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Tuesday, March 6, 2012

Breaking it Down - Farm Size and Efficiency

Today I had the opportunity to hear Dr. Kevin Stafford speak - he is brilliant and hilarious. The perfect combination. If you want more of a background on him read this.

He said something today that was very clear and made absolute sense to me but a lot of people in the urban world, and some in the rural world for that matter, have a hard time understanding. So I thought I'd put his ideas on here and get some feedback.

His ideas on why farms have gotten bigger while the number of farms has decreased (this is world wide, not just in the U.S.) are:

- If farm gate prices are too low then...
- Farm size must increase to support the family producing the food therefore....
- Animal production intensifies because more animal units require more management, feed and efficiency which leads to....
- More animals per person OR Engage in niche farming/marketing (natural, organic, grass-finished, etc).

I think this makes perfect sense - Dr. Stafford said that the size of the family farm in terms of animal numbers has nearly tripled in New Zealand due to cheap food prices and low support to farmers. The same has happened here except in the U.S., some farmers get some subsidies (but they're not getting rich, just to be clear on that point).

So what do you think?

Until next time,
~ Buzzard ~

8 comments:

  1. Agreed. My little brother is getting ready to move back to our family farm in May. As a result of my brother coming home, our family is looking for more land to buy and other opportunities so we can expand. Today you can't support 4 families on 100 head and a few hundred acres. It is an exciting time at our ranch as we look for opportunities to grow. However, with that comes growing pains and also the comments about whether or not we are a "family" farm just because we are large. You can be large and still be a family farm, but a lot of consumers don't always agree with that.

    Good post!

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  2. I think that's a fair description of what has happened. I don't think it necessarily justifies the expansion in and of itself. I'd say you forgot one option after intensification and efficiency...

    1. More animals per person
    2. Niche/farming/marketing
    3. (the one left out) Go out of business.

    Number 3 is what consumers probably find most irritating. It's tough to see farmers put out of business in the pursuit of efficiency.

    Also, what do you think is driving farm gate prices down? Consumer demand? Corporate pressure?

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  3. Elliott,

    I'd argue that number three should be at the top with low prices. People go out of business because it doesn't pay well enough or their children don't return to the farm because they'd rather have a 8-5 job than a 24/7 one. Then there's no one to leave the farm to and it goes out of business. Forces other farmers to pick up the gap.

    I don't think corporate pressure has anything to do with it - I'm talking about the 97% of farms that are family farms.

    Becca - thanks for the comments!

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    Replies
    1. I know 98% of farms are family farms, so I'm not talking about a corporate farm. I'm just wondering if you thought, for instance, if meat processors could exert pressure on the farmers based on what they will pay the farmer. For example, say Tyson draws up a contract for its growers that pays them less money than before or less than they were expecting. They can either take it or leave it. Given the investments in chicken houses, to leave the contract would mean bankruptcy essentially. So Tyson could force the hand of the chicken grower. That's the kind of pressure I'm asking about.

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  4. Hmmm

    That does make sense but I don't really know that much about the relationships between packers and growers in that sense. But I'd be very willing to learn if you ran across something.

    Thanks for the insight!

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  5. I think Elliot, has a valid point.
    Look at the hog industry as an example. Farmers do get pushed out of the industry due to processor pressure. My family experienced this first hand.

    At one time there were several independent buying stations for hogs - anyone could raise hogs. But as the large processor moved in and offered contracts those buying stations began to disappear. Some small family farms did not have the means to expand or invest in a hog barn to continue production. The ones that could expand are still family farms - in a very corporate way (they have to have contracts in order to be profitable). As you said in your response - people go out of business because it doesn’t pay well enough.

    And what about other factors such as speculators oil prices, the average age of farmers, and the price of land? Any thoughts on what this is doing to our farm operations? With all of these factors it is very hard for a young person to break into farming.

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  6. Not that I am very opinionated when it comes to the subsidy issue (not sure where I stand) but this is a legit website that tracks this information. It’s broke down by state.

    http://farm.ewg.org


    And looking at this and keep in mind that the larger the payment the larger the farm. The question that baffles me the most is...If these payments were not made, (and some of them do supplement farm income by a good chunk). Would these large farms be profitable? If not what is the point of expansion? Wouldnt it make more sense to be smaller? So are subsidies a driving factor in current farm size?

    Just food for thought.

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  7. Leann

    Thanks for all the info and comments - I definitely know that land prices and the lack of younger support play a role. My husband and I have already started to face that struggle. I haven't looked at the link you provided yet but am looking forward to it.

    You have good points about the subsidies and it's something I've never really thought that hard about. Thanks for the insight!

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