55 Years And Counting From The Tractor Seat By bill whitman Six-tenths of 1 percent. That’s right, six-tenths of 1 percent. That’s the percentage of the population of the United States that are farmers or ranchers. In the grand scheme of things, that number doesn’t carry much of a voice in what happens in our industry. In my view, it’s also why, despite the $555 billion in gross revenue produced by agriculture in this country, we are the last and least to benefit out of that very big pie. Let’s add another factor to this equation. The USDA says we will lose 25 percent of the farming operations this year. Now the percentage of the population drops to roughly one-half of 1 percent. Several times I’ve mentioned that agriculture provides the first and most important things essential to life. Food, clothing and shelter. We are one of very few businesses that have no way to set the prices we receive for our products. Instead, we are subject to controls that are established in the ancillary trade of our economy. The government uses our products in negotiating aid with foreign countries, so they have a vested interest in influencing crop prices. Countries across the world buy mass quantities of our products, but their pocketbook is dependent on the world economy. Locally, processers, wholesalers and retailers have profit margins which they protect with zeal. None of these factors seem fair to the farmer and rancher who invest everything they have, every year, without a guarantee of breaking even, much less losing money while continuing to meet their responsibility to feed the country and some of the world. Unfortunately for the consumer, in order for the farmer to stay in business, the costs in the grocery stores will rise. A current example is beef. I have to believe that the price of beef will ebb minimally, but I have the feeling that lower prices will not return. So, the livestock guys are making money, but even as livestock producers are making money, I encourage you not to take your eyes off the ball, inputs are rising as middlemen are focusing on taking a bigger piece of the beef pie. I read somewhere that economists believe that government subsidies will increase 3-400 percent this year in order to keep farmers in the game. I keep thinking that if we as a country can embrace “fair-trade,” the profit margins will provide a reasonable income and find a consumer balance we can all live with. There’s a hard lesson for the government and consumer to learn if the exodus from agriculture continues unabated. The lesson is that there is a reason that six-tenths of 1 percent farm or ranch – 99.4 percent of the population can’t or won’t do what is required to farm and ranch. The risk, the hours, the intangibles, and the toll it takes on our bodies, finances, and families without being able to depend on a paycheck after paying all our bills is something very few men and women are willing to do. So, the question becomes academic, how much loss can we absorb without having to face the inevitable? The fact is, farmers and ranchers need to know what that number is. With the ever-changing lender requirements we need to know that nothing is guaranteed. You may have a great relationship with your lender but if their matrix changes, you will find out just how little authority they have. So, you will want to always have “Plan B,” even if you never use it. Throughout my life, I have thought that farming as an industry would never change. I mean I saw over $10 beans in 1978, what are they today? So, despite inputs increasing many, many, times over, the price gravitates to the same place as 47 years ago. So, for all these years, farming as an industry (economically) has remained static. Now I am reminded of a conversation with an agricultural economist from Iowa in 2008. He said two things that have stuck with me. First, that the national debt, ignored by most of the population, will have a “reckoning.” Second and more specifically to our business, you can’t look at the gross numbers of income but simply focus on the margins. For just the second year of this century, we must look at margins that are losses. But because, even in the good years, the margins are slim and the gross dollars so high, losses are very difficult to overcome. For these reasons, I suggest that despite the small number of farmers and ranchers left to our country, how we are paid for our production will have to have some guarantee of price sufficient to break even, including providing a living wage for our families. I fully realize that there are different types of crop insurance that do this to some extent, but I have the feeling that we will see this streamlined in the very near future. The bottom line is that “times are a changing” and we must prepare to make adjustments at a much quicker rate of speed than ever before. IIndianaAg@bluemarble.net |
