Farm bankruptcies on the rise according to new Fed report
thehill.com
thehill.com
We have 68,500 farms in this state [1]. This summer was dry for a very long time, then it was very wet, and then it stayed very warm well into September. I suspect a lot of farmers had issues with moisture in their harvests. The thing about farming is you are taking a huge risk every year with what you invest, and farm equipment isn't cheap. If you make money, you make a decent amount of money. But if you can't make the payments on your machinery, you're basically done for.
I think this article was written with the intention of insinuating that this is somehow related to the Trump Trade war, and to be fair, I am sure that made or broke the profit margin for some farmers. But in general, I don't think that's what's going on here, and I think it's cheap journalism for them to play into that.
Somewhat related: Checkout "MN Millenial Farmer" on YouTube, it's some of the most relaxing content you'll find online. [2]
[1]: https://datcp.wi.gov/Pages/Publications/WIAgStatistics.aspx
[2]: https://www.youtube.com/channel/UCp0rRUsMDlJ1meYAQ6_37Dw
Trust me when I say this is real.
There's been a massive over supply of agriculture products around the world for the past 3/4 years.
In 2008 and 2011 there was shortage (weather issues) and price spikes. Farmers around the world -- from Ukraine to Brazil to the US -- made a huge amount of money and invested in technology (new farm equipment, better seeds, etc).
In the meantime the weather globally has been perfect. Beyond specific local situations worldwide it has been perfect and the technology has only added to production.
There will be a problem in the future but the reason American farm bankruptcies are high is that the prices are beyond low and the production levels are lagged (they're based on past conditions and take time to correct). Currently it's beyond bad for large scale producers.
This is an actual issue. In the future the failure of producers now will lead to shortage ... and so begins a new cycle.
The problem is that demand for food is rather inelastic. You are going to eat when you are hungry, and if you're hungry enough you'll pay whatever you can for that next meal. But food production is highly variable. For example the 88-89 drought in the USA dropped food production by 29%. Therefore to have enough food in a bad year, we have to be willing to overproduce in a good year. Which means that we guarantee an excess supply, and therefore a very low free market price.
How we get there is arbitrary. We can subsidize exports, we can buy up food to throw it away, we can pay farmers to not grow food in good years. All of these are done somewhere. There is no first world country that doesn't do at least one of these because everyone understands that it is a national security issue - if your people go hungry you're likely to get civil unrest.
As a concrete demonstration, consider the Arab Spring. One of the contributing factors was that China had a severe drought. To ensure their political stability, they bought wheat on the international market. Thanks to the laws of supply and demand, the cost of wheat doubled. Poor people in Arab countries that couldn't subsidize their citizens suddenly went hungry. They revolted. See https://en.wikipedia.org/wiki/Impact_of_the_Arab_Spring#Chin... to verify this sequence of events.
On the supply side production management has not proved successful that I'm aware of.
The demand side is a little different. Egypt is the world's largest importer of wheat and GASC (basically the same as the production boards but for buying) has generally been one of the best traders. They're good for the most part. They're generally clever.
Free markets work best in my personal opinion. But for production side I don't see broad-scale management working, while on the consumption side it actually can work.
What would you consider a failure?
I merely mean that economically the supply side is harder to manage at a board/national level than the demand side. Has a lot to do with many many producers but only a few companies able to import.
The problems managing the supply side tend to be very predictable - they happen most years. So you constantly see problems but they are manageable.
The problems managing the demand side are unpredictable. For many years you'll be going along fine, but when you have a problem you tend to have a BIG problem.
Of the two, you're better having manageable problems most years and no big disasters than having things usually go smoothly but occasionally you get a disaster.
Hay prices are up over double last year and last year was up from the previous year. Last year for example I would have been happy to buy $25 a 5x5 round bale. This year if you can find them, they're $90-$100. Small squares 2 years ago were $1.25, this year I happily paid $4.
When you lose the land, lease, or go bankrupt, your land gets snapped up by huge corporate farms that can run at a higher margin, driving down food prices over the long term, making smaller farms less and less viable.
If you own, you can select even segments of fields to harvest at more optimal times (a down grade, or wetter, portion of a field may harvest differently than an uphill, drier portion).
It sucks either way.
https://www.huffingtonpost.com/2013/02/20/supreme-court-mons...
But even the intention behind the distinction is wrong, as not wanting to be a huge agricultural business doesn't mean you're not professional.
In fact, quality-wise the smaller shops can be much more professional. So, no, actually, those are farmers, of the kind with the smaller lots, that have always been there and fed humanity for millennia.
The other are just big business conglomerates who don't give a fuck about farming and just happened to be in the agriculture business -- and will do anything to drop their margins and sell crap.
I hope that they get zero consideration from those who are supposed to help farmers, and hopefully are driven out of farming.
Big businesses have failed to do so, and small family shops have survived for centuries...
So, taking a bit hit, or even dying, on some "not great years", is not a criterion for business vs hobby at all.
https://www.freep.com/story/money/business/john-gallagher/20...
Bankruptcy is an area of American law that is ripe for use for restructuring debtor-creditor relations to fight back against these trends. The entire Code, particularly Chapters 7 and 12, could and should do more to assist consumer and farmer debtors.
Thomas Sowell wrote a great book about this:
https://www.amazon.com/Wealth-Poverty-Politics-Thomas-Sowell...
There have been countless policies since the 1950s intended to offset wealth disparity that have backfired and hurt the poor. For example, the rent control and other "tenant friendly" laws in Toronto and NYC in the 1970s resulted in decrepit urban ghettos littered with arsoned apartment buildings, because the only way a landlord could "renovate" was burn down their own building. Just look at pictures of Harlem in late 1970/1980s...
It also created a massive disincentive to invest in new low-income property, as the developers knew they'd make less money targeting the poor. So development went towards upper/middle class housing (resulting in an even worse lack of low-income housing in NYC and to a lesser extant Toronto by the 1990s).
Modern rent control laws have attempted to factor these "unintended side-effects" but there are a hundred similar examples in that book. It keeps happening and happening with every clever scheme concoted to help the poor.
The only winners of the massive growth in the US gov since the 1970s were consistently large firms, who had their competition wiped out or huge barriers of entry created in their markets in the name of 'progress'. And countless well-meaning socially conscious economic policies usually works for a small group while hurting a much larger group in the process, or works at the beginning then as the side-effects build up it becomes a net-negative...where it would have been better off to let the market function as is.
https://www.census.gov/newsroom/blogs/research-matters/2018/...
While unemployment and asset prices have recovered in the past decade, business starts have remained at historic lows. When these small businesses die they aren't being replaced by upstarts. I wish we knew why.
I'm worried the future will be a small handful of oligopolist mega-corps. You see this consolidation in every industry: banks have consolidated (there are fewer banks now than at any point in modern US history), a few leading tech firms, agriculture, energy, etc.
1) Globalization has made it almost completely impossible to make things in the US unless they are massively overpriced goods (ex. luxury items or niche specialty goods). Customers simply won't pay enough to cover your costs. And there's a good chance that if you are successful, someone will copy your stuff, make it in China, and sell it for half your price within 12 months.
2) In California at least, costs are pretty ridiculous for small businesses. Between state, county, and city taxes, high labor costs, ridiculous healthcare costs, rent, insurance costs, etc. etc. It is far more expensive to start a business today as a percentage of expected revenue than it was a few decades ago.
3) The US IP protection and regulatory systems are out of control. Fending off patent trolls, tiptoeing around trademarks, dealing with licensing systems specifically designed to be too burdensome for small companies to bear, spending time and money to deal with regulatory compliance, etc. puts small businesses at a massive disadvantage.
4) Unpopular opinion, but I think today's workers are less suited to small businesses than they used to be. Many younger workers say they want to work for startups, but what they really want is a venture-backed cushy office with catering and perks completely untied to actual business revenue. These types of businesses account for a tiny percentage of actual small business starts in the US, which are often not places today's workers want to work at, let alone stay loyal to.
I can buy all sorts of US made shit, that is profitably sold, at reasonable prices, overalls, jeans, mattresses, washing machines, boots, cars - its that the margin is lower in the states as it costs 2-5% more to make something here.
The issue is, many things here cannot be made here with any ease, because the ecosystem for them no longer exists.
I'm willing to pay 10% more for american made things - I suspect most americans would be too, given the option.
The real problem is that we absolutely suck at manufacturing anything other than items that only really make sense to manufacture locally (certain food items, detergents), where in terms of exports we only exceed at certain types of heavy machinery along with certain chemical and polymer products.
If US made was only 10% more, I would go out of my way to purchase only domestically produced goods, but when it's 100+%, it's really hard to justify.
https://lcking.com/collections/jeans-pants
All US made stuff, decent quality and long lasting too - first link is made in Oklahoma, second on in Tennessee.
Start there - good boots are expensive no matter where you buy them - I have 100 dollar cowboy boots though, that are US made.
Boots of various styles, mostly western though - all US Made: https://www.justinboots.com/footwear/men_collections_shop-ma...
Like what?
Just to give you an example - in Los Angeles, the county assess a tax on unsecured property that has absolutely no bearing on your revenue. That's a tax on your office equipment, furniture, machines, etc. The city also assess a tax on revenue, not profit, in excess of $100,000. And even if you don't make a dime in profit, Corps and LLCs still pay a minimum state tax. If you own a building for your business you're also going to pay property tax, and if you don't you're going to pay it in the form of higher rent as well.
To your last point, you need to add an "if" to make it accurate. California is a far better choice than the Midwest or South if you can start a small business with high enough margins to cover the much higher costs of basically everything.
The minimum LLC franchise fee is $800. A real business can afford that, a pretend business cannot.
Double-Irish structures don't work to shield US income. They never have, so US companies can't use them to reduce their US taxation either, regardless of size.
And finally, you chose a pass-through form of taxation, meaning you chose to be taxed as an individual instead of as a separate entity. That's on you--not on California. That same choice would screw you over pretty much everywhere there's a state income tax--meaning all the states where people actually want to live.
#4 somewhat relates to #2, where costs as often put on the employees to keep small businesses afloat. Large companies have the sizes to keep costs down. I would love to work for a small business, but it would mean x5 increase in healthcare and insurance costs.
That was mentioned along with a litany of other things in point 2.
I would have started my own business by now ... heck I'd probably have started and failed several by now if not for one thing. Well three:
1) you cannot afford prescription drugs in America unless you have good health insurance. At least in my state (Alabama), the federal health marketplace offers exactly one option from exactly one provider. It has a ridiculously high deductible and is (no shit) not accepted at nearly all doctor's offices in my town.
2) I cannot afford to lose my access to prescription medication and healthcare, because my wife has diabetes and I survived cancer a few years ago. We're in fine health now, but we DO have medical expenses ... things that should NOT be that expensive (yearly CT scans and insulin are hardly breaking technology), but have been SO inflated in price by a bogus, rigged third-party-payer system that we literally can't afford those things without "insurance".
3) I had kids early in life, and since my adult working career began, it has been an absolute baseline requirement that I be able to get them medical care and otherwise provide for them.
ok ... having kids early was my decision, and I'll accept that this decision limited my universe of personal options. Getting sick. Having a wife who got sick. These were not personal decisions. They are just things that happen to people.
Our system in America is designed to keep me at my desk, working for someone else, doing mostly meaningless work. Why? Because it'd be a complete nightmare for those at the top, if every last one of me out there in the workplace could afford to take a risk that might not work out.
There'd be a helluva lot more competition out there.
America is dying because of this. Not just our economy. But our society. The world would genuinely be a better place with the companies I would have started in it. And that is true for every other stymied inventor/would-be-entrepreneur in america.
There is always a downside to risk, and there is always a risk involved in starting a new Enterprise. But what we have right now is so far out of whack that taking even a minor risk, can straight up kill you or your kids for lack of access to proper medical care.
My wife could afford to start a few small businesses over the years only because I have health insurance from my employment, and can get her, and our kids, to the family plan.
If Obamacare did something good to people not on lowest-paid jobs, it is giving at least some options of health care to entrepreneurs who are not yet raking in millions (that is, most of them).
Since we are talking about anecdotes - whenever I mention some success in my business, most friends get bored. Yet if they get to another create-a-crud-form job - this is being celebrated like some kind of achievement. I still hear talks about how small business is celebrated in the USA (i am immigrant), but I do not experience it in practice.
Historically, lots of small businesses are started not by healthy, young, single childless people, but by midcareer people that have savings to invest and professional networks and experience-based insights to build a business around.
So, when those type of people lose opportunity to start businesses, then total business starts drop.
Also, young people starting non-VC backed businesses have often relied on older midcareer relatives supplying financing, networks, and supporting experience, so many of the same things that hurt older people starting businesses (including healthcare costs, which—with common insurance schemes—not only tie you to wage labor but also still require you to maintain capital reserves for co-insurance, which reduces the attractiveness of using savings for speculative, long-payoff, high-risk business investment) also have a similar, if somewhat lesser, negative effect on younger people doing so.
I don't really understand where that's coming from because it takes a minimal amount of research to figure out that the BLS unemployment statistic tells us virtually nothing(even Adam Ruins Everything covered that). Wages have been stagnant in comparison to productivity since around the 1970's(adjusted for inflation), the labor force participation rate is in decline, I don't know anyone who doesn't think housing and rent is absurd right now, Americans are buried in debt, medical care is expensive and often enters scam territory, etc.
And we're supposed to become entrepreneurs? lol
Things aren't adding up, and we're probably not going to even accept that we're in a decline until we're well into it.
The problem with much of these things is that we're on a hedonic treadmill that we refuse to get off, even as further expansion of consumerism is destroying our planet. The big problem we have is policy that has promoted a society of which economic growth and even wage gains fails to provide a meaningful improvement in peoples lives.
Policy reforms could allow for the majority of people to live in cities in relatively new buildings serviced by public transit all at a lower cost than what we have now given our current system of inflated land values and high automotive transportation costs (i.e. cost of new construction is still relatively affordable when compared to the cost of land and public transit is far cheaper to build and service than automotive infrastructure). Reforms around healthcare that currently restrict the availability of doctors and enable overcharging of medical components would go a long way as well, and lastly, reducing the overhead around university administration while restricting lending would go a long way.
tl;dr: We aren't in decline, we just need reforms around housing, healthcare and education as their costs make poor economic sense and are only high due to protectionism and loose lending/insurance laws.
That however stopped translating to things being good for the average American in like the 50s
https://www.forbes.com/sites/timworstall/2016/10/03/us-wages...
Essentially, up to the 1970s, wages followed closely with productivity. Quite suddenly, wages stopped growing while productivity has continued to grow with no sign of catching up.
Take a look at this chart from the BLS:
https://pbs.twimg.com/media/DJ9l_q6VYAERRDt.jpg
What we can take from that is while prices for certain things have declined(e.g. technology, new cars, software, toys, clothes), the price of arguably more important things (child care, medical care, college tuition, textbooks, housing, food) has gone up. Sure, we've been bearing those costs, but the maximization of profits from those expenditures will inevitably cause an adjustment when Americans can't pay for those things anymore.
Americans might technically have a higher buying power than 1900, and especially 1930, but not necessarily in every area or even the areas that are important. If we were to say that Americans have more access to food, clothing, computers, education, etc., it doesn't mean that Americans are actually paying for those things; a lot of the wealth we think we have is coming from record amounts of debt that were unseen in the early 20th century. The things that make it seem like we have more spending power than we did a century ago are being made possible by what could be a ticking time bomb.
I think our leaders just said “why not both?”.
It’s going to be an interesting few decades.
That is, once the dollar dropped the link to gold, and money could be printed, a lot if things went increasingly haywire, down to the circus of bailouts in 2008 and "quantitative easing" afterwards.
What’s to say that currency won’t be tied back to commodities? What makes you so confident?
That's plenty of time for an entire generation to be raised with an awareness that any entrepreneurial enterprise they may attempt can be crushed and consumed in short order by a competitor with the backing of the moneyed elites. If you try to manufacture a quality product in the US, and bootstrap your business, the instant you prove there is a market for it, someone will gather up some financing, knock off your product in China, and run you out of your own business. If you build a fun game app, Zynga or King or some other chop-shop with their model will instantly clone it and kill you with their marketing. If you open so much as a lemonade stand, the city will come round asking about inspections and permits.
Advancing technology has enabled a greater economy of scale as well as mass customization beyond what was possible, thus increasing the competitiveness of large businesses.
Examples include customized shoes from big brands, e-commerce recommendation algorithms taking the roles of local shopkeepers, IT systems reducing the costs and increasing the effectiveness for managing far-flung enterprises.
"the sharing economy"
no, seriously. I have family that ran busineses. I have run businesses. Most successful small business don't pay much better than driving for uber, and driving for uber is a lot less risk, a lot less effort. (there's also a lot less upside, but let's be honest here... making a small business that pays better than working for google that isn't just contracting, even when you have the same skills, is extremely difficult.) - if you drive for uber, at least the capital you blew is on something that is still useful after you quit the business. I know a lot of people with a bunch of branded cups and other junk from their previous failed ventures.
I mean, I had some pretty marketable skills when I started my own business, so I did better than the uber driver, but I worked hard and made like 1/4th of what I get working for other people.
The other thing is that unless you are in the business of getting funding, it's way easier to start a business when the economy is shit. In '09, nobody tried to undercut me. Now? I would not want to be in that market anymore, just 'cause there is so much competition that is willing to lose money to buy marketshare.
In '09, I was able to pick up good people who were temporarily unemployed as employees; now? if you wanna hire someone good, you are competing with people willing to pay netflix level money.
(I mean, all this, I think, is actually pretty great. But it is not so good for facilitating a small self-funded company)
When the economy is shit, most large companies outsource a lot of work because they can't afford or don't have the workers for the amount of work they have. So if your a freelancer, business can be pretty good.
When the economy is great, those same businesses try to bring all those efforts in-house, so all those contracts dry up.
Not sure how it relates with entrepreneurship, but this guy had to quit freelancing and get a full-time gig (which is how I met him) because no one was handing out the contracts he wanted anymore.
Business startup by necessity has gone down. It's much easier to get hired by an international company in a niche field and work from home now, so people no longer are required to start a business to work in the field of their choice
It's more difficult to start something really innovative, related to the slowdown of Moore's Law
It's more difficult to start a business in an established field, as licensing laws have come to cover so much more of the landscape. You can no longer just decide to become a barber and hang out your shingle.
In my experience, it's been a problem with banks and small business loans being hard to obtain these days. Banks want a LOT of leverage, you have to already be doing pretty well.
Folks that are already pretty well-off aren't going to take the types of risks that create small businesses.
As an individual example: in 1998, Intel's top-of-the-line CPU was the Pentium II with about 8 million transistors. In 2008, they released the Core 2 Extreme QX9770, with about 820 million transistors; this is a 100-fold increase in 10 years, which is almost exactly what Moore's law predicts.
Fast-forward another decade to 2018, and Intel's highest-end Xeon chips have something like 7 billion transistors, which is less than a 10-fold improvement in the same timeframe.
EDIT: that said, I think it's a real stretch to go from "the slowdown of Moore's law" to a sweeping claim about innovation in general being more difficult. There are a ridiculous number of different fields in which someone could start a business; relatively few of them are dependent on enormous, ever-increasing amounts of computational power.
I'd love to see a production cell phone that is already thick with a relatively huge battery, more rugged case, and a slightly better protected display. I'm willing to bet there's a market for this, just based on otterbox sales, and the sales of backpack battery covers.
Similarly a home media player like the roku, shield tv or fire stick are plenty small. That has nothing to do with being able to innovate and create newer or better experiences.
All this whiz-bang shit startups do like AI, machine learning, really even any kind of custom software or process innovation, just isn't possible when you're small. There's no scope for it.
The reason it's a bigger problem now is because we have bigger markets globally and better tools, both of which create winner-take-all effects.
20-30 years ago you might start an auto parts distribution or manufacturing business, or a niche software business, or something else. It's a lot different when you have to compete with the best of the best globally from day 1 without any of the advantages the incumbents (e.g. data, existing channels to market, established brand) can bring to bear.
One angle: A lot of stuff is moving online. Good luck with Google, Facebook, Amazon having their own interest$ etc being gateways to your site. Most people will not make it, so why even try? Risk vs reward.
Using banks as an example, look at the market share of total assets over the last 20 years: https://www.peakprosperity.com/sites/default/files/users/u31...
The largest banks (JPMorgan, Citi, BoA, etc.) have decimated regional and mid-size banks while credit unions have essentially maintained the same role at the bottom. The big banks have more resources to invest in new technology and financial initiatives, thus having the ability to be market leaders and capture more money. In my opinion, digital also makes a huge difference. For example, JPMorgan is able to spend $10B on technology a year, which is more than the total assets of many small banks and credit unions. The banks that are midsize are in the hardest position because they don't have the capacity to outpace a big bank in R&D or IT, and are stuck in a position of being a lagging trend follower since they also can't spare a lot of risk tolerance. Further, it's hard to even leverage branch access and customer service as more individuals rely on digital banking to handle their finances, which actually pushes the big banks ahead in consumer satisfaction: https://assets.sourcemedia.com/dims4/default/0e422a4/2147483...
From a business side, it looks like we are headed down the path of oligopolist megacorps unless there's major changes. Money is the name of the game, and even in the startup world, the end-goal for investors is to pull off a lucrative exit (which usually means selling to a monopolistic megacorp) or IPO. Ask a megacorp CEO how much is "enough" for their business, and the goal will be to have as much as they possibly can.
I don't know if entrepreneurship is actually dying, but my speculation is it's getting tougher to build a reliable business to employ others and depend on for one's livelihood within the remaining territory left. So much has been taken over by huge companies, it's difficult to find a niche or market opportunity to feasibly "disrupt". It feels like the megacorps have already cleared the fields and claimed the land and the rest of us entrepreneurs have a choice of: i) work for the megacorp that owns everything, or, ii) try to find solace in the few options left.
It's not healthy, and no matter what the consequences will be, I cannot envision an outcome where any of this leads to positive things. But maybe it's just my own "bias" that I have positive associations with not being a subject to a hive mind of centralized power and control.
I think we're already here, or closer than a lot of people realize.
I worked on an alp in the mountains for a month, doing everything from cleaning the stables, milking cows, herding them on steep mountainous terrain, cooking, feeding the sick animals. I had a 16h work day; all while earning almost nothing (I did it to know what it means to work in tough situations). My boss and his family hardly had anything left when the month ended.
I don't know how to fix this, but it's important.
We know the US produces way too much food than it needs. We know that US food is artificially kept cheap due to subsidies. Would higher food prices lead to more starvation in other countries? More hunger in the US? Or would farmers around the world step up and compensate for the deficit? Would it perhaps lead to farmers in lesser developed countries being better supported and lead to economic growth in those countries?
But if you cut subsidies, what will happen in the short- to mid term is more farmers going bankrupt and an increase of imports. Would it lead to economic growth in those countries? Hard to tell. Usually what happens in an industry that grows is competition which will lower prices in the mid- to long term. So maybe more farmers would be well off by finding jobs. I don't know. Good thought of yours, though.
I think the first thing(s) that should be done is eliminate farm aid to farms that own more than X acres, or are owned by parent companies owning more than X acres of land. Significantly roll back the DMCA. Third, would probably be to re-secure those loans on better terms. It's a national security issue at its' core.
If you’re looking for something to invest in it’d be AgTech with a focus on these new farmers as users.
Because what I'm seeing is a pivot in exactly the other direction. Near urban centers you're seeing more 'specialty' farms like you spell out. These farms cater, almost exclusively, to the wealthy.
But out in the breadbasket, there has been an absolute crush of consolidation. Fewer, larger farms are producing the goods.
I argue that we're going to see (or rather are already seeing) the wal-martization of farming. Few, HUGE scale producers who work at a scale that is just so much larger than what we have now they can still turn a profit.
Small scale production is going for specialty products, at higher prices, to specialty consumers. Think of a local vegetable farm that sells to farmer's markets, or a goat dairy that's making chevre to sell at specialty groceries in a 50 mile radius of their farm.
On the other hand, gigantic companies are increasingly controlling land used for industrial agriculture. Near me, a recently incorporated LLC (aka holding company for investors) just paid $171-million for 14,000 acres of irrigated farmland in Eastern Washington [1]. At that scale, there's simply no way that the traditional "small family farmer" can compete with industrial ag.
The few that have near me, are large families that essentially operate like a business. They've managed to hold on to their traditional farmland, and then expanded into what are essentially family-owned large-scale industrial ag operations. Good for them, but they're the strong minority.
[1] https://www.heraldnet.com/business/big-farm-deal-171m-for-14...
The one-off farms are great for those that can spend extra but they are not the ones feeding America right now.
* Old huge farms employing fewer and fewer people, replacing more low-skill work with machines, and possibly driving prices on some crops down.
* New smaller farms, employing a small number of people, made profitable by the extensive use of the (semi-autonomous) machines, catering to specialty / niche markets, perishables, etc.
Huge mono-culture fields may, or may not, be split to smaller, more diverse fields, as agriculture machines become more advanced and smart. A machine that allows for techniques that let you spend less on pest control could be attractive from a purely economic POV.
Since the cost of labor is high, neither will drive agricultural employment up. They will likely still bring more variety, and more sustainability due to technology allowing nicer practices.
Permaculture, maybe? I hope you’re right.
There's a bit of a myth about how farming should be, or was, but it really just had some booms here and there and then busts rather than any real golden age that lasted very long.
As for boom and bust - agriculture is like investing. You may not make much in a year, and you may lose money in two or three, but over the course of your lifetime, you accumulate wealth (land) and prosper. The issue, at least in my area, is that property is just prohibitively expensive. I am by no means in a hot area of the country, but the price of an acre of land has almost tripled in the last 15 years.
Also - that so much of our food is produced by so few individuals is an incredibly recent development, like less than 40 years recent development.
I'm not really sure what all that adds up to, but I'm sure it's something.
For most people in most of history, agriculture was subsistence. A bad year means you go hungry and possibly die. Far from being a stable source of food, in countries such as China, there was pretty much always some region that was undergoing food scarcity (famine) at any given point in time.
There's a dangerous mentality which comes across farmers frequently. The neighbor is getting out of farming for whatever reason and putting their land up for sale. Land is typically held for decades, and having any of your neighbors selling their land may never happen again in your lifetime.
So farmers end up paying ridiculous amounts of money for land which will give them a very small positive, or often a negative, return on investment.
And good luck if you want to get into farming. The capital expenditure is ridiculous, even just for 40 acres of land. Medium quality farmland was running $6,800/acre in 2017. [1] $272,000 get you 40 acres without buildings, equipment, animals, seeds, a well, etc. It's so easy to hit $500k even if you went with used equipment. If you tried this, you'd probably want to build your own brand and get people willing to pay a significant premium for your product rather than trying to grow commodity products.
[1] http://dreamdirt.com/blog/iowa-farm-land-land-values-up-2-in...
The huge companies get involved and take the price for 40 acres from a relatively sensible $120,000 (what I purchased at 10 years ago) to $750,000+.
If you can't work at a scale that is so much larger than anything a family farm can, then you're priced out immediately. And if the farming mega-corps are not interested, it's because the ground isn't fit for row-cropping and the mega-corp nationwide hunting trek outfitting companies will double your bid without blinking.
It's a sad state of affairs, really. The only people who have enough money to play the game are either corporations or are in their 90's and bought the ground when it was $30/acre.
I don't think it's sad, more efficient users of resources are bidding them up which is exactly what they should be doing. The idea of a small farmer is great and has a lot of American nostalgia, but in general a giant company that produces much more food on the same land is way better for the country as a whole. It gets messy with subsidies, but the idea of more efficient players replacing small timers is how we keep upping productivity year after year and get richer as a country.
A handful of corporations are gaining massive influence over our political and legal systems. The "small farmer" is precisely what our country was founded on and was considered our strength. It allowed us to be something closer to a true democracy as opposed to the functional oligarchy we're running at this point. You're not an independent citizen if you have to depend on an employer to keep you fed, sheltered, and healthy.
It's only more efficient if you consider "generation of theoretical GDP" the ultimate badge of efficiency. If it's sitting in some banker's pocket, extra productivity doesn't really benefit anyone.
It is more than nostalgia. It's a strength. What we're seeing in SO many areas is just a race to the bottom.
The thing is this won't cause one acre of farmland to go unused it just means other farmers will have larger farms.
The type and amount of data they have is startling. The issue is there are so many variables that are uncontrollable, or unpredictable in the time frame of a year or an entire growing season. These include weather and climate, and political climate across the world.
When a small-time farmer from my neck of the woods can sell directly to China, he has to worry about our politics and theirs, as well as the weather here, there, and at all stops between.
So, in other words, it's easier to predict what will be worth more, but no more easy to predict what will grow or what will sell well in 2 years or so. Add in soil conditions and requirements and costs, and you have a complicated picture.
Not to say I disagree with incentivizing food production at home altogether.... it's just such a mess.
See http://www.uscourts.gov/services-forms/bankruptcy/bankruptcy... for ex
I was alurred into “stability” by staying with the corporation that aquired a startup I was working for. It was my decision, but now I regret it.
I’ve been working tirelessly to transition back into being independent, but now I too have a family to support and the current state of health care coverage in the US is one of the biggest risks I see.
Interestingly, I’ve seen more entrepreneurs lately from countries like Canada and Norway who have founders that aren’t as stressed when compared to here in the states. I don’t have any data points to prove my hypothesis, but I often wonder if we are doing a disservice to ourselves here in the US. I guess only time well tell.
http://dreamdirt.com/blog/iowa-farm-land-land-values-up-2-in...
the need for farming hasn't dropped, it's the desire/ability/money to do it that is. Small farmers are going away and corporate farming is taking over.
Who buys them? Maybe big agro? Or maybe convert it into building-approved land? Report doesn't exactly say as far as I can tell.
What percentage of farms are going bankrupt? 70 farms seems like a very small percentage.
How many new farms started?
Not because China is more structurally sound, because its not, but the opportunities - partly because of the inefficiencies - seem massive on mainland and greater China
I just want to know what people think about anything, out there, from their perspective.
I was in Australia and a young blond woman in college was on her social justice kick, talking about how horrible the US must be, and it was funny to me because her perspective was so limited to civil rights abuses and valid healthcare and education inequalities.
I told her "yeah but none of that would apply to you".
Because she doesn't know about the socioeconomic component, and the heavy correlations to the demographics of socioeconomic brackets, and the history of those demographics, along with the accessibility and strength of legal defense, if you can afford it.
and I bet China is the same way or similar, especially if you come to the environment with a bankroll already.
< End Tangent
Think about coffee. It’s a commodity. But more people are spending $4-5 on a single cup instead of $4-$5 on a pound of grounds. Spending power does not match price change.
A good historical case study is Standard Oil. In an effort to stabilize prices and reduce peaks, Standard oil established last mile delivery for refined oil. People bought Standard Oil at the grocery store. Standard didn’t start buying oil wells until 20 years into the company after they had pressured prices down to the bottom.
I'm not sure how anything about brands could apply. Any "brand" ends at the grate where you dump the grain.
Similar with other ag products. Remember how we just had that E. Coli outbreak in lettuce and nobody had any idea for several days where exactly it came from, so they had to broadcast the warning across the entire nation?
https://unctad.org/en/pages/newsdetails.aspx?OriginalVersion...
An oversimplified explanation would be that each buisness has an incentive to undercut their competitors and by doing so decline the profit margins for everyone.
edit: /u/WillPostForFood points out this report ends prior to the tarrifs. My bad. Their effect will be in subsequent reports.
A gallon of 2% milk in Canada is about double the price in the US. I think its reasonable to assume that if Trudeau can't bring retail food prices down and resolve this dispute he's going to have to go back to surf boarding and substitute teaching in 2020.
There are a lot of other factors here too, one being that during the 70-80s American agricultural legislation focused much more on large scale farm operations than Canada and as a result it is much harder for small farmers to get by in the US.
Regardless, even with all other factors being equal dairy costs would still be slightly higher in Canada since due to generally higher taxes and higher farm wages.
Lol, nothing like downplaying the achievements of the literal leader of a country ( one of the most successful possible positions for a person ).
The next report may be a doozy, then.