(Continued from Part 3.)
The Future of Farming
The smallest of agricultural tools demonstrates the largest of problems in farming today. Small funnels are often thought of as almost disposable, but this one and its sticker saying the price survived all of these decades to become a component in this discussion. The funnel is from 1977 when my dad was young long before I was born. It was 59 cents. A comparable funnel today is around 5 dollars. Let us call it almost a ten to one ratio because you have in many states to add sales tax. Corn prices back in 1977 were about $2.30 a bushel. Corn prices 40 years later were $3.61. (I recently had a quote for corn at $4.30 a bushel.
The highest that corn sold for is a little under $8.50 a bushel back in 2012 due to some serious weather issues and decreased production forecasts.) Farmers were selling corn a little over 50 percent more 40 years later while purchasing equipment that could have been 1,000 percent more. Even with increased yields with improved varieties, this is simply not sustainable. Every piece of agricultural equipment that I can think of is higher in that time span. Back in 1977, a 125 hp tractor was about $20,000. Something comparable today can be over $100,000. Even larger tractors can easily cost a million dollars today. There is a lot of truth in the joke of how to make a million dollars farming: start with two million. There is still money to be made for the most efficient farms, but it requires people to have an understanding about business, weather, and history as much as it is about equipment.
What does the future look like in farming? Unfortunately for those who wish to be “operators” of equipment, it is like most jobs with large-scale declines in the amount of labor required to produce the same amount of calories or product. For those owners often knowing how to do a process, but hiring operators on a seasonal, ad hoc basis, or using more fully automated machinery at some point, the future looks brighter as costs decrease. This is part of the natural historical process of the amount of labor required to perform tasks in decline. Even this keyboard I am typing on is so much easier than using a mechanical non-electric typewriter. There are no “help wanted” ads for linotype operators anymore.
The amount of labor required to produce almost anything has been in decline almost continually since the First Industrial Revolution. Farming was actually a later industry to be mechanized than others. The steps to industrializing farming first required some form of portable power to achieve a mechanical advantage first through steam and then through relatively portable gasoline and diesel engines. Unlike most activities, the land is immovable, so you need to bring equipment to the land to work it trying to coax more out of the ground than you put in.
Ancient people would grind grain using an animal and those near water sources were able to figure out that falling water could be used to grind grains. An example of an industrial application of this principle is the factory mills of Lowell, Massachusetts in the mid-1850s where over 50 water-powered turbines were powering the drive shaft in factories producing over 350,000 yards of cloth per day being produced in industrially powered looms. By comparison, someone skilled in the loom can produce between one to three yards per day. The mills had over ten thousand people employed, but still this was over a 10-to-1 advantage even with the relatively primitive technology of the mid 19th Century.
At some historical interpretation sites, you often will find someone using a spindle and loom demonstrating the last step in ancient practice of transforming flax into linen which is a 12 step process including such terms as you probably are first reading about such as stooking, rippling, retting, scutching, and hackling all before it is spun from the distaff on a spinning wheel. Much of this was done at home in piecework prior to the First Industrial Revolution. Using the factory model earlier developed in England, centralized factories allowed the ability to achieve higher output of fabric at a lower price driving out suppliers of goods. The factory organizing model led to the first large changes in how families were organized financially and socially with the workers journeying and often moving to the work. The work was not performed in their homes as it had been before, selling or trading at a local general store for other goods.
Centralization was necessary as the factory’s machinery was not portable. Usually, this was near a falling body of water to produce power inexpensively as gasoline or diesel power generation was several generations in the future. You may be wondering what our little journey to meet the “mill girls” of Lowell in the mid-19th Century has to do with farming. Their journey to the factory and centralization of their work was an early symptom of the decline of the family farm.
Many farm families in Massachusetts who were earning cash in piecework at home sent their daughters to work the looms for three or four dollars a week minus boarding expenses. Prior to this expansion into the Americas with the factory system, there is another interesting group of people who saw their jobs going away: the Luddites who starting in 1811 realized that machines were replacing people and they would go around smashing textile machines in order to stop this transformation. They were not successful. Eventually the cloth factories of the North moved to the South and most of this production has moved overseas due to labor costs over the last 30 years.
Factories cost money to build and to run. This requires capital which in its purest form is a free person deciding to take the results of his labor or money he has raised from other free people who decide that they can produce something at a lower cost than they can sell it at. You will often hear about “capital costs” or capitalization of a factory. A farm uses many of these same principles. We put our capital out and expect a return on this capital. This is not an overnight process: a winter wheat crop goes into the next year, but it is always more than six months and usually over seven before we see any financial benefit.
Labor has been declining in overall strength for the last 150 years. A large machine is often the equivalent of more than one man working continually. In many ways, that is the understatement of this century as it often is the power of thousands of men or something man could never accomplish on his own without the machine such as powered flight. In terms of raw number crunching power and ability to generate reports from facts, a machine can generate the report in seconds with the right prompts versus a human could not even begin gathering the data.
One thing that my family has done is given me an appreciation for people who labor and we would often visit factories when going on vacation. Where pictures and movies demonstrated how it was done years ago with countless individuals on various production lines, many people have been replaced by machinery which rarely takes a break to the point of needing some required maintenance or an overhaul. Many jobs will be on the chopping block as men with capital figure out how to reduce their costs with labor often being a significant and escalating cost.
Whenever I consider anything about history to glean some knowledge to use today, it is useful not only to look at battles and diplomacy, but about the people and the men (it was mostly men) working farms. The women made their houses into homes by following what the Bible says about the family in that they were helpmeets to their husbands and their contribution was to build a community in which these patchworks when sewn together became a great nation. The hours and dangerous conditions they faced were enormous, but these farm families were feeding a growing nation.
In the 21st Century, we tend to romanticize the past with our love of the frontier of a pioneer feeding his family, of cowboys driving cattle to the market and men gathered around the campfire telling tall tales. For the most part, men have always dreamed of figuring out how to make things more efficiently and farming is no different. The goal of grain farming is to extract more “seeds” out of the ground than you put in. When successful, it is significantly more than your overhead.
The first men transformed the motions of men using animal-powered reapers and the various tasks were combined into an integrated “combine.” All of those steps which required so many men working around fast moving often sharp metal objects now are accomplished by one man in a combine that often has GPS control over steering. A hundred years ago most farming was done with horses or mules. Successful “combining” was a well-coordinated activity incorporating the labor of multiple men working together to accomplish the task.
The combining task when examined through a modern lens is a safety nightmare. Traditionally, one man sat on an elevated perch reached by a ladder high above attempting to command often more than two dozen horses with no safety equipment such as seat belts or roll bar trying to efficiently drive this literal horsepower to accomplish a task that is now done by one man. (See the photo at the top of this article.) When sitting in an air-conditioned combine seeing computer readouts with steering with GPS capability, it is amazing to see the growth in efficiently. Currently, there are no fully autonomous combines sold in the United States, but that possibility exists in the near future.
Wheat in the field is basically worthless to a grain farmer unless he can figure a way to get it to the point where he can extract the precious wheat berries for his own use or to sell them. The entire point of the modern combine is to make that a seamless process taking the ancient processes and turning it into a usable easily transportable product. Before wheat became easily transportable in semi-trucks that hold approximately 1000 bushels of wheat that can be sold at the grain elevator for checks, it usually was put into sacks and then these sacks were transported to be sold locally or transported by rail.
Selling wheat or wheat products such as flour in sacks became a part of American culture for decades. One of the elderly women who I interviewed in my study of the Great Depression described her early years where she, her mother, and sisters would make flour sack dresses as the flour sack companies often competed with stylish patterns that these sacks could be turned into dresses once they had served their purpose of transporting the grain or flour to your home or farm. Nothing on a productive farm is wasted and years ago few people in the city would actively waste anything as money was much more difficult to acquire years ago.
Many farms are in debt. We are not. A longer explanation of this is available in my November article part 3. Debt is so important of a topic that this needs to be explained as debt destroys dreams. Debt is the thing that often will drive you off your land, out of your home, and take you away for many hours from your family on a daily basis to work a job in the city where you have little control until someone figures a way to remove the cost of your labor from their profit and loss statement. Even if you are reading this from inside of a city or suburb working a job, this discussion will have great relevance for you. If you are not in debt, congratulations. If you are trying to get out of debt, hopefully the paragraphs I have written on debt will encourage you.
Acreage cost is to the point of being simply uneconomic for someone to wake up and say let’s move to a farm and the farm will pay for itself consistently with your labor and you can have a great standard of living from annual crop sales. The last time that was true in the Midwest was possibly the late 1940s to 1950s and that “Golden Age” soured quickly. Whenever I look at various farm budgets, one thing needs to be considered: it would be difficult to justify buying farmland at these prices for the purpose of possibly getting a return if you are buying it with a mortgage. Generally, land is illiquid, can be volatile in price, and difficult to extract profit from on a consistent basis.
Land is no longer free or available at a reduced cost. The various land for labor schemes such as the Homestead Act of 1862 or land for a few dollars frameworks such as the Preemption Act of 1841 to settle the country are no longer available. Good tillable ground costs thousands of dollars an acre to well over ten thousand dollars an acre. I am sure that an Iowa corn farmer is reading this is saying maybe “Single Farmer” has not heard that it can be tens of thousands of dollars an acre. Yes, I saw some of those sale sheets with parcels of tillable ground that have sold recently.
(To be continued tomorrow, in Part 5.)
A Concluding Note From JWR: This young man is prayerfully seeking a wife. He is offering a gift of $18,000 to whoever introduces him to his bride, after marriage. For some details, see his recent article: A Quest and a Gift.