After peak oil we need small family farms. But U.S. farms are getting even bigger

Preface. Oh dear, wrong direction! Eventually 75 to 90% of Americans will need to be farmers to feed their family and support craftsmen and others in towns, just as it always was before fossil fuels arrived. These big farms are more dependent on fossils than smaller farms as well. I would hate to see them survive peak oil, because that would mean most people would become peasant/slaves rather than owning their own land.

Alice Friedemann   www.energyskeptic.com  author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer, Barriers to Making Algal Biofuels, and “Crunch! Whole Grain Artisan Chips and Crackers”. Podcasts: Derrick Jensen, Practical Prepping, KunstlerCast 253, KunstlerCast278, Peak Prosperity , XX2 report

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Weinraub, M. 2019. Size matters. Big U.S. farms get even bigger amid China trade war. finance.yahoo.com

HAZELTON, N.D. (Reuters) – As the 2018 harvest approached, North Dakota farmer Mike Appert had a problem – too many soybeans and nowhere to put them. Selling was a bad option. Prices were near decade lows as U.S. President Donald Trump’s trade war with China weighed heavily on the market. Temporary storage would only buy him a little bit of time, particularly in an area where cold weather can damage crops stored in plastic bags.

So Appert, who farms 48,000 acres (19,425 hectares), cut a check for $800,000 to build eight new permanent steel bins. That allowed him to hold onto his bumper crop and wait for prices to recover.

He sold half of the 456,000 bushels stored on his farm throughout the following summer, earning about $1 more per bushel and avoiding storage at nearby CHS elevators or an Archer Daniels Midland Co. <ADM.N> processor in the area.

But most farmers do not have $800,000 to spend on steel bins, and many are going under. The number of U.S. farms fell by 12,800 to 2.029 million in 2018, the smallest ever, as the trade war pushes more farmers into retirement or bankruptcy.

Roger Hadley, who farms 1,000 acres in Indiana, was unable to plant any corn and soybeans this year after heavy rains added to farmers’ woes.

He spent most of the summer trying to plant a combination of grasses, a so-called cover crop, so he could apply for government aid and try again next year.

“The guys that got rich are getting richer,” Hadley said. “It has frustrated a lot of guys.”

In farming, size does matter. The farms left standing after the trade were will likely be some of the biggest in the business. Appert’s operations are more than 100 times bigger than the average American farm and the advantages provided by that magnitude are becoming even more critical as the trade war stretches into a second year.

The declining number of U.S. farmers could hurt the world’s top grain merchants such as ADM and Bunge <BG.N>, who will have fewer suppliers. Additionally, farmers will have less need to rent space in the merchants’ grain silos as big farmers like Appert have plentiful storage on their own farms.

By the end of 2018, the average U.S. farm size rose to 443 acres, a 12-year high and up from 441 acres in 2017, according to the latest U.S. Department of Agriculture data.

And the biggest farmers are growing their operations even more as retiring farmers choose to lease their land rather than selling it.

When land becomes available for lease, only the biggest farmers can readily shoulder the costs needed to expand.

The size of the loans smaller farmers would need to buy equipment, for example, are too big for applicants with little collateral, said Dave Kusler, president of the Bank of Hazelton in Hazelton, North Dakota. “It is almost impossible with what the costs are,” Kuslersaid. “In this area you can’t make a living on 1,000 acres.”

Critics say the Trump administration’s policy of compensating growers for lost sales due to the trade war pays the bigger farm operations more, since payments are calculated by acres farmed.

The Environmental Working Group, a conservation organization, said in a recent study the top 1% of aid recipients received an average of more than $180,000 while the bottom 80% were paid less than $5,000 in aid.

Big farms can reap the full benefits of new high-tech equipment that boosts farm yields.

Doug Zink, who farms 35,000 acres near Carrington, North Dakota, said he likes to trade in his fleet of four combines and planters nearly every year to ensure that his equipment is under warranty, which saves thousands of dollars in maintenance costs and helps avoid breakdowns during key seeding and planting periods.

They also receive deep discounts – as much as $40,000 for some combine harvesters that can cost as much as $400,000 – allowing them to upgrade more often.

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2 Responses to After peak oil we need small family farms. But U.S. farms are getting even bigger

  1. Fred Justesen says:

    One of the problems is that machinery companies do not build harvesters for smaller farms. The problem is that commodity prices simply have not kept up with the price of everything else. Margins are so thin that you have to have a huge volume just to make living for one family. It is almost impossible for a small farmer to buy more land because there is not adequate net income to make land payments. Im selling a bushel of wheat for the same price I did almost 50 years ago and payments for conservation payments are the same as they were 30 years ago. It is the same phenomenon that is happening in most all of our capitalist system. Small business have a difficult time competing with large corporations or large privately owned companies. So you buy used equipment and defer maintenance and lower your standard of living. Or you sell out or lease your land out to a larger operator. The small ranch that my Grand father used to make a living on is now considered a hobby ranch or a gentle man’s ranch. In other words an operation that does not make a living but is a good tax deduction for some one who has a good revenue stream from some other business. It is how capitalism evolves, not too different than monopoly. Eventually someone owns it all.

  2. Weogo says:

    Hi Alice,

    I agree that we need to phase out industrial agriculture.

    An interesting look at scales of farming:

    http://nymag.com/intelligencer/2019/06/america-loves-the-idea-of-family-farms-thats-unfortunate.html?utm_source=undefined&utm_medium=undefined&utm_campaign=feed-part

    Thanks and good health, Weogo