Real Issues in the Decline of Mid-size Farms

Farming looks mighty easy when your plow is a pencil and
you’re a thousand miles from a cornfield.
-Dwight D. Eisenhower

An Essay on the Political Economy of NJ Farming

The most recent Census of Agriculture shows the loss of America’s mid-sized farms even as the number of large and small size farms are increasing. Loss of the “ag-in-the-middle” does threaten the stability and productivity of our farm-to-fork food system. Many have weighed in proposing solutions to saving family farms – but often the agenda gets hijacked by those who plow with their pencil and are a thousand miles from a cornfield.

Anti-technological/anti-industrial farming proponents opposing “get big or get out” policies continue targeting “large farms propped up by heavy government subsidies” as dooming American agriculture. While many cringe at the suggestion Iowa will one day be covered by a handful of 250,000-acre mega-farms, most would also be surprised that many enterprising northeastern farmers, operating family farms under 500 acres, are already in the upper tier of national farm income. It is not unusual to produce a million dollars annual revenue on 200 acres or less. The larger concern for Northeast growers is meeting competitive market challenges. UC-Davis researchers calculated converting only five percent of California’s grain acreage would double that state’s output, already accounting for half of the country’s production of fruits and vegetables.

Switching grain and forage acreage to growing fruits and vegetables and selling directly to consumers and food service institutions is not a panacea. The right farmer in the right location with the right management abilities can create lucrative enterprises. Likewise, food processing can be part of successful farmers’ marketing strategies, but requires equally skillful farm management to maintain profitability. Both should be part of our national agricultural and security policies requiring local agriculture supply a portion of a region’s produce because it decreases “food miles” – the fuel energy consumed in food distribution. However, a quick path to losing more of our region’s farms would be to start converting Midwest grain acreage to fruit and vegetable production.

The Missing Solutions to Sustaining “Farms in the Middle”

The rhetoric focusing attention solely on “big farm size is bad” needs to stop because it diverts our attention away from finding solutions to critical issues. Instead, let’s do the hard work of fostering policies to reduce regulatory impediments; restore research and development of public goods – not just services; and, enhance farmer’s managerial capabilities to deal with technological innovation, market consolidation, and marketing opportunities. Presented are five problems we need to address. The viability of our mid-size farms is at stake.

1. Management and capital intensity required of mid-size farm owner-operators is too great for most. This was illustrated to Congress by the Council for Agricultural Science and Technology in 1988 (CAST Report 114): “The future viability of the adequate size, well-managed commercial farms, and the part-time smaller farms is not in doubt. The future is much in doubt, however, for full-time family farms lacking a strong financial or managerial base, too small to realize economies of size, and too demanding of labor and management for the operator and family to earn substantial off-farm income.” Just as true today, solutions must address simplifying mid-sized farm management requirements, not vague notions that crop selection is the core problem.

2. The myriad of costly labor, occupational, environmental, and land use regulations are also driving out mid-size farms. Large farms employ compliance officers just like any larger business; smaller farms fall under the regulatory radar. The midsize family farm is subject to all regulations, but lacks management depth to deal with them. Policy solutions must consolidate regulatory requirements to minimize the cost and complexity of compliance.

3. A real unspoken source of frustration among sustainable advocates is a sense of powerlessness at the relentless economic dislocation caused by technological innovation and consolidation of wholesale buying power to fewer enterprises (food processors and retailers) that serves consumers better in market economies. Misplacing blame for the pace of constant change, their recommendations do not provide solutions that benefit average consumers and average farmers.

Instead of being anti-technology, anti-science, and anti-global, advocates should focus on enhancing Farm-Size Neutral innovation for agriculture. Individual farmer and farm community innovations provide much of the improvement in production methods, equipment, and sales tools. Farm-size neutral technologies, such as improved crop varieties with greater disease resistance and higher yields, serve all farmers, yet our nation’s USDA decreased research, development, and release of improved “public crop varieties” beginning in the late 1970s. Public varieties gave US farmers and consumers products from government research, not just services.

4. The widening Farm-to-Retail Price Spread, the inability of producers to capture a stable share of consumers’ food dollars, is the most perplexing issue to most American farmers. What portion of a $60/plate dinner or a box of cereal goes to the farmer? The larger portion (about 80%) of the US food dollar goes to the middleman for transportation; post-harvest shelf-life treatments; processing; packaging advances; merchandising and marketing; and services related to food eaten outside homes. Farmers, taking all of their production and management costs out of the remaining 20%, failed to incorporate distribution, merchandising and marketing strategies in their businesses.

5. The Cost-Price Squeeze catches farmers. Retail prices, which rise with inflation, are paid for production inputs, particularly energy. Farm sales receipts stagnate or decline due to more efficient competition, slack demand, variable quality, not providing what consumers want, other market forces, or poor policies. Generally, regardless of the commodity grown, farmers investing in satisfying their customers with the right product and service make profits.

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