Can the family farm survive?

[katrina]

Here is my two cents worth:
Rent in this area is $30.00 to $35.00 dollars an acre.
A place next to us sold for $600.00 an acre. It's grazed to the nubbins and has quite abit of cheat grass on it. The irrigation sold for $1600.00 an acre. Pencil it out anyway you want...
Price machinery. 1982 4440 are bringing almost new what they sold in 82.
How about gas, propane, steel, health insurance, corn going in and corn going out. wheat, cattle,(the only bright spot), fertilizer. And for what?? To say you are a farmer or a rancher....
Sandhusker is right and so is OT. IMHO.

 

[Faster horses]

And OT, what you said is what made this country great.

Now, sad to say, we have a very spoiled and lazy generation coming up. The work ethic is not there. It isn't their fault. WE DID IT TO THEM. Handing them everything, letting them lack for nothing. They have never had the feeling of achieving something because we took that away. We gave them so much, we gave them too much...

Well, I'm getting on my soapbox again. But I am worried about those coming up. We can't keep people holding jobs anymore. They don't want to do a job, they just want a paycheck. Heck, young people are moving home in the highest percentages ever. Why? Because they haven't been trained to make it in the world, the big, bad world.

 

[Econ101]

Boy, I wish all strings could be this good. There are a lot of problems with the farm community and they are not really being addressed because the right questions are not being asked. Some of the problems have been put on this string.

From an economist's point of view, my biggest problem is with market manipulation and how that takes value out producer's pockets. A cheap food policy (so everyone can get enough food to eat) only distorts the amount of income to producers. We need to look at the policies coming out of our government and see if these policies are in the best interest of ECONOMY, not in the best interest of campaign contributors (Tyson, Cargill, Con Agra, Monsanto, ADM). Producers are as much a part of the economy as they are. Their interests need to be taken into account. Just giving them a handout is not the solution. Making sure that their interests in the economic game is. As rkaiser points out, they have a multitude of people in our capitals trying to influence policy to their ends. Producers have only the good will of polcy makers to do the right thing up in Congress and in the regulatory agencies. They have been infiltrated by the interests of the packers (large corporate campaign contributors) masquerading as consumer interest. It is a lie.

Our rural communities are suffering from these policies. Look at any rural America or Canada and you can see this. The bottlenecks of our value are in the hands of people who want us to compete but do not want to compete themselves or they want to find ways to compete unfairly to drive honest competitors out.

The cattle cycle of producing more supply is a long term cycle. It is ripe for manipulation because of this. While packers want to argue that demand is weekly, they know it really is not. They have the inventory and the captive supplies to make sure it is not weekly. Cryovac and other technologies have allowed them more bargaining power over the manipulation of that supply and inventory. They argue that they must be allowed to be "efficient" by securing enough supplies to run the packing plants continuously through captive supplies and other means. This only takes away the only bargaining tool that producers have--limiting the supply to the plants and making the plants pay more for the cattle.

The little mechanism of formula pricing and the cash market was a really good scheme for taking advantage of the market supply and demand characteristics so they could swing the cattle markets to their advantage. It is complicated enough so people can not easily argue against it without a real in-depth discussion and full of so many diversions and illusions that seem to make sense. Then on to the hill where the decisions get made. Producers are totally outnumbered there with corporate lobbyests and have little chance other than a few congressmen and senators who know the industry well enough to know what is going on and are willing to stand up and not be bought off. After Donna R. resigned, we got the inactive, incompetent, can't win a case and is promoted anyway, JoAnn Waterfield as acting director of GIPSA. A Washington insider!!! Their only advancement in D.C. is through pleasing committee chairs who have been bought off by industry and jump to help their campaign contributors interests. Now we have an NCBA member that probably doesn't know the issues well enought and does not know the limits to his power really makes him a puppet anyway.

I will shortly be posting an example of this corruption of the producers by the "studies" (if they are still available on line) that come out of the land grant universities. Stay tuned, Jake.

 

[Jason]

I'm still waiting for someone to tell us how big business is responsible for higher rents etc. It still is ranchers competition even if it is caused by land being sold to hunters etc.

Oldtimer said some corprations buy land, but usually oil companies, or for hunting like he mentioned. Has Tyson, Cargill, Monsanto, Zeneca or any of the others bought land? Most of the land is being developed for housing or recreation.

Those hunting reserves actually can cheapen pasture rent depending on the corp. A pure hunting reserve needs someone to look after it most of the year so the owners can hunt for 4 weeks.

One other question is what is in it for big agri-business to drive producers out? Monsanto for example, if they break farming who do they sell chemical to? Tyson has been buying cattle, but feeders only. How will they procure feeders if there are no cow/calf operations left?

 

[Econ101]

I'm still waiting for someone to tell us how big business is responsible for higher rents etc. It still is ranchers competition even if it is caused by land being sold to hunters etc.

Oldtimer said some corprations buy land, but usually oil companies, or for hunting like he mentioned. Has Tyson, Cargill, Monsanto, Zeneca or any of the others bought land? Most of the land is being developed for housing or recreation.

Those hunting reserves actually can cheapen pasture rent depending on the corp. A pure hunting reserve needs someone to look after it most of the year so the owners can hunt for 4 weeks.

One other question is what is in it for big agri-business to drive producers out? Monsanto for example, if they break farming who do they sell chemical to? Tyson has been buying cattle, but feeders only. How will they procure feeders if there are no cow/calf operations left?

There is nothing in it for them to drive all the producers out. They don''t want to do that. They want to capture all of the value for themselves. The additional "swing" they put on the cattle cycle put a lot of family farmers under that may not have gone under had the prices not been depressed. They are playing the international markets with different cycles to capitalize on the difference in oscillations for themselves at the detriment of domestic producers and domestic competition not set up for globalization and importation of substitutes.

As far as businesses being responsible for higher rents, that is a little stretch. There is a little problem with the wealthy being able to write off some of their expenses to the farm. It decreases the tax base from the wealthy and increases the tax burden on the poor. It is another transfer of wealth (in the form of taxes) from the poor to the wealthy. In addition it allows for business models that produce farm products not necessarily for the return of the farm products. The by-product is farming that doesn't pay but also control of land base in the hands of the wealthy who can write off expenses (and therefore the policy). This and the economies of scale it takes to stay in production is one of the reasons for proposed limitations for govt. payments. If the wealthy want to subsidize agriculture, why does society want to pay them govt. payments when production/price doesn't work out?

Jason, rents will be what the market determines. Price you get for your product should also be a factor of markets (uninfluenced by market power). Sometimes you get into something called "sticky prices".

 

[YoungFarmer]

Bro-

"The other option is to have a $40 000 dollar a year job and raise your 150 cows on the side. THat is where I see the cattle industry heading, and looking around me, most people operate this way - very few profesionals."

I think you are very correct in this statement Bro, but I truly believe the number of young farmers willing to work a fulltime job and calve 150 cows on the side are getting few and far between at least in our area. If I am going to hobby farm I will do it with 2 horses and 1 or 2 pet cows.
Don't get me wrong, I worked hard on the farm growing up and paid my own way through university, but why would I want to work 70 or 80 hours per week. (and not many ladies are willing to do that either) If I could farm full time and make 30 000 dollars a year believe me i would do that. Their is nothing beter than owning your own business and being your own boss.

My parents are the older generation that all they know to do is work and feel more secure with their money in land than invested in GIC'S even if the land does not go up in value.

 

[Econ101]

Bro-

"The other option is to have a $40 000 dollar a year job and raise your 150 cows on the side. THat is where I see the cattle industry heading, and looking around me, most people operate this way - very few profesionals."

I think you are very correct in this statement Bro, but I truly believe the number of young farmers willing to work a fulltime job and calve 150 cows on the side are getting few and far between at least in our area. If I am going to hobby farm I will do it with 2 horses and 1 or 2 pet cows.
Don't get me wrong, I worked hard on the farm growing up and paid my own way through university, but why would I want to work 70 or 80 hours per week. (and not many ladies are willing to do that either) If I could farm full time and make 30 000 dollars a year believe me i would do that. Their is nothing beter than owning your own business and being your own boss.

My parents are the older generation that all they know to do is work and feel more secure with their money in land than invested in GIC'S even if the land does not go up in value.

Just look at GM and some of the airlines recently. By giving that 40 k a year (it does cost more to live in the city) and not keeping their promises of retirement benefits, your parents were probably better off with their decision. Large corporations with retirement promises that are not fully funded are just another invester scam on the working. They get away with it with a lax or influenced government. No wonder everyone is mad at the current politicians. They are not doing their jobs, get paid real well, and have a golden parachute. Maybe we should all be politicians instead of what we do for a living.

 

[cowzilla]

Faster Horses;[/b] I don't think young people are lazy , they are just better educated and have a lot of good options. When I was 18 farming ,cattle or grain had come off about 10 good years. There was no question what I wanted to do. When my sons turned 18 we had had about 10 poor years. Can't blame them for looking at other options. Just as an example; My brother and his wife's income is more than my Gross income from 150 cows. They live in a company house ,drive one company car and have there utilities paid for. You really got to love this Job :!:

 

[Anonymous]

Econ101-"Just look at GM and some of the airlines recently. By giving that 40 k a year (it does cost more to live in the city) and not keeping their promises of retirement benefits, your parents were probably better off with their decision. Large corporations with retirement promises that are not fully funded are just another invester scam on the working. They get away with it with a lax or influenced government. No wonder everyone is mad at the current politicians. They are not doing their jobs, get paid real well, and have a golden parachute. Maybe we should all be politicians instead of what we do for a living."

I just saw where GM has costs built in their vehicles that amount to around 2500? per automobile in order to honor their retirement commitments and such. Toyota by comparison had 400 per car built in to their costs for the same. That and competition goes to show that business has to stay on their toes in order to stay competitive. See any comparisons to the beef industry Econ101? I need to go, more later.

 

[Econ101]

Econ101-"Just look at GM and some of the airlines recently. By giving that 40 k a year (it does cost more to live in the city) and not keeping their promises of retirement benefits, your parents were probably better off with their decision. Large corporations with retirement promises that are not fully funded are just another invester scam on the working. They get away with it with a lax or influenced government. No wonder everyone is mad at the current politicians. They are not doing their jobs, get paid real well, and have a golden parachute. Maybe we should all be politicians instead of what we do for a living."

I just saw where GM has costs built in their vehicles that amount to around 2500? per automobile in order to honor their retirement commitments and such. Toyota by comparison had 400 per car built in to their costs for the same. That and competition goes to show that business has to stay on their toes in order to stay competitive. See any comparisons to the beef industry Econ101? I need to go, more later.

Jake, if we allow ourselves to continually be driven down in price we lose. Lower prices do not make farming any more profitable. In the GM and the airlines cases, the companies did not put away the money necessary for the retirement costs. They just let them ride on the company. GM lost market share due to the market changing (high gas,lack of low mileage vehicles and little innovation). When they lost market share, the costs they put on the workforce that were costs made previously doubled. Do you see any comparisons to Social Security?

Toyota has not done this kind this kind of fraud accounting plus they have expanded market share. Way different scenarios. Investors want labor and producers to fall into the arguments they sometimes make but they need to be closely looked into before you buy into them. GM had bad management and lost market share. It is not labor's fault for their bad management. The big investors pulled out way before you knew any of this.

Eventually the supply of cattle will come back up with these prices and the prices will come down. They should not come down due to market manipulation, however.