The Center for American Progress has put out a report entitled: A Fair Deal for Farmers. You can find it at: https://www.americanprogress.org/issues/economy/reports/2019/05/07/469385/fair-deal-farmers/.
This report came to mind the other day after visiting with a farmer west of here who is trying to implement some new practices into his commercial corn, seed corn and soybean operation. The farmer is wary of straying too far outside the “conventional system” because of the limited market options he sees and because of some stipulations that are set by the companies and relationships he is currently tied into. He is not unlike many farmers I speak with during interviews and at farm events I attend.
Each farm is historically designed and shaped by many factors. Many farms and ranches have been heavily influenced by historical policies and trends, many of which have been seemingly outside their control. However, other farms and ranches have attempted to steer clear of too much reliance on governmental programs or they simply could not benefit from them as greatly as others, so they were forced to look elsewhere to make their farms financially work for them.
Knowing the history, institutional structures, polices and regulatory environment that a business works within is important for understanding where one has been and where one could go. While we want to have a “fair deal” for any business, it is also important that we be informed when working towards fairness for everyone in the system, not just a few. Imbalance in our agricultural system creates a ripple effect of imbalance on all levels of our nation.
Here are some interesting highlights from the report that outlines some of this current imbalance and why we need to be looking at new strategies to bring more people into the marketplace, more diversity and most importantly more control of the destiny of our nation from the grassroots up. As we see farmers taking their own lives, facing depression or seemingly experiencing fewer alternatives all around us, there is no better time to become more educated and involved with our futures. There are options, but we won’t find them looking in our own backyards, local areas or even our own state at times.
The report states, “While increasing concentration is not uniform across all agricultural commodity markets, there are some that have exhibited alarming rates of consolidation. For example, from 1986 to 2008, the four-firm share of animal slaughter nationwide increased from 55 percent to 79 percent for cattle, from 33 percent to 65 percent for hogs, and from 34 percent to 57 percent for poultry. The concentration level of processing varies from market to market. While this report focuses on pork processing as a case study of concentration and the threat that possible monopsony power poses for hog farmers, there are other markets that are at least as concentrated as pork processing. For example, the four largest wet corn millers and soybean processors control 84 percent and 82 percent of their respective national markets. Similarly, four grain traders control the movement and allocation of nearly 73 percent of the world’s grain. The beef packing industry has an astounding four-firm market concentration of 82 percent. Meanwhile, the top four specialty canners account for nearly three-fourths of the market for goods such as beans, baby food, and soups.”
The report also outlines, “In 2017, 41.8 percent of midsize family farms – family farms with annual sales between $350,000 and $999,999 – had an operating profit margin of less than 10 percent; the USDA (United States Department of Agriculture) considers a farm with a margin of 10 percent or less at high risk of financial problems. The rise in farm bankruptcies in recent years, with seven states hitting their highest rates of Chapter 12 filings in a decade, illustrate the precarious economic condition of America’s farmers today.”
The farmer I spoke to has legitimate concerns based on his experiences and the only options he believes has has available to him. The future can be shaped differently – but doing this will take farmers like I spoke about above, immersing themselves and learning from, a sector of the farming and ag business community that has chosen to step outside archaic models. The neighbor that may have some great insight for you on how to make it work may not live next door. Knowing where we have been, can also help us more clearly unravel the puzzle so we can envision and implement a better way.