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Is the Second Farm Crisis Upon Us?

civileats.com

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Re: Is the Second Farm Crisis Upon Us?

#101
post #2

"A gallon of milk costs a farmer approximately $1.90 to produce, but in the last year, farmers have been receiving as little as $1.35 per gallon." If it cost more to make it than they are getting, why are milk prices not higher?

Setting aside the specifics of milk, there are situations where it is more economical to run a business at a loss than not at all.

Let's say producing a product costs $5 in fixed costs (interest, depreciation, etc) and $1 in variable costs (labor, raw material, etc), for total of $6 per unit. If you can sell the product for more than $6, you make a profit. If you sell the product for $1-$6, you lose less money than you would if you didn't sell it, because you have to pay those fixed costs even if you don't produce any units. You should only stop production if the price falls below $1.

Re: Is the Second Farm Crisis Upon Us?

#102

“We’re heading to a place where we don’t have farmers; we just have food production.” This. I don't know what the solution to this is. I have a small farm, and raise meat sheep. But it's very much a hobby. The problem is, though, that almost all of the other farmers in my area, the ones I meet at the feed store or the livestock auction, they're also hobby farmers. There is exactly one “real” farmer (meaning that it's…

> The economies of scale in agriculture have become so strong that there's no way to compete on price any other way. And people understandably don't want to double their grocery bills just to buy local. Isnt this the reason for barter communities; bater some of your meat for some other veggies... or farm products.?

I also own one of those hobby farms. My simple answer is, No. At my scale, barter is pretty useless. How many vegetables will you trade me for one pig? It better be a lot because I only have 6-10 pigs to barter every year. We have a lot of hobby farms around here. But they all raise animals. Nobody is doing potatos or cabbage. I mean we all do a few onions and tomatoes. But nobody is growing enough of anything that they could trade for half a beef.

When people want half a beef, they pay cash.

The old style barter systems require scale just like the OP said. That scale no longer exists. Everybody is either too small or too big. If you are small enough that I can barter with you, you don't have enough of what I need. If you are ADP, you don't have a human who can interact with me to execute a trade and you have no interest whatsoever in my goat.

Re: Is the Second Farm Crisis Upon Us?

#103

Earlier quoted context omitted.

Exactly, we are eating oil and gas. Once the spigot slows down, things get ugly real fast. This is going to make the great depression and ww2 look small in comparison. Buckle your seat belt, and grow unusual edible species. I don't even eat grains, humans aren't equipped to eat that.

Humans are very much equipped to eat grains, we built agriculture, and thus the whole of civilization, on top of cereal grains like rice, wheat, and corn. Grains are the staples of most cultures. What are you talking about? Some hand-wavy paleo theory that isn't scalable?

One counter-argument to agriculture is Jared Diamond's classic article: "The Worst Mistake in the History of the Human Race"

http://discovermagazine.com/1987/may/02-the-worst-mistake-in...

Re: Is the Second Farm Crisis Upon Us?

#104

“We’re heading to a place where we don’t have farmers; we just have food production.” This. I don't know what the solution to this is. I have a small farm, and raise meat sheep. But it's very much a hobby. The problem is, though, that almost all of the other farmers in my area, the ones I meet at the feed store or the livestock auction, they're also hobby farmers. There is exactly one “real” farmer (meaning that it's…

> I don't know what the solution to this is.

The problems you mention are very real. I am not in farming, so a noob, but it is clear to me that significant change in food production is a requirement.

I see some positive trends (at least here in The Netherlands). On the one hand the awareness that industrial-scale production is unsustainable. There is a Guardian article on that today: 'Europe's meat and dairy production must halve by 2050, expert warns' [0]. Also there was talk on potato farmers getting only 0.09ct per kilo for their produce, while in the supermarket it costs $1.80 (this for local production, NL is quite small). Even large farmers are selling below cost price. Furthermore they throw small potatoes back on the field to rot, because they do not match supermarket criteria. Etcetera. NL is 2nd-largest food exporter (in a bunch of markets) in the world, after US [1]. A system under strain.

On the other hand - at the consumer side - there is growing awareness of the problem, more willingness to pay more for local and organically (eco) grown foodstuffs.

I think it should be possible for different models to be profitable. Besides the bartering communities mentioned by sibling, your small farmers could all arrange yourselves in co-ops, both to the supply-side (buy machinery together) as towards consumer-side (e.g. run/finance a co-op supermarket).

Regarding produce: Diversifying, and offering stuff that is not in supermarket can be a unique selling point. Good cooking with proper ingredients has become a hype in NL (stimulated by countless TV programs). Now take cucumber. The supermarket only has the long green, rather tasteless kind. But there are countless varieties. Different forms, different flavors, more tasty. Sell it as a specialty. Tell a good story with them (i.e. marketing storytelling), 'The good country life'-idea. Have people be willing to pay a premium.

I realize that in Netherlands this may be easier, because of population density, and production being always very near to consumers.

[0] https://www.theguardian.com/environment/2018/sep/15/europe-m...

[1] https://www.nationalgeographic.com/magazine/2017/09/holland-...

Re: Is the Second Farm Crisis Upon Us?

#105
The article illustrates the crisis, producing an example of how farmers fail to make ends meet:

>A gallon of milk costs a farmer approximately $1.90 to produce, but in the last year, farmers have been receiving as little as $1.35 per gallon.

But they don't explain the underlying economic forces. The only possible reason (I think) that a farmer can't charge more than $1.35 for a gallon of milk is that some other farmer is able to produce a gallon of milk for less than $1.35.

So, clearly, some farmers are quite successful, and their success (or maybe just their efficiency) is part of the reason that other farmers are having a hard time? But the article doesn't talk about that much.

Slightly off topic: I pay my local supermarket $3 for a gallon of milk and now I'm curious about the breakdown of what that markup is spent on.

Re: Is the Second Farm Crisis Upon Us?

#106

Earlier quoted context omitted.

Humans are very much equipped to eat grains, we built agriculture, and thus the whole of civilization, on top of cereal grains like rice, wheat, and corn. Grains are the staples of most cultures. What are you talking about? Some hand-wavy paleo theory that isn't scalable?

One counter-argument to agriculture is Jared Diamond's classic article: "The Worst Mistake in the History of the Human Race" http://discovermagazine.com/1987/may/02-the-worst-mistake-in...

His counterpoint appears to apply only to individuals and small bands; without density we never achieve industry, which brings us, well, the modern world and all its medicine, internet, refrigeration ... satellite-based forewarning of enormous storms and time to prepare against those and other existential threats to large areas.

People live to be 100 and happy and productive on largely grain-based diets, not thanks to the grain, but thanks to the modern world it allows. Pre-grain, we didn't live so long.

On balance I think grains are a no-brainer. Maybe there is some extraordinarily minor benefit to the individual not to eat grains, but, obviously, in light of the past 10,000 years of history, grains are fine for you and will keep you both alive and happy.

Re: Is the Second Farm Crisis Upon Us?

#107

Earlier quoted context omitted.

As a grain farmer in Canada, I see this year as being one of the better years for commodity prices. Wheat was back to levels we haven't seen in a long time. Corn has held a little above average. Soybeans have taken a big hit in the last couple of months, but there were some good marketing opportunities earlier in the year. Unless harvest is a complete failure, there doesn't seem to be much to worry about. A welcome c…

Yes. But if you're going to do whatever one else is doing, that's not a plan to prosper. It's suicidal. For example, I didn't see a single mention of "...so we're going to go organic..." Again. Don't get me wrong. Food supply is important. One article does not a trend make. That said, sharing a bad idea with 100 or 1000 other people (farmers) still makes it a bad idea. I realize change isn't something most farmers se…

So you're saying, "Grow something unusual."? Something like... water chestnuts? Or mint?

Convert your wheat crop to mint?

Commodities are commodities because there is such a huge demand for them. Niche products are not some super easy to get rich with scheme.

If you want to succeed in the mint market, you'd better do you homework, execute perfectly, and get lucky. Just like in the commodities market.

Re: Is the Second Farm Crisis Upon Us?

#108

Earlier quoted context omitted.

A gallon in the stores costs $4-5

I don't know where you're shopping. A gallon of milk this afternoon cost me $2.59.

A 1/2 gallon of organic whole milk at a grocery store in Portland, OR is 3.99 or 4.59 depending on if the store brand is available or not. Not disputing any of your knowledge of the industry, just adding another data point.

Re: Is the Second Farm Crisis Upon Us?

#109

The article illustrates the crisis, producing an example of how farmers fail to make ends meet: >A gallon of milk costs a farmer approximately $1.90 to produce, but in the last year, farmers have been receiving as little as $1.35 per gallon. But they don't explain the underlying economic forces. The only possible reason (I think) that a farmer can't charge more than $1.35 for a gallon of milk is that some other farme…

> the only possible reason that a farmer can't charge more than $1.35 for a gallon of milk is that some other farmer is able to produce a gallon of milk for less than $1.35

Not necessarily - if you have demand for 300 units of milk and there are enough producers to match, then when demand halves, the producers are still producing 300 units of milk and paying for the costs to produce that amount of milk. To offset those costs as much as possible, they'll willingly momentarily sell under marginal cost - the production costs have already been spent anyways

Re: Is the Second Farm Crisis Upon Us?

#110
post #32

I see the multi-generational family farm being doomed as anything more than a niche boutique to make premium-priced organic produce in the next few decades. The reason for this is automation, though it isn't really touched on by this article. At some point in the near future robots will not only be able to construct greenhouses for growing crops with hydroponics but they'll also be able to do most of the work too. Lo…

For hydroponics, I've heard of lettuce being commercially grown, but nothing else - it's more expensive than just farming a large section of land.

And for automation, yes it is a threat, but often times more expensive than just paying cheap labor, which it seems the world won't be running out of in the short term

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