Tuesday, November 5, 2013

The Next Farm Crisis?

"Ed, what do YOU think about things? Watching that "The Farm Crisis" documentary and it just sounds SO like the same thinking about land prices and the like are the same as they were then.
Are we going down again?"

"I  don't know. I think our economy will crash first but could be wrong. How our economy keeps going I have no idea but I can tell you lots of NATers like _____ and ____ _____ have gold silver, loaded to the bear and ready for anything. So far, only a few farmers are leaving and leaving silently, some more will be hitting the skids here. They can't make $300 ground work, thank God I don't have to. Great question, good blog topic."

There are some great discussions by real farm people at this link.   Corn is half the price it was a year ago but inputs aren't.  Wheat and beans have held their own but the commodity markets have been pretty dead.  Cattle are good property but hogs may hit the skids again.
"So what could farmers do to survive another financial crisis? The world is always changing, but farmers may gain some valuable insights from those who survived the farm crisis of the 1980s.  First, the answer is not to do what farmers are been advised to do for the past 50 years. This is not the time to get bigger, give in to corporate control, or get out of farming. The farmers who bought more land and equipment to expand during the 1970s were the ones with the biggest problems during the 1980s. With regard to contract production, the agribusiness corporations do not make legally binding, long term commitments to their contract growers. When times get tough, contract producers are going to be caught with large investments in facilitates and equipment with no animals to feed or no markets for their crops, and thus, no means of making their loan payments.
The farmers who survived the farm financial crisis of the 1980s were those who resisted the temptation to borrow money during 1970s. Those without large debts obviously were not committed to large loan repayments nor were they subject to bankruptcy, even after significant year-to-year losses. Their equity, primarily in the unencumbered value of their land, was more than adequate to cover their modest debts. Diversified farmers also fared much better than those who had specialized in one or two commodities. Those with a variety of crops, or both livestock and crops, were in a better position to manage their financial risks. Even though prices in general were depressed, different commodities were more or less profitable at different times."
"Those who fared best during the farm financial crisis of the 1980s had strong personal relationships within their families and communities.  Farmers who have developed personal relationships with their customers, who also happen to be their neighbors, will not only have their moral support during the hard times ahead but will have their continuing financial support as well. Friends don’t abandon friends when the going gets tough, they stick it out together. Those who eat locally won’t go hungry and those who market locally won’t go broke. Instead, they will find ways to work though their problems together and their relationships will grow stronger as a consequence.
So, the most important strategy for surviving the next farm financial crisis may be to get to know your neighbors and turn them into customers as well as friends. Wendell Berry writes that farmers of the future “must tend farms they know and love, farms small enough to know and love, using tools and methods that they know and love, in the company of neighbors that they know and love” – and I might add, producing food for people they know and love.  The key to surviving the next farm financial crisis will be a deep and abiding love of land and people."
This makes sense to me.  What do you think?  I just added Ralph Goff's excellent link to a story on such in his area.
Ed Winkle


  1. High land values are thinning out the small family farms here Ed. We are becoming tenants and workers where we used to be land owner/operators. http://cjme.com/story/homestead-inc-pt-2-saying-goodbye-family-farm/151162

  2. Thanks Ralph, the BTO's are taking over here but the small guys had to become middle to large guys or get out. Still a few youngsters starting with 20-100 ac here which I encourage so we have a huge mix. The overall trend is get big or get out.


  3. I think it would be better to have 10 1,000 acre farms with owner equity, than 1 10,000 acre farm with 10 (or more) employees, but...how to slow the consolidation? Change the farm programs?

    1. Most of us do but in a "free market economy" how do we truly do this?

      In retrospect I think more should have been done to save the small family farm but that never happened and would be difficult to recapitulate now.


  4. Lets try this again.....took out my thoughts on BTOs, crp and fed crop cuz it woulda upset some people....

    I'm thankful for Willcross being in the nongmo good grade market. I can take a little more time and grow a value added crop and have a better bottom line.

    That sounds more politically correct then what I typed first.

  5. I know you well enough that I think I understand what you are trying to convey.

    I do know we are all tired of trying to be politically correct.