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Are we witnessing death, rebirth of agriculture?

Could we start referring to 2020 as the beginning of post-modern agriculture?

At least the death of smaller, independent family farms? Are we entering the era of large, corporate-owned ‘agri-businesses’? To be clear, I’m not talking about family farms that have incorporated for tax purposes. Let’s concentrate now on the traditional family farm, that close-to-mythical place run by a family, extended at most, and handed down from one generation to the next. Urban folk see an imaginary little house on the prairie with a big round barn out back, a white picket fence keeping a few chickens close by, maybe a pig or two in the barn.  Of course, a few Holsteins wandering the pasture complete the Norman Rockwell inspired picture.

To make the point, over a century ago, we saw the death of small companies dealing with that techie curiosity known as electricity and the rise of General Electric. Small automobile companies died off by the hundreds and the few remaining coalesced into a giant known as General Motors. Is an agricultural mammoth to be called General Farms just a few years away?

Could we start referring to 2020 as the beginning of post-modern agriculture?

The State of American Agriculture

Chapter 12 bankruptcies, a federal program that allows family farmers to restructure their finances to avoid foreclosure, are at an eight-year high. Almost 600 farms filed in 2019, up from a low of 361 in 2014. We’ve lost more than 5,000 farms in the decade that began in 2010.

To borrow a phrase that’s currently hot, “That’s not sustainable."

The numbers are even more grim than those statistics show. The U.S. Department of Agriculture says a third of projected net farm income in 2019 came from “government aid and taxpayer subsidized insurance payments," not from sales of farm-grown commodities.  Wisconsin was the hardest hit with 57 bankruptcies last year coming on top of a devastating 49% drop in dairy farms in just 15 very short years.

The net/net? The only thing standing between most farms and complete financial disaster is Uncle Sam’s current generosity which might be greatly reduced in 2021. The proposed budget calls for cutting almost one third of the budget for a program that subsidizes crop insurance, a critical support for corn and soybean farmers during extended periods of low prices, such as the one currently in effect

Without artificial props, the wolf comes to a wide-open barn door and strolls through to inspect his new domain. Without huge investments in American farming by foreign investors from countries like Brazil and China, the great agricultural Midwest could become an empty space abandoned by thousands of farmers, an exodus that would rival the Dust Bowl-forced emigration of the 1930s.

Compounding the issue is a series of almost unprecedented weather disruptions that has visited fire, flood and drought on the heartlands of American agriculture. Throw that on top of a tariff war that’s seriously wounding international trade and the result is farmers wrestling with what to plant, when to plant and what to say to their favorite lenders.

The next 10 years

Want more gloom and doom? The average age of the American farmer is at an all-time high. The men and women behind the plow and feeding the cattle are quickly approaching the usual retirement age, many have already seen that number come and go. And let’s set aside the notion that the old centennial farm can be passed down to a new generation, eager to pick up the reins and carry on with a hallowed tradition?

Several generations have come and gone, forgetting their ag roots to try their luck in the cities. More recent generations, faced with the prospect of 7 day, 14 hour weeks with little or no breaks in order to make an uncertain buck now-and-then, are stampeding toward the bright lights, big city in larger and larger numbers.

Their response to Mom and Dad asking them to take over? “No thanks.” They are not seeing an acceptable future on the farm.

Admittedly, quite a few are still eager to remain in the lifestyle and some who have left are coming back. The trend, though, is definitely depressing. Last year, Business Insider reported “While farmland may stretch far and wide, farmers and ranchers themselves make up just 1.3% of the employed U.S. population, totaling around 2.6 million people. Today, there are about 2 million farms in operation in the U.S., a steep decline from 1935, when the number of farms peaked at nearly 7 million.”

It was only a few years ago that the thought of just 2% of Americans involved in farming was a depressing though. Think again. By the middle of this decade, we will be staring hard at 1%.

Is this the inescapable future?

Fewer hands, of course, mean more automation and the major farm equipment companies are way ahead of you. In fact, the ‘futurization’ of your tools of the trade is way ahead of almost very other business. Self-driving vehicles?  John Deere beat Tesla by years. Robots? I think the auto industry might have led the way but ag is catching up quickly as it struggles to find replacements for harder-to-find field hands. Computerized record keeping (think Quicken) replaced traditional pen and paper ledgers well before the turn of the century. With the ever-tightening border drastically reducing the number of field hands, the desperate need for assistance is compelling. In fact, Goldman Sachs thinks this fast-growing high tech ag market could reach nearly $250 billion in just a few years.

Goldman Sachs is predicting an incredibly large investment, considering the economic pain felt by farms of every size. As farmers and ranchers scramble to get 2020 financing from their friendly neighborhood banks, they’re finding less friendliness as most bankers will tighten loan requirements. Last year’s weather and trade disruptions have made them a little skittish.

To borrow and reword Volkswagen’s famous ad pitch, just ‘sign and go’ won’t cut it, anymore.  And that means deeper pockets will be required to gain access to ‘other people’s money,’ further pushing the little guy over the financial cliff.  The inevitable conclusion? Larger farms, more automation, fewer participants.  It’s time to replace the world ‘agriculture’ with ‘agritech.’

That Norman Rockwellian vision of the idyllic small farm that urbanites romanticize? Buy a print; the concept, if it ever really existed, is just a myth.

 

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