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The Evolving Business of Farming

The sort of agriculture that surrounded us as we grew up fit a pattern that is now promoted by USDA and others who are into food nostalgia as "know your farmer/know your food." Quite literally, my parents knew many local farmers and purchased eggs or freshly butchered pork from some of them. As we recall, there was a so-called truck farm at the edge of town that grew sweet corn and other vegetables, and our mother was a regular customer when supplies were available during the summer.

Those 150-acre grain farmers of our youth may have made a living, but it was partially due to U.S. government farm programs that supported crop prices. However, even high crop price supports could not provide a living for the 150-acre farmer for long. A revolution in farm equipment produced a variety of larger machines and implements that raised productivity, but were increasingly expensive. Many small farmers simply could not produce enough on such a small area to support a family while at the same time acquiring the machinery and inputs necessary to compete with larger neighbors. At some point, he had to either expand the size of his farm or sell his land to someone else and leave farming altogether. Thus, the average farm increased in size as the number of farmers declined. The average farm in the eastern South Dakota county of our youth has by now probably grown to around 1000 acres or more.

Farming is like any other business that produces and sells goods and services. Its profitability depends on maximizing productivity, efficiency and economies of scale. This has often meant that the costs of production per unit are reduced when spread over larger amounts of land. However, many farm state politicians often bow to the concept of supporting "family farms," a term that has somehow been twisted into a synonym for "small farms." By the same token, the phrase "corporate farm" has come to mean any "large farm." The clear connotation is that small farms are good, but large farms are bad. In fact, only a very small percentage of U.S. farms are owned by corporations other than those that have been incorporated by the families owning them.

Critics of large farms are also usually critics of government farm programs which they accuse of promoting the growth of large farms at the expense of "family farms," because a majority of farm program benefits (critics call them subsidies) go to the large concerns. It is probably fair to say that farm program benefits helped finance the growth of many farms, but that was a trend that would have happened anyway. A growing urban population in the U.S. and around the world demanded increased food production at affordable prices. The only way to accomplish this was to increase farm productivity, and this required the benefits of economies of scale that larger production units could access.

There has been a campaign against big farmers, big grain handlers, big exporters, big processors and big food manufacturers and anyone else involved in agriculture seen as big by an ad hoc group of foodies, environmentalists and various doomsday forecasters. We will not go into all of their complaints and accusations here as they have been highly publicized and are well-known. However, we must ask what is wrong with an agricultural industry whose livelihood depends on supplying a growing population of consumers around the world with adequate food supplies as inexpensively as possible?


(This article was originally published in the 20 February 2014 issue of Ag Perspectives as part of the Common Thread column by Bob Kohlmeyer. Click here to find out more about subscribing to Ag Perspectives.)




WPI Spotlight

  • August 24, 2017
    During his presidential campaign, candidate Donald Trump often characterized the 23-year-old North American Free... NAFTA Renegotiation Begins
  • June 20, 2017
    Farmers in India want the Swaminathan Report recommendations implemented, including the suggestion that Minimum... Loan Waivers and MSP Issues in India