Farmer’s Collision Course with Destiny

Missing: A Farm Family

Posted on August 13,2010

It was mid-week, the first week in August, travelling through the Texas Panhandle for my 50th class reunion that I noticed it. I had not been in this area for forty-years. The maize was headed out and looked great, the cotton was starting to bloom, and the corn was in its final stage before harvest. The crops looked great, but there was something missing.

Every few miles a clump of trees that once sheltered a farmer’s home stood alone with no house to shelter, or there was an empty farmhouse no longer inhabited standing eerily vacant. So I asked myself, “Where are the farmers?” Worse, upon arrival to the small town where I went to school, the population marker showed fewer people than from forty years ago.

The quiet little town of Groom, Texas looked the same, just a few remodeled and new homes, otherwise, looked no different than it did forty years ago. My sister and her family still live in the area, so I had a chance to visit and ask about Groom’s decreasing population and the empty farmhouses.

Their answers were alarming. I will try and relate to you the economics of having to continually expand and acquire more acreage just to maintain the status quo and service the increased debt load from expanding.

First, you should know that all of the farmers diversify with farm animals, custom plowing, harvesting, and other farming chores. Farming is a year-round proposition. The modern farmer plants different crops that mature at different times and operate as efficiently as possible. The modern farmer maximizes his resources and wastes nothing. He treats the land with reverence and appreciates it for the bounty it produces.

But there is a dark side to farming that is on a course to unravel a whole nation that enjoys the farmer’s resourcefulness. The farmer produces the cornucopia of agricultural products we all enjoy at a reasonable price. But the economics of farming is slowly eroding the ability of the farmer to continue to provide products and make a living. Whenever the farmer can no longer service his debt, or his heirs do not want to farm and take on the debt, the bank, farmer, or the farmer’s heirs sell the farm with the proceeds going to any debt first and the remaining proceeds to the farmer or his heirs.

In order to keep this piece as brief as possible, we will only explore the farmer through the prism of raising only one crop, Milo/Maize. This representation is not the sole income of a farmer, but represents the farmer’s plight to stay viable.

I can attest from my youth in 1956, raising a pig for an FFA project, I paid $3.10/hundredweight for milo maize to feed it. Today, that same hundredweight of maize still costs at or around $3.10/hundredweight. Such stagnant pricing for this product produced by a farmer creates a spiral that has only one ending – complete destruction of the family farm and a monopoly for the last farmers standing.

Traditionally, 40 years ago, a family farm ranged from a half section (320 acres) to a few sections (640 acres/section). Each family farm was home to the farmer’s family and they lived in a house on their farm. But times have changed, politics have changed, and so has the size of today’s farms. A closer look at the economics of farming reveals the reason for the exodus of so many farmers.

If the average yield for an acre of land is 3,000 lbs. of maize, and the price the farmer gets for that maize doesn’t increase along with his other expenses, the farmer slowly drowns trying vainly to produce enough product to make a living. One of the ways he can get more money is to increase his production, which leads to acquiring more land. But land acquisition is expensive, so buying more land may not be an option. The remaining solution for the farmer is to sell and quit farming. If the farmer is heavily in debt and cannot pay, the bank will foreclose and sell the property to recoup some or all of the money owed against the property.

First, some statistics:

If we used 1956 as a base, 100% of parity would yield the following: What cost $3.10 in 1956 would cost $24.20 in 2009. So compared to the value of 1956, today’s hundredweight of maize is only worth $0.39 cents, roughly 1/10th the value of 1956.

Since the value is less, in order to have the same purchasing power as the farm of 1956, we now need to farm 10 times as much land. Everything about farming more land is larger – including expenses. Because we have more land, we need bigger and more equipment.

What the farmer sells has not increased in price very much, but what he uses to produce his products has managed to keep up with inflation. Gas has gone from $0.19 cents/gallon in 1956 to $2.00/gallon on today’s farms. That $5,000 tractor in 1956 is now a whopping $250,000 goliath complete with air-conditioning, communication, and GPS enabled.

The larger tractor is necessary because of the added acreage. It is impossible to protect the tractor driver from the Sun and dust without a cab. The cab forms a ‘fish-bowl’ and heat buildup renders the cab unlivable without air-conditioning. GPS and communications track the location of the acreage to the FSA (Farm Service Agency) to satisfy their requirements. A farmer today cannot even think of buying new equipment unless that equipment can pay for itself. Labor has skyrocketed from $1.00/hour in 1956 to $10.00 and more per hour in today’s market. Increases in costs put more pressure on the farmer to produce more. The operation becomes a balancing act of debt service and keeping enough to live on. Failure to service the debt satisfactorily means higher interest rates or the inability to acquire the necessary loans to continue farming.

The vicious circle of more production output also poisons the market with more product than is needed, and a saturated market means even lower prices. Lower prices translate into more production, so the farmer must acquire even more land and buy more equipment. There is no winning for the farmer.

According to the statistics with the USDA, in a five-year period, the crops will be only average 2 of the five years; one will be a disaster, one below average, and one above average. The disaster years always come at the worst possible time. Stretch out the 5-year outlook to ten years and there is a high possibility of a bumper crop at least once out of the ten years. Every year, the farmers rejoice at the possibility of getting rain when they need it, and apprehensively watch every storm cloud because it takes just one hailstorm to ruin their crops.

The human side of the story of farming is where we as a nation really reap benefits. Farming is a rewarding way to live and raise a family. The farmer’s life is an ingrained way to live that is satisfying to the soul. The rewards of farming are seldom monetary in nature. The real reward for a farmer is his children. Farmers raise their children to have a good work ethic, respect for the land, and the importance of family and God.

But sadly, the American family farmer is disappearing because of the economical realities that he faces. Agricultural producers are victims of their inability to control their markets. Individually, farmers cannot afford to withhold their crops from the market to influence the prices he receives. Most have debt, and servicing that debt leaves little wiggle room. They have to sell their crops at the prevailing market value. It is the farmer’s ability to produce, and those who are less aggressive in acquiring additional land will leave farming. Farmers who increase their growing capacity and have more to sell determines whether or not a farmer will survive another year.

What will the future bring? Eventually the number of farms will decrease, but their sizes will continue to grow. As the smaller farmers leave the fields, their land will become part of larger farms. Eventually, the land under cultivation will belong to very large operations that will be able to control their markets. The emerging large operators will be able to control output to fit the demand. When that happens, the cheap food enjoyed by all Americans will come to a screeching halt.

Economics will run its course but the cost in human terms will be the biggest casualty. We will lose those strong principled children raised by our farmers who contribute so much to the honor of this society. There is no dollar amount that makes up the loss of this resource. Losing our family farms is a tragedy not even Shakespeare would have adequate words to describe. There is no silver lining to the future of farming. Unless some unforeseeable act occurs, we are racing towards a very bleak destination.

The Groom’s of the world will slowly disappear. If there is any consolation, there is time to make corrections to our path. There are a lot of smart people who are working on the problem. We can only hope that a solution for the preservation of our family farmers will be found.

"A good listener is not only popular everywhere, but after a while he gets to know something."
- Wilson Mizner

Cheers,
-Robert-

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