(Continued from Part 5. This concludes the article.)
The number of hours required to complete an agricultural task has been in decline for over 100 years. This is one of the key concepts that you need to understand in order to have the best chance of surviving the future as these efficiency increases also are across many industries.
Time is not spread out evenly on a farm which is a problem from a labor perspective. There are many times in the life cycle of a grain farm where there is nothing to do, but wait especially with dryland (non-irrigated) farming meaning that you allow natural precipitation cycles instead of introducing irrigation through pivots. There are some times during the initial stages of planting and the last stages when harvesting that there is too much to do in a given day given the needs of human operators.
I am simplifying this process as there is preparation of the ground necessary to plant, usually a couple of applications of fertilizer in the late Fall and early Spring for a “top dress” application or having to treat the crops for specific conditions. (Including some who will use a crop duster if conditions necessitate that step.) Most of the time it is allowing natural processes to unfold and that usually occurs on an observable timetable. That is both the problem and the solution and this concept impacts every reader in this country.
Modern farming is an extremely capital-intensive business. Perhaps you were or know someone who was an apprentice and progressed to being a journeyman in their field. This stage often requires ownership of tools as a journeyman has developed skills and ownership of materials necessary to carry out his craft. I have heard complaints about people wondering why someone would need to spend over ten thousand dollars on tools to work at a job. Tools cost money, many often “disappear” having a value that allows them to be turned into ready cash by men whose morals need realignment, and all of this shrinkage can cost an employer their bottom line, so men who own their own tools are typically paid more.
A workman who owns his own tools without any debt often has demonstrated a long series of steps toward responsibility. This is much the same as a man in Virginia in 1620 who was industrious enough to be able to afford through his own strength land and resources was seen as worthy of the next step of marriage. Now, a modern farmer will often have a tool and equipment budget in the millions of dollars. Obviously, you don’t wake up as a young man and say “that farming business sounds like a good thing, so I am going to get into it.” You are born into it or you buy into it often successful at something else as you seek diversification. Gone are the days when a strong back and some initiative would allow you entrance. That era has long been closed.
Many farmers actually are a combination of owner of some land and a tenant/contractor also working their neighbor’s land either for a set cash amount or a percentage of the crop. Because of the high prices of cropland, they often own only a percentage of land that they actually work. The high cost of machinery and the overall efficiency of machinery are the two reasons why so few people (as a percentage of the population) need to be in farming.
The greatest problem is the capital-intensive nature and I will briefly highlight a couple of areas. Earlier you read about the humble funnel and the tractor. There is a lot of single-use machinery on a farm. Consider the process of getting the seed into the ground. From ancient times until the industrial age, people would broadcast wheat and this often made a nice meal for birds and a fairly low yields at harvest which because of the uneven nature of the application. This changed with the introduction of tractors and the implements of introducing seed into the ground such as seed drills and planters.
Speaking in general of row crops: Planters plant the seed at a precise depth having an acceptable number of plants per square foot neither with too many or too few as either scenario will not result in optimal conditions for plant growth and harvest using a combine. This obviously is labor intensive for an individual without machinery. Now, a large modern planter can precisely plant upwards of 100 acres an hour! Planters have not followed Moore’s Law of semi-conductors, but great strides have been made and you can see the overall decline in labor needed on a farm through the ability of being able to plant six rows in the 1950s to 48 rows, today. If a person attempted to achieve this same level by hand, it would likely be a fraction of an acre a day for planting with enough exercise and calories burned that they would not need to go the gym.
There is a cost associated with this massive efficiency. A modern planter with that level of capability costs over $500,000 plus the cost of a tractor which can easily be another $500,000 to a million dollars, so a modern farmer can be spending over a million dollars to be able to complete one task. Some of the tasks will use that tractor again during the agricultural year, but there are so many other single-use pieces of machinery. All machinery requires regular “feeding” of fuel and maintenance. Most passenger vehicles have under a 20 gallon tank and that can be expensive: Filling up a large tractor or combine can easily cost hundreds of dollars to over a thousand dollars.
Consider how plowing was done in the early 19th century where one man and one horse could plow an acre per day and some people added additional horsepower, so maybe your could increase it to 10 acres a day with more horses. Of course, the additional horses cost money in feed and time required for care when they are not doing agricultural tasks. Unlike tractors, there is a potential for natural reproduction of horses. (Unlike mules which were also often used on pre-industrial farms.) The cost of mechanical tractors is enormous, but the efficiency is amazing: Plowing has also undergone a remarkable increase in efficiency at current record levels of hundreds of acres in daily work capacity of mechanical horsepower versus animal-based agriculture in the 1800s.
I often think about the future of agriculture. All of us live in a very interesting time. Fewer people have ever been involved in the growing of food as a percentage of the population, but many of the farmers are really struggling. The debt that I spoke of so many times is still often a large factor in farming. We have no debt, but debt is serious as it effects many of our friends and people in our country who are in farming. We are customers of many agriculture-related businesses, so often we find ourselves being recipients of various “magazines” these businesses send to us through the mail. I put all of our agricultural-related information into a box throughout the year for tax purposes and some of these magazines end up being put into another box (with the intention if it is an article that I should read or refer back to someday). I decided to pull some of these magazines for a few years to get a general idea as to what was being discussed. Some of the articles are talking about increases in efficiency, some new product out there, or someone’s thoughts on the commodity market, but many times it is discussing the financial aspects such as “growing liquidity,” “reducing costs,” or “increasing revenue.”
I am writing this during the latest “Farm Bill” discussion in late December, but a summation of the reason for the billions of dollars of extra subsidies is useful to show how we ended up here having to subsidize food production. Many commodity production farms have entered into their second plus year of financial downturn, so they need to get loans to help be able to cover family and farm costs into the new year and until they receive their first checks for the 2025 crop which could be mid year for many commodity farmers. The current “solution” is for the government to give farmers money so they can show the banks that their financial condition “improved,” and they can then pass the necessary lending hurdle to get approved for a bank loan to continue farming.
Many of these magazine articles talk about loan to value, debt to asset ratios, or the impact of interest rates. The ideal state is to have no loans. However, many farms have large loans on them: the small farms average over 200,000 dollars worth of debt with the largest farmers averaging almost ten times that worth of debt. Net farm incomes this year are expected to decline. If a bank would evaluate most farms as a business, they would laugh most of the people applying out of the building, but a farm is unique in that people need to eat. A lot of people will say that we can just import food from elsewhere like we do a lot of manufactured goods that were previously made in our country until the late 20th Century. We export about 20 percent of our food to the world. Under one percent of our GDP is output of food from farms, but the vast majority of calories you eat are grown somewhere inside of the United States either directly eating it or being processed through livestock feed.
The problem is that farming has for years been a non-self-starting endeavor. Probably the last time was during the Homestead years, but even then you needed to start with some type of “grubstake” to begin. And it is at the point of being non-self supporting. (The cost of land and everything it takes is many years beyond what you receive from a crop if you have an interest expense from debt on top of your other costs). A healthy percentage of farm “profit” is often government subsidies (in some recent years across all farms it was 40 percent of the income was from government subsidy checks). There are some farms that do not take any government payments out of principle, not wanting to have the government involved in their business. Many farms rely on them as a percentage of their “profit” to justify the massive costs involved and sometimes the subsidies are the difference between a “profit” and a large loss.
There are no easy solutions: all require work and pain. Some people say to eliminate all of the subsidies immediately, but then a lot of farmers would leave farming and we would have less food. Most farmers are independent family farmers like us meaning that we can decide what food crops to grow on our land. These decisions are made on a family level. If a crop is no longer self-supporting, it is no longer grown. Because of crop prices, we have decided to stop growing several crops that we have historically grown because we no longer believe it is worth the risk, so we reduced our financial exposure.
We do not owe anyone any money, so we do not have a bank to report to who could influence our decision-making process. In this scenario which has little likelihood because of the catastrophic downstream effects that would occur if these subsidies were withdrawn, the farmers who remain who were not taking the subsidies would experience more profit, but your grocery bill will probably be much higher. Right now, every American is paying about 150 dollars per person per year if all of the subsidies were divided out equally at even at a high amount of 50 billion a year in which many years it is lower.
Most people would think that the “Farm Bill” is about farming, but the majority of funding for the “Farm Bill” is normally about 80 percent of funding for the “food stamp” program now called Supplemental Nutrition Assistance Program (SNAP). My family and I have never begrudged helping out needy people and are always trying to help people. However, helping often becomes hurting when government is involved as individuals are not counseled by people knowledgeable about their situation applying healthy doses of “tough love” when necessary, but are categorically eligible. The one problem with all subsidies whether it is to farmers or to needy people is there is never a way in these programs to encourage people or industries to become self-supporting. The current “food stamp” program started out at costing 75 million dollars in 1965 and in 2023 it costed almost 113 billion growing from about a half a million people in 1965 to over 40 million people today. The problem is that they have resulted in more people on them (not fewer), we as a nation have to borrow for these programs, and our nation is over 36 trillion dollars in debt.
President Reagan joked that “nothing lasts longer than a temporary government program.” There is so much truth in that because each program usually starts out as a “pilot” program and then expands eventually to becoming a sacred cow which could never be reduced, only expanded. Feral hogs annually cause billions of dollars of damage to crops across many states. In 2014, funding started for a “National Feral Swine Damage Management Program” and the 2018 “Farm Bill” contained a provision for a “pilot” program on feral hogs. Some new farm bill advocates want to make this program permanent. Over the years, first settlers and then farmers hunted wild animals because their continued presence would reduce crop yields and create problems with farm animals. Advocates of the feral hog funding want to increase the amount to study and “control” it by doubling the appropriation of the 2018 levels.
“Rule 308” still works well to solve issues with feral animals and it is often cheaper than spending hundreds of millions of dollars “studying” problems. We do not have any large dangerous wild animals in our area in large part due to the topography in our area and as these have been hunted and trapped by previous generations. Trapping can be more effective especially in eliminating large numbers, but less glamorous to people who enjoy “the hunt.” Often you will see government create a problem and “pay” for the solution while still allowing the problem. Consider the case of the re-introduction of the wolf to western areas of the United States.
If you tried to explain this to someone from the 1800s, you would not be able to explain the story of the modern wolf to pioneers who would reduce predator populations whenever they had an opportunity as they knew the damage a pack of wolves can do. Now, wolves are “federally” protected in many states (this is a brief comment not covering the whole story of the “re-introduction” of the wolf) with their “meals” being subsidized through the taxpayers in many instances through federal indemnity payments when they are “federally protected predators.”
Farmers do all kinds of interesting things with their grain in an effort trying to get more for it. Some farmers try to guess what the future price will be by getting involved in the “futures” market. No one knows the future. We do not get ourselves involved with the futures market. Some try to hold grain expecting the price to increase (which may or may not happen for years). You can store grain in bins and then truck it to the elevator if the price is higher or you need to pay a bill. Some people store it at the elevator and this also costs money. My dad believes in selling the grain. Many times the price is higher initially and then as more supply comes in it lowers unless there is some type of international event which could cause an increase (supply and demand at play here and everywhere).
Our farm philosophy has been to regard the money that we received from our farm as “seed capital” for other ventures, not constantly trying to see if we can extract every last possible cent out of this investment often risking more money. There is a lot of wisdom in the old saying of “don’t pick up pennies in the path of a steamroller.” Over the years, we have diversified into other businesses outside of agriculture and are not as subject to price shocks as many other farmers.
Never before has been less labor needed to farm, but the costs to enter into commodity farming are extremely high. I see the total amount of labor decreasing further with the growth of fully autonomous farm equipment. The days of a farmer borrowing money going from crop to crop could be numbered if this equipment is able to achieve true autonomy in the upcoming decades. Most labor in the form of muscle applying itself to a task has been largely replaced by mechanization. A “combine operator” in upcoming years for the majority of tasks may become as obsolete as a lamplighter. Each innovation results in job loss where people move to something new. From scholars with quill pens diligently copying the Bible before the introduction of the printing press started making the Bible more accessible in the 1450s to linotype operators replaced by phototypesetting, and eventually to computerized editing, there is always an effort toward efficiency for most commercial production. As individuals living in the country and preppers, we are aware about the complexity of modern life and know how to do things in both ancient and modern ways.
The most successful people that I know in agriculture are always “future-oriented” with a deep appreciation of the past. Over the years, successful people who live debt-free have seen the prices of commodities rise and fall and are not much disturbed by them as they are less subject to price fluctuation. The years of larger checks in farming allowed them the ability to develop a surplus which they were able to invest. Many individuals expand outside of farming in order to diversify while other successful people sometimes enter into farming at optimal times in order to diversify. Productive land has maintained a value to the individuals living on it even during periods of both deflation such as during the Great Depression and during periods of high inflation — seen quite recently and in the 1970s.
To survive and thrive in the 21st Century in farming one must be nimble, avoid debt, have a variety of income sources from businesses that are unrelated to agriculture, have friends, and most importantly to have faith in God that He put you here for a purpose. We enjoy living on our farm and consider each day that we have here to be a blessing. I do hope that someone reading this will know a single young woman who is also looking for a husband and can tell her or her family about me. It is my sincere hope that you have enjoyed this little journey into understanding more about grain farming in the 21st century.
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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.