Alan Guebert is an Illinois farm journalist.
This past summer, agriculture secretary Dan Glickman asked his 27-member Commission on Small Farms to answer a simple question:
What can be done to help small farms survive in today’s highly capitalized, integrated, concentrated ag industry?
Oh, but were the answers so simple. Or for that matter, even to be found.
The commission’s first two hearings suggested the initial problem to be confronted is one of definitions.
“To me,” said commission vice-chair Kathleen Sullivan-Kelley, who ranches and farms with her husband near Meeker, Colo., “the testimony heard so far points to how haphazard federal ag policies have been over the years – particularly for family farmers.”
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A large part of the willy-nilly approach, believes Kelley, lies within USDA data. “The ag census divides American farmers into ‘sales classes’ which really don’t explain who farmers are. We need to get a handle on just who are the real farmers out there before we can identify problems and offer targeted solutions.”
Kelley’s point is extremely important, says Michael Duffy, an ag economist and associate director of the Leopold Centre for Sustainable Agriculture at Iowa State University. Duffy testified before the commission in late August.
“In short,” Duffy said, “I wanted to suggest the commission is misnamed. Its task should be to take a hard look at the structure of agriculture before proposing any strategy to save family farmers.”
Duffy built his testimony on farm records from the Iowa Farm Business Association’s 1,200 or so participant farmers. It shows – for Iowa, at least – that farm size and sales-per-farm are poor measures of efficiency and profitability.
“Our records indicate once a grain farm reaches about 300 acres in size, the cost of production nearly flattens,” he said.
In other words, the smaller grain farm is as efficient or competitive as the 3,000-acre grain farm.
The same is true of livestock operations. “A farm that markets 800 to 1,000 head of hogs per year is just as efficient as the mega-operator with 300,000 head,” notes Duffy.
So why the disappearance of 612,000 American farms since 1980 and the 225-percent increase in farms with sales of more than $250,000 annually in less than 20 years?
“In the 1950s, net farm income was about 35 percent of gross farm income for Iowa farmers,” he explained. “Over the last 10 years, that percentage has dropped to about 18 percent. If you pull government payments out of the mix, net as a percentage of gross drops to about nine percent per Iowa farm.”
The major cause of this declining-income trap – to Duffy’s analytical mind anyway – was a farmer binge to substitute capital for labor.
We invest more to sweat less.
For example, according to Duffy, Iowa farmers row-cultivated 86 percent of the state’s soybeans in 1989. Today, they row cultivate only 46 percent. The switch to drilled soybeans – which scraps labor-intensive plowing, disking and cultivating in favor of capital-intensive no-till equipment and chemicals – means farmers are choosing to spend more money and less labor per acre to make a crop.
But if farmers are working less per acre – or per cow or per sow – how can they expect to earn as much as in the past?
In truth, said Duffy, they can’t.
So, he continued, when capital per unit of output grows and labor and profit per unit of output declines, farms must expand for operators to earn the same amount of family income.
“That’s what is changing the structure of family agriculture and that’s why it’s important to study farm structure before trying to solve the problems of family farms. First we have to find out who these farmers are and how they operate their farms, don’t we?”
