Preface. One of the best ways to survive the coming energy crisis and reduce biodiversity loss, soil erosion and toxic chemicals is to start an organic farm. Today, that’s hard to pull off unless you have a 9 to 5 job, because to pay back the cost of the land and equipment, you’ve got to grow a lot of food, and that requires expensive equipment.

The result since 1935 is that farms have gotten larger and larger. In 1935 there were about 7 million averaging 155 acres farms, today just 2 million farms averaging 444 acres.

Since oil peaked in 2018, it’s a shame that ways to split up large farms into smaller ones is highly unlikely to happen in order to prepare for energy decline. So that means a future feudal system of mega land-owners and their serfs, or more likely, endless civil wars as land is redistributed the hard way.

Another way to go about farming even if you don’t know how would be to buy land and invite a farmer to live there to do the work: McKeough (2020) Their Dream Was a Working Farm (but They Weren’t Farmers). So one urban couple had a brainstorm: Why not build a house they could share with farmers just starting out, on land that could be farmed? New York Times.

Alice Friedemann   www.energyskeptic.com  author of “Life After Fossil Fuels: A Reality Check on Alternative Energy”, 2021, Springer; “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: Collapse Chronicles, Derrick Jensen, Practical Prepping, KunstlerCast 253, KunstlerCast278, Peak Prosperity , XX2 report

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Krymowski J (2020) New technology and machinery’s improved efficiency are bumping up the costs of being a farmer. AGdaily.

No wonder industrial farms keep getting larger. An average-size new, basic model with no optional add-ons, such as John Deere or Case IH combine starts at about $300,000.  Some of the larger tractors in this industry can hit $700,000 or more. Most have proprietary software, leaving farmers without the right-to-repair since most problems will need to be fixed by the dealer at greater cost. Used tractors are cheaper but even here a decent combine will cost $100,000.  

Now, what about the more basic stuff? Take a look at your average utility tractor, something non-articulated to just satisfy everyday loading, moving, and trailering needs. Again, as a base price, you can go to your local dealer and expect to pay well within the bounds of $20,000 to $50,000 for something mid-sized, in the 25 to 80 horsepower range. Used these machines still run $10,000 to $30,000. As you can imagine, the price tag goes up significantly based on greater horsepower and add-ons.

If you plant row crops (like corn or soybeans), there are a variety of implements you need. One of Kinze’s 4705 24-row no-till planters will cost you at least $310,000, for example, while a John Deere corn head for that combine you already paid hundreds of thousands of dollars for will add another $55,000 to $100,000 to the cost. Of course, when you rotate soybeans or wheat in your fields, you’ll need harvesting implements for them, too. Don’t forget tillage equipment, sprayers, hay raking and baling equipment, and augers, all of which may be necessary to conduct business.

The ever-increasing prices of equipment, in part due to ever-increasing technological advancements, almost seem more suited as luxuries than essential pieces of work equipment. Even a standard new skid loader (and like a tractor, irreplaceable on many farms) can easily cost you $25,000 to $65,000. Or if you need a side-by-side utility vehicle for hauling feed or doing other odd jobs around the farm, expect to drop more than $20,000 on a Can-Am Defender Pro or roughly $10,000 for a Kubota RTV series. It’s no wonder many farmers opt to run their compact pickup trucks into the ground for these kinds of tasks — it cuts costs.

The cost of arable land

Arable land, the most fundamental agrarian natural resource, seems to be increasing in value while decreasing in availability. In 2016, tillable acreage in the U.S. made up only 16.65 percent of landmass. This isn’t surprising when we consider that from 1962 to 2012 we lost 31 million acres of farmland to some sort of development.

Cost per acre fluctuates greatly by state and region. But in some of our prime farm country, affordability is virtually impossible for just anyone without an inheritance to waltz into the industry and acquire enough acreage to get into cost-of-living-sustainable production agriculture.

In California, one of America’s agricultural powerhouses, the average cost of farmland is $10,000 per acre. Iowa isn’t too far behind at $7,190 an acre or even Florida at $5,950 an acre. When you consider than many production farmers say (https://www.agriculture.com/farm-management/business-planning/how-much-does-it-take-to-become-a-farmer) they need at least 500 owned acres and hundreds more leased acres to actually make a living solely on the farm, the sum of the money spent can be staggering.

The cost of crop farming

With the unfriendly cost of entry, so to speak, it may lead you to wonder about the generational farmers fortunate enough to inherit land, equity, and even equipment. If you have the foundation set, it should be easy to make an honest living in this business, no? Unfortunately, even this case isn’t so simplistic.

Your annual costs of operation vary greatly according to season, commodity, and region. But in general, costs are going up, and market values just can’t keep up sufficiently.

Profitability per acre of any crop is difficult to accurately depict in a blanket statement. It will vary greatly by the needs of a particular soil, weather, bushels per acre, labor, time of marketing, and much more. But for some perspective, let’s look at the 2018 Illinois reports for corn and soybeans cost of production. Corn averaged $854 cost of production across all of the state’s various regions, and it ranged anywhere from $3.70 to $4.33 a bushel when sold. Being conservative for with the national 176.4 bushels per acre yield average in 2018, that means each acre brought in only about $653 to $764.

Illinois soybeans averaged $639 cost of production per acre, for a value of $8.99 to $10.64 per bushel. That year the average was 51.6 bushels an acre, with a potential income of $464 to $549 an acre.

Other crops aren’t much more cheerful looking. Looking at historical commodity costs and returns per the USDA, national wheat production had a -$71.42 value of production, less total costs.

The reliance on off-farm income

This brings us to another important reality — the majority of farmers are reliant on an off-farm income of some sort to help pay the bills. This isn’t new — in fact I’d say most people in ag know this very well, if not statistically than in practicality. Think about it, how many farmers does anyone know running an operation as the sole source of income for them, their spouse, and perhaps the children? Chances are very, very few, if any.

According to the USDA, while it appears median income is expected to rise for farm households, it’s important to be aware off-farm income is directly related to this.

What “off-farm income” looks like varies quite a bit. It could take the form of a spouse with a full- or part-time job, it could be both spouses working full- or part-time in addition to farming, or even an affiliated parent or adult child working off the farm in some capacity. But the root cause tends to be the same — the farm just doesn’t pay for itself (or perhaps it can pay for itself but not the line of interest, the equipment loans, or health insurance).

We’ve seen how the cost of production has continued to rise and the return on investment of the major commodities has simply been unable to keep up, severely regressing in some years.

In 2017, the USDA released a nice “Food Dollar Series,” which showed exactly how America’s food dollars broke down and where each sent went after purchasing a processed and packaged food product.

The biggest chunk of change went to the food services sector getting 36.7 cents, followed by food processing getting 15 cents, and the wholesale trade with 9.1 cents. Farm production sat at fourth getting just 7.8 cents of every dollar spent. Now, in a food system so heavily reliant on widespread distribution and processing, a shift in how the dollar is cut up is reasonable — after all you can’t just go to the farm down the road and purchase a bundle of wheat and go through all the intricate steps to get a handful of bread flour. But when this number is visualized so plainly, coupled by the ways in which farmers have been struggling for decades, something doesn’t bode well with a lot of people.

There isn’t any one solution from any one organization, sector, or group to answer to the many financial issues farmers face in the modern era. But it seems to stand that commodity farming as we know it won’t get incredibly easier any time soon. What we can do is support our farmers, local and maybe not so local, and recognize the contributions they make to our food supply system. Pay attention to your local Farm Bureau and see what issues and concerns they are raising for farmers in your areas and show your support if you can. We all need to eat, and we all can’t have answers, but we can work for the future of agriculture and try to make it the best we can.

The cost of livestock production

Other commodities, such as livestock and poultry, haven’t fared much better. According to the USDA in 2019, the dollars per hundredweight gain value of hog production, less total costs was -$5.62. Less operating costs, that value would be a whopping profit of $11.10 . Note the reason in difference between these two numbers is that operating costs, present in the first dollar amount, account for the most expensive parts of all animal production. To calculate this unit, the USDA took into account things like purchased feed, on-farm grown/harvested feed, animal purchase, bedding, veterinary care, repairs, marketing and so forth.

Dollars per cow in the cow-calf segment of the beef industry that same year were a net value of -$786.87, less total costs. Even without operating costs, that leaves another slim profit margin of $49.65.

A benefit (or not so much of a benefit depending on whom you ask) to commodity poultry and pork are the wide availability of contracts with corporations such as Tyson, Cargill, and Smithfield. Granted, this does provide the safety net of a guaranteed buyer, but it doesn’t necessarily mean significantly better finances or lower startup costs. For example, the USDA said 60 percent of contract broiler growers earned household incomes that exceeded the U.S.-wide median, with a pretty wide range in annual salaries. However, this report noted: “On average, off-farm income accounts for half of the total household income earned by contract growers, and off-farm income varies widely.”