The Convergence Crisis in Agriculture

The Convergence Crisis in Agriculture

Farming has been romanticized as the idyllic way of earning a living and raising a family. This portrayal shows only the view of fresh air, open spaces, and freedom from city living stress. In the past 50 plus years, agriculture has increasingly changed.  No longer is farming a simple formula of plant the crops, nurture them during the summer months, and market them for the best price. Farmers now wear many hats, including Researcher, Operator, and Financial Analyst.

CURRENT CONDITIONS

Extremely poor weather, market conditions, and decreasing profitability have brought public attention to the current crisis facing agricultural production. This spring season has seen wet farmland not seen by most, if not all farmers.  The entire planting window of opportunity was delayed and denied by excessive rain and flooding.  Most if not all areas, from the cereal and pulse producing states like Illinois and Iowa, to the dairy states like Wisconsin were affected which will result in decreased yields nationwide.

MARKET CONDITIONS

The USDA report on August 14, 2019, projected yield increase of corn, and a virtually unchanged soybean estimate.  The impact of this report, along with the US-China trade war, has sent commodity prices tumbling. The announcement by China that it would increase tariffs from 5 to 10 percent, US products including soybeans, beef, and pork have exacerbated price decreases.  The Trump administration farm subsidies have had little impact on smaller operations, with 15 percent of farm businesses receiving 85 percent of them, according to the Cato Institute.

PROFITABILITY

Many farmers are being forced out due to unprofitability.  The price cost of production squeeze has been a consistent problem.  Increasingly higher fixed costs, such as land and machinery, are the major contributor to the cost side of the equation.  Variable input costs such as seed, fertilizer, and pesticides have not declined.  An interest rate increase of even a couple percent will force the bankruptcy rate to skyrocket. The high cost of entry has been a barrier for the new, younger generation looking to pursue a career in agriculture.  The average age of today’s farmer is 58.

CONCLUSION

Agriculture will continue; however, its construct will change.  Uncertainties in market conditions, particularly access to foreign markets, will see farms increasing in size as smaller operations fold. Farming will be a large corporate conglomerate able to operate on thin production margins, aided by tax implications through incorporating.  Knowledge of farming practices, locally and generally, will be lost as farmers age.  The trend toward corporate entities is unstoppable in my opinion, due to the above-stated conditions.  No amount of government subsidy can sustain smaller farm operations and is unpalatable to farmers and the general public alike.  This is an unfortunate end to what is one of the finest family-oriented occupations.  It may take years due to the pride and stubbornness of farmers, but I believe that it’s inevitable.

1
Leave a Reply

avatar
1 Comment threads
0 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
  Subscribe  
newest oldest most voted
Notify of
BL Remshardt

Putting the recent years weather anomalies aside. I think you are right about that our family owned farms will be eventually taken over by corporations. But I hold out hope that farmers can and will adapt to the changing times. Perhaps the younger farming generations will take the wheel and make the needed changes in today’s world.