First the drought monitor remains basically unchanged even with the recent rains. The abnormally dry region is as close as Pawnee County. Wheat is being planted and coming up. The area is still lagging in terms of harvest progress for summer row crops but again progress is being made. The biggest weather event the past week was the freezing temperatures last Friday and Saturday. It can be debated if this was a “killing” frost (it has to be so cold for so long) but it ended the growing season for summer row crops. And this should help those wanting to cut grain sorghum. Now onto today’s topic.
Last week was a general discussion of the history of farm programs, the why of these programs, and the changes brought about by the 1995, Freedom to Farm, farm bill. The ag community, from producers to all aspects of the agricultural business agree there is a crisis in the farm economy. Some term it a recession. Some don’t. But all agree there is a problem. The question is why and what is being done to overcome it. First the why in a very generally way.
• American agriculture is efficient. Maybe too efficient for its own good. We produce far in excess of what we can consume. This is due to an array of technological advances ranging from improved equipment and cultural practices, advances in breeding of crops and livestock, advances in fertilizer efficiency, and a better understanding of how to manipulate the ecosystem.
• The laws of supply and demand play a role. Earlier, higher prices after the drought of 2012 result in increased production. This resulted in production in excess of demand and resulted in lower prices.
• Markets play a huge role. The ag community has spent decades cultivating export markets for crop and livestock production. As we speak of huge trade deficits with many other countries, agricultural trade was a bright spot. The US normally had a positive trade balance with the rest of the world. Which leads to the next point.
• The “Trade Wars” with countries like China has resulted in steeper tariffs on ag commodities and with many more countries than China. The outcome was a steep drop in sales for export.
• The weather also is hurting the farm economies. As weather patterns are experiencing more extremes, crop production the last several years has become more difficult. It would be difficult this year and last to not notice the challenges in crop and livestock production from weather extremes. As a side note, in spite of these weather challenges, we are able to maintain good to excellent production as a nation for most crops.
• Input prices haven’t tracked with commodity prices. The steep drop in commodity prices hasn’t resulted in a step drop in input prices.
• Consolidation affects profitability. There has been over the last 40 years significant consolidation in agribusiness, especially in the livestock industry but also for crop producers. For crop producers inputs from seed to equipment to chemicals are produced and sold by fewer and fewer companies.
• Finally, consolidation of farms. Bankruptcies are well-above historic levels with the result of fewer, larger farms. And while we speak of millions of farms, a small percentage of the farms is responsible for a disproportionate amount of production.
Natural there are other factors. Next week: What can be done?
Dr. Victor L. Martin is the agriculture instructor/coordinator for Barton Community College. He can be reached at 620-792-9207, ext. 207.