20 June 2019

Why Do People Continue To Farm?

Why anyone chooses to be a farmer is a mystery to me, and indeed, few people not born to this life do so.

Your income varies wildly from year to year due to factors beyond your control like weather and prices for farm products which vary tremendously. Hail storms, tornados, floods, droughts and wildfires destroy crops and farm facilities with some regularity, and far less notable weather events can seriously impair how well your crops turn out. You are particularly subject to the weather if you are a dry land farmer in the arid high plains, as many of my relatives in Colorado are, who can't depend upon reliable crop irrigation from high priority water rights.

Climate change, eroding supplies of top soil, and increased prices for equipment fuel and petroleum based fertilizers and pesticides as we march every closer to peak oil (that has been staved off temporarily with fracking at a high environmental cost) will make reliably producing ample harvests even harder for the next generation.

You have to be extremely productive to be competitive, and will see your income decline unless you can keep up with this productivity growth. You are directly competing in a national and oftentimes international marketplace against literally everyone else in the industry. And, increased productivity in the industry from technological advances (also e.g. GPS guided self-driving tractors) means every generation somebody's children has to get out of farming and your small towns continue to depopulate a little bit more. 

With current farming technology as actually practiced in the United States about 10 acres of land (40,000 square meters) is used to produce food for each average person. Globally, we use about a third as much land to product the same amount of food as we did fifty years ago, and agricultural productivity per land area has increased steadily year in and year out.

This represents are remarkable improvement in agricultural productivity in the last half century or so. Between 1950 and 2000, during the so-called "second agricultural revolution of modern times", U.S. agricultural productivity rose fast, especially due to the development of new technologies. For example, the average amount of milk produced per cow increased from 5,314 pounds to 18,201 pounds per year (+242%), the average yield of corn rose from 39 bushels to 153 bushels per acre (+292%), and each farmer in 2000 produced on average 12 times as much farm output per hour worked as a farmer did in 1950. 

This isn't a new trend. The number of people employed in farming as a whole has declined every decade since the United States was established to less than 2% of the workforce today. In 1820, 72% of of U.S. workers were engaged in farm occupations; in 1840 it was 69%; in 1860 it was 59%, in 1880 it was 57%, in 1900 it was 38%, in 1920 it was 27%, in 1940 it was 17%, in 1960 it was 6%, in 1980 it was 3%, by 2000 it is a little over 2%. The actual number of people in farm occupations has declined from about 2.9 million in 1820 to 2.1 million in 2000. 

Populations in farm counties have steadily declined as well. For example, according to forecasts from the state demographer in Colorado (as of 2007), every rural front range county except Morgan (county seat Fort Morgan) and Logan (county seat Sterling) will see its share of the state's population decline in the census in 2010, 2020 and 2030. The same forecast applies to most of the San Luis Valley. Most of the state's growth is expected to occur in the I-25 corridor (although Denver, Jefferson County, Boulder and Arapahoe County, all home to many landlocked central cities and first ring suburbs, will also decline in their share of the state's population), and in countries with tourism and mining driven economies.

It is challenging to be sufficiently productive even though your enterprise is exempt from a host of government regulations, including environmental laws (e.g. clean water, clean air and toxic waste disposal), safety regulations, land use regulations (including parts of some zoning laws and building codes), and labor laws (e.g. child labor law exemptions, worker's compensation exemptions for migrant workers and self-employed workers, overtime regulation exemptions, small employer anti-discrimination law exemptions, and family leave act exemptions).

You need an immense investment in land and machinery and annual consumables like seed, fertilizer, pesticides and fuels for the machinery, but do to the irregularity of your income, financing these purchases with debt is very risky. And, many of these investments could secure safe, steady returns that are quite respectable in non-agricultural industry investments.

You need a journeyman skilled tradesman level of expertise in multiple fields like engine repair and welding, you need a working knowledge of futures trading in the commodities markets and sometimes international trade as well (e.g. mink farmers I represented once sold most of the furs they produce in South Korea and Russia), you need enough accounting and business management knowledge to be self-employed, and you need a firm command of botany and zoology. You have to understand water law. You need to establish stable relationships with traveling migrant farm worker crews and specialized equipment providers that are hard to track down and can be impacted by immigration sweeps. You need to plan at least several years in advance (to make crop rotation decisions and figure out when to buy equipment). All of these skills and traits can command very good compensation in alternative careers in the non-agricultural work force.

You are likely to have to serve in elective office at some point because the number of elected officials per capita in rural areas is so high and a large share of all agriculture industry businesses are organized as consumer or produce cooperatives. 

You have to work long hours some of the year and to rise very early often. You usually have to work whether you are sick or hurt or not. A huge share of your days are lonely ones. Almost no other industry has higher rates in work related accidents that cause injury or death, and work related illnesses from chemical exposure.

You usually have to live in rural areas or small towns where you have inferior access to health care, poor entertainment and shopping options, and very limited and cash strapped options for educating your children. You don't have easy access to, or much time to spend in, the dating scene to find a spouse. Small towns tied to the agricultural industry have depopulated so greatly that few rural school districts can field full sized football teams any more because their schools are too small. Most rural school districts in Colorado have already resorted to teaching classes only four days a week.

Even so, many aspects of your life are subsidized by urban people (in policies that have a long history). The state pays an unusually large share of your children's K-12 education. Your postal service and phone service are provided at less than cost. So is law enforcement. Your property taxes are artificially low. The roads you use a subsidized by urban people who rarely use them. In some farm industries (e.g. corn farming) the average farmer receives half of his income (and farmers are overwhelmingly men) from government subsidies, farm loan bailouts, and government managed price supports (although this is slow tapering off), tariffs limiting competition, and crop insurance payments (in some more productive recent years this has been as low as 15%). Inertia and the structure of water law makes the marginal cost of water for farming much lower than for other uses in the arid West, which causes farmers to use water to grow crops and support livestock that they wouldn't if the marginal price of water was similar across industries.

I have little doubt that, but for these subsidizes the number of farms in the United States would plummet through consolidation, and the amount of farming done in marginal circumstances (like dry land farming in the arid West) would decline tremendously, and the first hints of this are underway. 

The writing is on the wall. Western water use is divided between high cost/high return urban water users, and low cost/low return irrigated farmers (many of whom wouldn't even make any profit without a combinations of crop subsidies, cheap water and off season jobs in the city). Where it has been possible to overcome the transaction costs involved in sales of water rights in the arid West, buy and dry plans have virtually ended farming entirely in these areas. As I noted at dkospedia, citing figures from sources current when I wrote it in October of 2004:
Urban users of water pay tens times a much per gallon as agricultural water users for water. . . . [I]n Colorado, 90% of water goes to agriculture, 7% to residential users, 2% to industrial uses, 1% to "stock water" and less than 0.5% to commercial users. . . . The two biggest demands that municipal water users in the arid West place on water are lawn watering (54% of residential water use goes towards landscaping) and watering golf courses (1 golf course used the same amount of water as 750 residential households, which is more than 2,000 people). Major industrial and commercial users (factories and car washes mostly) use a significant share of the rest of urban water. Other domestic and commercial uses (dish washing, showers, drinking, toilets, etc.) are a fairly small share of total water use in urban areas in the arid West. . . . [I]n many Western states the tourism value of fishing and canoeing exceeds the economic contribution to the state that comes from irrigated farming, the dominant use of water in the West. For example, in Colorado, agriculture contributes $700 million of net income each year to the state's economy, while boating, fishing and hunting contribute $1,050 million of net income each year to the state's economy.
In Colorado, as of 2004, fishing and boating were worth more to Colorado's economy than all of its horticulture combined. Farming and ranching combined accounted for just 0.6% of the state's personal income

There were just over 2.2 million farms in the U.S. in 2007 with an average size of 418 acres. But, most of them are marginal and account for only a tiny percentage of all U.S. agricultural productions. About 59.8% of farms sold less than $10,000 worth of agricultural products in 2007, and only 16.2% sold more than $100,000. Keep in mind that these sales numbers are gross, before the costs of seeds, fertilizer, pesticides, labor, fuel for farm vehicles, equipment, or land. Fewer than 400,000 American farms, each of which is much larger than the national average (although small farms do use a significant share of all farm land in the U.S.) are capable of supporting even a single full time farmer at much more than a poverty level.

The hard question is whether the old farmers are running mostly small unproductive operations (74% of farms produce just 3% of U.S. farm products on 31% of U.S. farm acreage and about 57% of all U.S. farm production comes from just 4% of U.S. farms on 19% of U.S. farm acreage), that will be easily absorbed into a corporate farming complex with more normal demographics, or whether the industry as a whole is careening towards demographic collapse. A large share of all U.S. farms fit into the first category and produce little of the nation's food. I don't know the answer to that question.

Even then, most farmers need to have at least one family members who has a permanent non-agricultural job to provide a baseline income and often health insurance, and most farmers without livestock are employed temporarily in the city (often in the construction trades) during the comparatively slow times when planting and harvesting aren't underway. Many farmers also supplement their income by making their land available for oil and gas wells, wind farms, and cell phone towers.

It is probably no coincidence that the vast majority of farmers are continuing family businesses started by their parents and grandparent, etc., benefitting from inherited land, inherited water rights, and some inherited equipment, skills learned as a child from family members and neighbors, and a non-economic emotional commitment to being a farmer that become part of your identity. And, indeed, in light of these circumstances, fewer people are becoming farmers:
In 1978, the percentage of farmers age 65 and over, and under age 35 were about the same, 16% or so each. By 2007, the percentage of farmers age 65 and over has nearly doubled to about 30%, and the percentage of farms aged under 35 has declined by about two-thirds to about 5%. The trend measured at five year intervals by the University of Iowa has been steady and unbroken since 1978 (and probably earlier). Just in the past five years [ed. from 2002 to 2007] the average age rose to 57 (from 55) and the ranks of the 75-and-up set increased by 20 percent from 2002 to 2007. The number of those younger than 25 has dropped by nearly a third.
There have been some bright spots for the agricultural industry. In the last decade or two (i.e. since the 2000 census) there has been a rare increase in the total number of farms as new organic farms and marijuana and hemp industry grows have started essentially new industries in parallel to the existing agriculture industry. But, those numbers aren't huge in the overall scheme of things.

Yes, everyone on Earth does need to consume agricultural products on pretty much a daily basis to survive. So, we will always need someone to farm and market prices for agricultural goods will always rise enough to keep enough farmers producing those agricultural products. But, that doesn't explain why particular people in particular economic situations continue to do so.

1 comment:

Tom Bridgeland said...

The concentration of farms in fewer and fewer hands is longstanding fed policy since at least the Earl Butts era during the Nixon administration. Price supports set at a level below what all but the lowest cost farmers can make set up a vicious cycle. Production steadily increases up to the point where prices are nearly always right around the subsidy price. In bad years less efficient farmers crap out and farms are bought by larger operations.
Without the subsidy production would rise and fall more in anticipation of higher or lower prices. More high price years would allow smaller farmers to stay in business.