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The bottom line is that farming is a business

November 17, 2009|By JEFF SEMLER

Recently, I have written on land use issues and how I feel that one way to keep land in agriculture is to make farming profitable.

I wrote that adjusted for inflation farm gate prices have remained flat and in some cases dropped over recent decades.

I also couldn't resist bringing us back to the connection of farming to eating and how the average American knows more about the Jonas Brothers or Michael Jackson than they do about where their food comes from.

This week we will forge on, looking at agriculture and its future.

Many people who feel that the only way to survive in agriculture is to get bigger might be looking at things a little shortsightedly.

In general, when I get a chance to talk to farmers, those who are of a manageable size and are not leveraged to the max are the ones who are most happy with their lifestyle and occupation. Kind of sounds like what any small businessperson would say.

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And that is the rub. Many people, including some farmers, have this idealistic view of agriculture formed from visits to grandpa's house or reading a storybook in grade school. Farming is and always has been a business. There are some marked differences. Ever since retailing was given up to others, farmers have become price takers. Meaning they receive whatever price a buyer pays not a price the farmer sets.

To put it in terms the masses can understand, when you go to the checkout of your favorite mass retailer you don't tell the clerk I'll give 50 cents for that pack of gum and $6 for that shirt. You simply pay the price on the product so the mega-retailer is a price maker. By contrast, when a multinational food company wants to buy soybeans they go to the market and set the price. Now yes, supply and demand does play a small role in this but remember if this company cannot buy its beans from Iowa or Maryland at the price they wish to pay they can buy them from Argentina. And thanks to the price supports from the Argentine government, the price will be competitive.

So how can the farmer become competitive? Truly, you must do one of two things, either get bigger or simplify. Getting bigger allows you to take advantage of economies of scale. It will also make you unpopular with your neighbors, especially the ones who are newly transplanted suburbanites. Additionally, getting bigger also adds headaches. Peter Drucker reminds us, "With every increase in technology, there is a corresponding decrease in leisure time." You probably think Mr. Drucker is way off base, you think technology is the answer. Remember in the 1960s when it was predicted that thanks to technology by the 1990s the average American worker would be working approximately 22 hours a week. Ask yourself am I working fewer hours? If you are the average American, you are actually working approximately 46 hours per week, a little more than twice what the technocrats in the 60s promised.

The other thing technology has undermined is interdependence. There was a magazine ad in the 40s where a family was sitting on their front porch admiring their new tractor and how they thought it was an answer to prayer and it replaced their horse. In fact, what it replaced was their neighbor. They were no longer interdependent to get their work done. They could now farm more land in order to pay for the tractor, and of course, they bought out their neighbor and so they had to work longer to pay for the new mortgage and so on the spiral continues.

While I am not here to glorify the Amish, interdependence has not been lost on them. They evaluate each item of technology in light of how it will affect their community at large and adopt those things that help and shun those things that tend to separate.

If you don't think we as a society are too plugged in, evaluate your family's reaction to a power outage. Was it like the world stood still? Were your children sure that the apocalypse was at hand?

What is the take home point? Simplify, if you are building a house don't make it 3,500 square feet if 2,000 will do.

If you are a business person, evaluate your technology choices and if you need a reality check, call a help line where you can be put on hold for 20 minutes while a recording tells you how important your call is.

Invest in people when you can and remember the words of Art DeMoss, "Use money and love people, don't love money and use people."




Jeff Semler is an Extension educator, specializing in agriculture and natural resources, for the University of Maryland Extension. He is based in Washington County. He can be reached weekdays by telephone at 301-791-1404, ext. 25, or by e-mail at jsemler@umd.edu


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