems with agriculture.

Not only is he unable to find a Hispanic woman from the upper Midwest who worked for Earl Butz to appoint as Secretary [full disclosure--that was stolen from someone's tweet).

Not only do his announced policies result in a stronger dollar, which is harmful to our export markets, and field crop agriculture depends heavily on exports.

But his promises on immigration threaten to cut into the labor supply for big farms.

Farm Structure

ERS did a piece on farm structure recently. Here's its graph:



I've used it to counter the common meme that big corporations dominate agriculture.  It's not true, at least with field crops.  But then I started thinking--it's true enough that corporations are big in fruits and vegetables, but why would that be?

I'm guessing the key is that fruits and vegetables must offer much higher gross income per acre than wheat or corn.  If true, it would follow that those acres are much more valuable and therefore take more capital to acquire, leading naturally to the greater use of corporations to assemble the acreage.

Another factor might be the economic structure: field crops likely require less processing than do vegetables. And fruits and vegetables spoil, they can't be stored, at least not unless they're processed by canning, juicing, drying, or freezing. Those factors make it more likely for vertical integration.    We've had vertical integration with poultry and eggs for 50-60 years.  I suspect the fruits and vegetables sector preceded birds.

"LIfe After Cows"

Unlike crop farming, dairy farms can come to a sudden and abrupt end. I know.

Two kids can set a fire, the barn goes, and the herd has to be sold.  (Averaging 27,000 lb per cow--that's a figure unheard of in the 1950's.)

Or advancing age, low prices, a smaller dairy, no successors can make for a more gradual sell-off, as here.

Or a TB test comes out positive, and the bureaucrats order a "depopulation".  (Some great photos at this site, prairie Canada.

Or, as happened with my dad, there's a severe stroke, so the cows went the next day, a phrase I can't type without emotion, even though I never wanted to farm.