17 ms·

Is the Second Farm Crisis Upon Us?

121 points by clumsysmurf 8y ago

ewams 8y ago
"A gallon of milk costs a farmer approximately $1.90 to produce, but in the last year, farmers have been receiving as little as $1.35 per gallon." If it cost more to make it than they are getting, why are milk prices not higher?
- jryan49 8y ago
  Only thing I can think of is if the government sets price ceilings
- GW150914 8y ago
  Milk is heavily subsidized in the US, to the tune of 73% of returns. https://www.realagriculture.com/2018/02/u-s-dairy-subsidies-equal-73-percent-of-producer-returns-says-new-report/ https://www.realagriculture.com/2018/02/u-s-dairy-subsidies-...
- meritt 8y ago
  Agriculture subsidies. Farming in the US hasn't been a fundamentally profitable business for decades but the government provides a massive welfare program to ensure the survival of farmers, maintain a stable food supply, and keeping prices low for consumers.
  - dbcurtis 8y ago
    Yes and no. Some some farming is naturally profitable. But much is subsidized.
  - jetrink 8y ago
    > ensure the survival of farmers, maintain a stable food supply, and keeping prices low for consumers Also, farmers are a powerful special interest group. I know a dairy farmer who was invited to meet with a state governor one on one. The farmer flew to the meeting on his family's private jet.
  - chiefalchemist 8y ago
    As a side note, a few years ago (~10 to 15 yrs) there was an article / op-ed in the NYT Sunday Magazine. In it the author's "theory" was the growing obesity crisis was due to farm subsidies. In short, cheap corn means cheap high fructose corn syrup. Hard to argue against that logic. Cheap food is great for votes. Unfortunately, it also seem to often have ill health consequences.
    - travisoneill1 8y ago
      I'll take it over the health consequences of a food shortage any day.
      - chiefalchemist 8y ago
        Easy to say until the health consequences become so massive they suck up so much money you're going to bed hungry. And that __is__ in fact happening. I hear ya. But that does not diminish the consequences and real cost of subsidized foods. Fact: Worldwide, more people die from the effects of too much food than not enough.
- village-idiot 8y ago
  Subsidies distorting the market largely. Farmers continue to use rBST to over produce milk, and the fed pays to destroy some of it to avoid collapsing the market. The situation would sort itself out better if we’d left it the hell alone, but now the pain that correcting this situation will cause is significant
  - knome 8y ago
    Is this one of those purposeful sorts of policies where the government decided artificially ensuring too much food being produced is better than letting the amount of food produced naturally bounce between too much and too little, preferring the comfort of waste to the possibility of occasional famine?
    - village-idiot 8y ago
      Possible, but one could accomplish that without adding rBST into the equation. Letting farmers purposefully jack up production and then paying them to destroy the excess product is just incoherent policy.
  - TuGuQuKu 8y ago
    "Capitalism is the most efficient method of allocating resources" lol
  - deleted 8y ago
    [deleted]
- dade_ 8y ago
  Really makes you wonder why a country would implement supply management. Oh America...
  - simonsarris 8y ago
    Just FYI the situation is the same in Austria, and possibly other EU countries, w.r.t milk prices.
- downrightmike 8y ago
  A gallon in the stores costs $4-5
  - ams6110 8y ago
    Yes if you buy "organic" milk in a glass bottle. Around here a gallon in a plastic jug at Kroger is about $2.00. Keep in mind milk is often priced as a "loss leader" to get people into the store..
  - GlenTheMachine 8y ago
    I don't know where you're shopping. A gallon of milk this afternoon cost me $2.59.
    - markkanof 8y ago
      A 1/2 gallon of organic whole milk at a grocery store in Portland, OR is 3.99 or 4.59 depending on if the store brand is available or not. Not disputing any of your knowledge of the industry, just adding another data point.
  - khuey 8y ago
    Even in San Francisco a gallon of milk at Trader Joe's is under $3/gallon.
    - shagie 8y ago
      There's some interesting mechanics in the milk subsidies. The original subsidy was based on the distance from Eau Claire, Wisconsin ( http://icetronauts.tripod.com/milk.htm http://icetronauts.tripod.com/milk.htm ). > Under the system established in the 1930s, the farther a state was from Eau Claire, the higher were the federal price subsidies paid to its dairy farmers on milk sold for bottling. > For example, the maximum subsidy, or differential, paid to Wisconsin dairy farmers is $1.20 per 100 pounds of milk, while farmers in southern Florida are paid $4.18 per 100 pounds. California is even further away. The particulars of it are at https://www.gpo.gov/fdsys/pkg/GAOREPORTS-RCED-95-97BR/html/GAOREPORTS-RCED-95-97BR.htm https://www.gpo.gov/fdsys/pkg/GAOREPORTS-RCED-95-97BR/html/G... It is still based in part on Eau Claire. https://www.bostonglobe.com/business/2013/06/08/what-does-boston-have-with-milk-prices-wisconsin-turns-out-lot/AUfXl8MXtCffhdw3PD79bJ/story.html https://www.bostonglobe.com/business/2013/06/08/what-does-bo... Between water policy, oversupply during the Eau Claire Base Point and existing subsidies... California is a very odd place to produce milk and the cheap milk is a legacy of those policies. And the last spring and hot summer in Eau Claire ( http://www.aos.wisc.edu/%7Esco/clim-history/stations/eau/eau-gddu-2018.gif http://www.aos.wisc.edu/%7Esco/clim-history/stations/eau/eau... & https://madison.com/wsj/business/usda-wisconsin-milk-production-slows/article_51ca73f4-b466-5f2d-ab1b-8b08874643c0.html https://madison.com/wsj/business/usda-wisconsin-milk-product... ) will impact the price of milk there, along with the tariff spat with Canada... which in turn changes the amount of the subsidy across the country.
- celias 8y ago
  Planet money did a piece the "government cheese" program during the Carter and Reagan administrations that was supposed to help dairy farmers https://www.npr.org/sections/money/2018/08/31/643486297/episode-862-big-government-cheese https://www.npr.org/sections/money/2018/08/31/643486297/epis...
- abtinf 8y ago
  Setting aside the specifics of milk, there are situations where it is more economical to run a business at a loss than not at all. Let's say producing a product costs $5 in fixed costs (interest, depreciation, etc) and $1 in variable costs (labor, raw material, etc), for total of $6 per unit. If you can sell the product for more than $6, you make a profit. If you sell the product for $1-$6, you lose less money than you would if you didn't sell it, because you have to pay those fixed costs even if you don't produce any units. You should only stop production if the price falls below $1.
jdhn 8y ago
The article only mentions land value once, and in my opinion this is a huge oversight. There's articles going back to 2010[0] that speculate that a land bubble had been going for a few years, and when that's coupled with quantitative easing it means that people had to borrow increasing amounts of money to buy an equivalent amount of land. Combine that with decreasing crop prices and additional debt load that was taken on as a result of buying/fixing equipment, and you have a perfect storm. [0] https://www.tandfonline.com/doi/abs/10.1080/13504850802297970?journalCode=rael20 https://www.tandfonline.com/doi/abs/10.1080/1350485080229797...
- ttul 8y ago
  I recall that the guy who made a billion or so betting against the housing crisis mentioned in a doc that his new thesis was farm prices... I wonder if he is out yet.
- F3Life 8y ago
  A lot of these farmers presumably owned their land prior to QE? Maybe it’s the ones who bought land after who are going to the wall. In the UK, economists say QE has been a success to the point where some say we have learned how to print money without creating Weimar-style inflation. However it looks like the inflation has simply transferred to assets, particularly property including farmland. And we don’t yet know what the impact is. Again in the UK, we might say in the future, increasing property prices resulted in a reduced birth rate, and an increased need for inward migration to plug the gap. Just speculation, but we don’t yet know how this experiment plays out - and with your interesting insight, we might ask whether the end of mid-scale farming was the impact. Given the importance of this group, for many reasons, on American culture and identity, what will be the victim of QE?
  - downrightmike 8y ago
    In the US, the subprime mortgage lending crisis was caused by good borrowers over leveraging the cheap mortgage rates they could get and buying extra homes to flip. When the money dried up and there was no one to flip to, they went under en mass. If farmers have been over leveraging on farm land, then something similar to a crash makes sense especially if yields are down or prices fall because of surplus.
krapht 8y ago
This process of farm consolidation is inevitable. Agriculture benefits from economies of scale, even 2000 years ago the Roman latifundia fed an empire efficiently.
- orf 8y ago
  Did they? What's up with all the famine then? The empire relied on an obscene amount of grain shipments from North Africa and Egypt (plus sicily to begin with). Roman food distribution was anything but efficient or fair
  - freehunter 8y ago
    Efficient doesn't mean perfect, or even free from flaws. In the ancient world, humans were very much at the mercy of the weather day to day, and one bad season could wipe out entire cities. Doesn't mean their farming practices weren't efficient for the time and available technology.
  - enraged_camel 8y ago
    I'd say they did pretty damn well given the lack of contemporary farming technologies and practices.
  - jandrese 8y ago
    There is an argument that all famine is political, and has been for several centuries. It seems crazy on the surface, but it's hard to find counterexamples.
    - khuey 8y ago
      All of the worst famines are political, because the combination of political and natural factors push the death tolls beyond what nature itself is capable of.
  - Nasrudith 8y ago
    That was an economic issue - or at least perceived as such contemporarily. This is all second hand recollections so don't take me as an expert or anything. From what I recall of Revelations interpretation much of it was coded political satire like remarks about famine but plenty of wine. Essentially prolonged war harmed citizen-soldier farmers and there was a glut of slaves from their victory over Carthage. That meant the wealthy could benefit from buying up poorly maintained farms and they made more profit from growing grapes for wine than growing grain. Inequality essentially lead to the famine indirectly. If the major buyers were the people enmasse wine would be less prioritized. Grain shipments would still happen given relative advantage in trade but it wouldn't have had such a dysfunction as food demand would have the proper 'clout'. I recall hearing about one further irony later in history. One reform that made things even worse for equality was having state supplied armaments instead of citizens being expected to provide their own. It has long been essentially common sense and the way a military seems like it should work. One would think that would be better for equality by allowing rich and poor to fight and advance in status but it helped set up a proto-generalismo situation by having the power derived by the state instead of citizens.
cheez 8y ago
Are farmers not able to use financial instruments to hedge their costs? Simply borrowing money with no hedge seems VERY scary to me. I guess that's just the game?
- NTDF9 8y ago
  I'm not aware of these instruments. What are some examples of hedges to farm borrowing so I can look them up?
  - icahnvalyou 8y ago
    All the commodities mentioned in the article have had active futures markets for decades. A farmer will typically sell contracts to deliver their crop as a hedge against the price moving against them during the season. https://en.wikipedia.org/wiki/Futures_contract https://en.wikipedia.org/wiki/Futures_contract
  - protomyth 8y ago
    Go to any of the major player's sites and they have programs for farmers such as https://www.cargillag.com/ https://www.cargillag.com/ - ProPricing is there marketing name https://www.cargillpropricing.com/ https://www.cargillpropricing.com/ You can do it yourself if you learn hedging. Iowa State has https://www.extension.iastate.edu/agdm/crops/html/a2-60.html https://www.extension.iastate.edu/agdm/crops/html/a2-60.html and University of Missouri https://extension2.missouri.edu/g602 https://extension2.missouri.edu/g602
  - village-idiot 8y ago
    Most farmers and their direct consumers will buy/sell a portion of their harvest in advance in the form of commodity grain futures. This protects the farmer from dropping prices and their consumer from rising prices. It's one of the reasons why prices don't shift around a ton from winter to summer anymore. You can also hedge risk against changes in production cost by using instruments that track the difference between raw grains and their immediate products (e.g. Soybean Crush). But that's not really a game the farmer might play. These systems have their limits, and are really there to protect all parties against sudden shifts caused by external events like drought and international trade. When the trend is long and smooth in one direction there's very little the farmer can do to fix their situation via purely financial means. No baker is going to pre-purchase their wheat at old prices when the market price has been slowly declining for a decade.
delbel 8y ago
these aren't "farmers" these are big agricultural 4000 acres mega-farms. they took out huge loans and make ridiculous purchases ($400k tractors) and relied on pie in the sky subsidizes, some are to actually not to farm. if you have an oxygen machine and your power company threatens to turn it off, you can get a doctor's note to prevent this. They specifically go through this with you during collection and refer you to the program, which is a federal grant and state program. I helped my neighbor do this who is on an oxygen machine. She even got solar installed "just in case the rid went down"
chiefalchemist 8y ago
I read and read quickly, so perhaps I missed it. But all the examples seem to be farmers of commodities. If you're producing something that's consistently being over-produced, what do they expect to happen? Don't get me wrong. Obviously, the food supply is important. It's also difficult (i.e., weather). None the less, running full force into producing a commodity can't be the best option they have. Is it?
- randomdata 8y ago
  As a grain farmer in Canada, I see this year as being one of the better years for commodity prices. Wheat was back to levels we haven't seen in a long time. Corn has held a little above average. Soybeans have taken a big hit in the last couple of months, but there were some good marketing opportunities earlier in the year. Unless harvest is a complete failure, there doesn't seem to be much to worry about. A welcome change from the last few years when the price was lower. Not being in the US, I don't necessarily see the effects of the trade war like the US farmer is seeing, so I am unable to comment about that. But as far as the regular market price goes, which the article also raised concern about, I really don't see the issue. The grain farmers should be positioned fairly well right now.
  - ams6110 8y ago
    What about futures contracts? I didn't see that mentioned at all and I thought that was the primary means that farmers used to remove uncertainty over what they would be paid for their harvest? Update: this is discussed in another sub-thread on this page.
  - chiefalchemist 8y ago
    Yes. But if you're going to do whatever one else is doing, that's not a plan to prosper. It's suicidal. For example, I didn't see a single mention of "...so we're going to go organic..." Again. Don't get me wrong. Food supply is important. One article does not a trend make. That said, sharing a bad idea with 100 or 1000 other people (farmers) still makes it a bad idea. I realize change isn't something most farmers seek, none the less, they are not immune to the definition of insanity.
janee 8y ago
Other than smaller farms suffering, what would be the dangers of farm consolidation? I was looking for a section in the article that talks about it, but couldn't really find any.
- downrightmike 8y ago
  In the last US census less than 1% reported were farmers. Huge change in demographics in 100 years. A lot of that has been made possible by large agribusinesses. The small guys day's have over for a while.
- UncleEntity 8y ago
  For some reason we need small (relatively inefficient) family farms as opposed to large corporate farms. Not too sure why other than purely political reasons, farm states vote first in the primarys for this specific reason.
cletus 8y ago
I see the multi-generational family farm being doomed as anything more than a niche boutique to make premium-priced organic produce in the next few decades. The reason for this is automation, though it isn't really touched on by this article. At some point in the near future robots will not only be able to construct greenhouses for growing crops with hydroponics but they'll also be able to do most of the work too. Look at these examples of hydroponic (vs soil) yields [1]. Hydroponic yields are in typically in the order of 3-10+ tims that of soil. In greenhouses you can control temperature, grow year-round and not have your crop wiped out by inclement weather (barring hurricanes/tornadoes, which may destroy your greenhouses but this is less of an issue than a frost or snowstorm destroying your crop). When human labour is only minimally required to construct a greenhouse or man it you'll see (IMHO) the biggest change to human food production since the advent of agriculture. It's also why I'm not particularly worried about the ability of the planet to feed itself. If food were produced this way, Earth could easily support a population of 50-100 billion. The article mentions that two bad years can lose the farm. The only way to counter such risks is scale. That's why mega-farms are becoming and will become the norm. Of course along the way I fully expect massive increases in government subsidies because of the political power of farmers (in the US and EU) but you just can't turn back time. [1] http://uponics.com/hydroponics-yield/ http://uponics.com/hydroponics-yield/
- BariumBlue 8y ago
  For hydroponics, I've heard of lettuce being commercially grown, but nothing else - it's more expensive than just farming a large section of land. And for automation, yes it is a threat, but often times more expensive than just paying cheap labor, which it seems the world won't be running out of in the short term
  - xoa 8y ago
    >it's more expensive than just farming a large section of land. Does that take into account all the externalities that are currently still ignored in standard farming? I mean, one could argue that they'll continue to get ignored indefinitely sure, but I wonder if we're starting to reach a tipping point there again and while cletus didn't mention it I think that's one of the most compelling arguments towards hydroponics. Pure physical barriers could mean the elimination of pesticide and herbicide requirements for example, and both of those hide and enormous amount of expense upstream and downstream. Nutrients (fertilizer) can be applied vastly more effectively and efficiently, and possibly at least as importantly excess can be recovered or processed before any emission which can entirely eliminate runoff issues and entry into the environment. Even thinking politically, the general public often enjoys the views and imagine romanticism of farming, but the general public can also quite easily notice and hate algal blooms, outbreaks shutting down beaches, nutrient baths causing explosions of invasives like zebra mussels, etc., and just general reductions in recreational water quality even beyond any other effects. Those also represent big, powerful industries as well. And there is the land itself, hydroponics means arable land is unnecessary for basic food production, and there are other compelling uses for said land. Also land-wise and politically, one argument that frequently gets brought up is "food security" and governments reasonably worried about having enough basic food available in an emergency. But at least for rich countries, if anything LED hydroponics could offer a better story there (at a price), since the facilities can even be put underground/underwater or in other non-arable, dense and defensible positions. They can be protected from new forms of diseases and pests far more effectively. Small developed countries that currently must import might be able to achieve that politically attractive (whatever the practical merits) "food independence" that is current infeasible for them. I mean, I don't think there will be any super rapid changes here, and I do think many places will continue to have some agriculture as a boutique offering, but hydroponics long term looks pretty compelling in a lot of major ways.
GlenTheMachine 8y ago
“We’re heading to a place where we don’t have farmers; we just have food production.” This. I don't know what the solution to this is. I have a small farm, and raise meat sheep. But it's very much a hobby. The problem is, though, that almost all of the other farmers in my area, the ones I meet at the feed store or the livestock auction, they're also hobby farmers. There is exactly one “real” farmer (meaning that it's his full time job) in my area. He raises specialty row crops and runs an agricultural co-op, the kind where you pay a certain amount a month and get a box of fresh vegetables every week. But hobby farmers can't feed the country. We can't even feed ourselves, if it comes to that. The problem is that these vegetables, which don't have to be shipped any distance and don't have the overhead of a grocery store, are still more expensive than the equivalent groceries in the local Safeway. The economies of scale in agriculture have become so strong that there's no way to compete on price any other way. And people understandably don't want to double their grocery bills just to buy local. I grew up on a 300 acre cattle farm. Fifty years ago a family could make a living on a 300 acre, well situated east coast farm. Not any more. You'd have trouble just paying for gas, groceries, and medical care. Forget paying down a mortgage or god forbid buying new farm equipment. The only way to even stay on the farm, is to either walk into a situation where everything - land, house, barn, equipment, everything - is already paid for. Or to get a full time job in town and farm on the weekends. That's what my dad did. And it's what my sister and brother-in-law do now. We have a situation where we've harnessed economies of scale so much that we have only a small handful of corporations producing our food. They mainly want to grow exactly the same small number of crops, to keep supply chains simple. We've wrung all of the redundancy, both financial and biodiversity, out of the system. So what happens if someone figures out how to weaponize that against us? What happens if Chinese investors own half the farm land and we go to war with China? Or what happens if we encounter this generation's version of potato blight on corn or wheat? This is not just a human tragedy. It's a huge national security issue, and it looks like nobody is paying attention.
- shoo 8y ago
  This is interesting, thank you for sharing. Is the main problem simply the reduced price of output (due to competition with large scale industrial agriculture), rather than other factors (such as potential increased costs of inputs, degraded soil quality, access to water). > We've wrung all of the redundancy, both financial and biodiversity, out of the system. I have similar concerns, not just about farming but other parts of a globalised economy. It is far more efficient to have everyone very specialised, with long-range dependencies. It is far less resilient to have one huge coupled economic system than a number of smaller, approximately independent systems. [+] Similarly, it's more efficient (in the short run, or the lucky case) to not leave any contingency or insurance against rare events. > What happens if Chinese investors own half the farm land and we go to war with China? I wouldn't worry about this one -- unless foreign investors have a means to enforce physical security of their ownership claims, there's always the option of the government with control over the physical assets to expropriate them, either by simply changing the law, or declaring special war time powers. For example, re: WW1 > the attack on enemy aliens and their property involved diverse institutions (governments, parliaments, the judiciary, armies and administrative bureaucracies) and actors (local businessmen and entrepreneurs, lobbies and interests groups but also ordinary people animated by patriotism or who saw in the attack on enemy property an opportunity to improve their own economic status). https://encyclopedia.1914-1918-online.net/article/property_rights_and_economic_nationalism https://encyclopedia.1914-1918-online.net/article/property_r... edit: [+] to call myself out for claiming things based solely on intuition, it's not at all obvious that many smaller independent economies are necessarily always more resilient than a single arbitrarily structured large economy -- it might depend on the structure of dependencies, and how much choice there is for alternatives if subsystems fail, and how much slack is in the system, and dynamic factors. To argue in the other direction, smaller, isolated economies also tend to be at more risk of failure if any of their larger participants fails (see also: common wisdom about risk of buying real estate in small single company or single industry towns and so on...), so there's probably more robustness for those economies where the impact of failure of any single participant upon the overall system is roughly negligible. but i think there is usually a pretty strong conflict between efficiency redundancy.
kingkingking 8y ago
This is one of the best test comments ever. Its bigly.
whitedeveloper 8y ago
This is one of the best test comments ever. Its bigly.
HIPisTheAnswer 8y ago
Not quite; the greatest crisis humanity has ever faced is upon us. Trickles down into farming, and everything else. We are just getting started.
- gnulinux 8y ago
  This sort non-evidence-based apocalypse talking, fear mongering isn't my favorite part of HN. I wish you could base your claims to some links, or books.
rmason 8y ago
I worked with farmers for over twenty years. It is a relentless game of ever increasing efficiency. But what I observed were marked differences in ability to market the crops they grew. One guy I was good friends with would always sell enough of his crop ahead to pay all his bills if the price was above his cost of production. Sometimes he'd sell two or three years ahead when prices were good. He said in a ten year period he had lots of neighbors who made more money than he did some years only to lose it during the bad years. He said that gambling with borrowed money didn't make any sense, only with your profits. Knew two guys who let their wives do all the farms marketing. They went to school for it and would network online with other farm marketers. They felt that they were too emotional about it and that it helped their wives feel like true partners.
mac01021 8y ago
The article illustrates the crisis, producing an example of how farmers fail to make ends meet: >A gallon of milk costs a farmer approximately $1.90 to produce, but in the last year, farmers have been receiving as little as $1.35 per gallon. But they don't explain the underlying economic forces. The only possible reason (I think) that a farmer can't charge more than $1.35 for a gallon of milk is that some other farmer is able to produce a gallon of milk for less than $1.35. So, clearly, some farmers are quite successful, and their success (or maybe just their efficiency) is part of the reason that other farmers are having a hard time? But the article doesn't talk about that much. Slightly off topic: I pay my local supermarket $3 for a gallon of milk and now I'm curious about the breakdown of what that markup is spent on.
- BariumBlue 8y ago
  > the only possible reason that a farmer can't charge more than $1.35 for a gallon of milk is that some other farmer is able to produce a gallon of milk for less than $1.35 Not necessarily - if you have demand for 300 units of milk and there are enough producers to match, then when demand halves, the producers are still producing 300 units of milk and paying for the costs to produce that amount of milk. To offset those costs as much as possible, they'll willingly momentarily sell under marginal cost - the production costs have already been spent anyways
  - heavenlyhash 8y ago
    Oh boy. If you and GP think there's a purely unregulated Laissez-faire market for dairy products in the U.S., you've got some fun reading to catchup on. A sibling comment lower down the page provides some links: https://news.ycombinator.com/item?id=17996881 https://news.ycombinator.com/item?id=17996881
    - rmason 8y ago
      What can change things dramatically at least in the upper Midwest is if the US is able to convince Canada to eliminate or greatly lower the tariff on milk and cheese. In our area of Michigan a huge new cheese plant is going in and the only justification I can see for that large an investment is they already know the dairy tariff is ending. https://www.lansingstatejournal.com/story/news/2018/08/09/555-m-milk-processing-factory-coming-st-johns-glanbia/850914002/ https://www.lansingstatejournal.com/story/news/2018/08/09/55... St. Johns is a small farm town North of Lansing which is Michigan's state capital.
dbs 8y ago
Large scale agriculture will add up, until someday it doesn't. This fable told by Jeremy Grantham explains it quite well. <i>My favourite story is about the contract between the farmer and the devil. The devil says, "sign this contract and I'll triple your farm's profits". But there are 25 footnotes, as there always is with the devil. Footnote 22 says that 1% of your soil will be eroded each year, which is actually horrifyingly close to the real average over the past 50 years. The farmer signs and makes a fortune on a 40-year contract. And his son then signs up for the next 40-year contract and makes a fortune. And his son then signs up for the third and final contract. He still does very well, and in the final 20 years the family has accumulated enormous wealth, but the soil has gone. It's the same story for all his neighbouring farms and everyone is out of business. My sick joke is that at least he will die a rich farmer when all the starving hordes arrive from the city.</i> https://www.theguardian.com/environment/blog/2013/apr/16/jeremy-grantham-food-oil-capitalism https://www.theguardian.com/environment/blog/2013/apr/16/jer...
TulliusCicero 8y ago
> He can offer help to many farmers, but what was once a robust network of state-funded farmer advocates has shrunk dramatically Do we have a robust network of state-funded plumber advocates or cashier advocates? If farming is unprofitable for many, then the expected market response is people exiting the market, which itself will make it more profitable for those who remain. Farming is largely a commodity game. That we need fewer farmers over time due to technological advances is entirely expected and even good! A society where a large percentage of people still had to be farmers to have enough food to eat would be a poorer one.

121 points by clumsysmurf 8y ago

"A gallon of milk costs a farmer approximately $1.90 to produce, but in the last year, farmers have been receiving as little as $1.35 per gallon." If it cost more to make it than they are getting, why are milk prices not higher?

jryan49 8y ago
Only thing I can think of is if the government sets price ceilings
GW150914 8y ago
Milk is heavily subsidized in the US, to the tune of 73% of returns. https://www.realagriculture.com/2018/02/u-s-dairy-subsidies-equal-73-percent-of-producer-returns-says-new-report/ https://www.realagriculture.com/2018/02/u-s-dairy-subsidies-...
meritt 8y ago
Agriculture subsidies. Farming in the US hasn't been a fundamentally profitable business for decades but the government provides a massive welfare program to ensure the survival of farmers, maintain a stable food supply, and keeping prices low for consumers.
- dbcurtis 8y ago
  Yes and no. Some some farming is naturally profitable. But much is subsidized.
- jetrink 8y ago
  > ensure the survival of farmers, maintain a stable food supply, and keeping prices low for consumers Also, farmers are a powerful special interest group. I know a dairy farmer who was invited to meet with a state governor one on one. The farmer flew to the meeting on his family's private jet.
- chiefalchemist 8y ago
  As a side note, a few years ago (~10 to 15 yrs) there was an article / op-ed in the NYT Sunday Magazine. In it the author's "theory" was the growing obesity crisis was due to farm subsidies. In short, cheap corn means cheap high fructose corn syrup. Hard to argue against that logic. Cheap food is great for votes. Unfortunately, it also seem to often have ill health consequences.
  - travisoneill1 8y ago
    I'll take it over the health consequences of a food shortage any day.
    - chiefalchemist 8y ago
      Easy to say until the health consequences become so massive they suck up so much money you're going to bed hungry. And that __is__ in fact happening. I hear ya. But that does not diminish the consequences and real cost of subsidized foods. Fact: Worldwide, more people die from the effects of too much food than not enough.
village-idiot 8y ago
Subsidies distorting the market largely. Farmers continue to use rBST to over produce milk, and the fed pays to destroy some of it to avoid collapsing the market. The situation would sort itself out better if we’d left it the hell alone, but now the pain that correcting this situation will cause is significant
- knome 8y ago
  Is this one of those purposeful sorts of policies where the government decided artificially ensuring too much food being produced is better than letting the amount of food produced naturally bounce between too much and too little, preferring the comfort of waste to the possibility of occasional famine?
  - village-idiot 8y ago
    Possible, but one could accomplish that without adding rBST into the equation. Letting farmers purposefully jack up production and then paying them to destroy the excess product is just incoherent policy.
- TuGuQuKu 8y ago
  "Capitalism is the most efficient method of allocating resources" lol
- deleted 8y ago
  [deleted]
dade_ 8y ago
Really makes you wonder why a country would implement supply management. Oh America...
- simonsarris 8y ago
  Just FYI the situation is the same in Austria, and possibly other EU countries, w.r.t milk prices.
downrightmike 8y ago
A gallon in the stores costs $4-5
- ams6110 8y ago
  Yes if you buy "organic" milk in a glass bottle. Around here a gallon in a plastic jug at Kroger is about $2.00. Keep in mind milk is often priced as a "loss leader" to get people into the store..
- GlenTheMachine 8y ago
  I don't know where you're shopping. A gallon of milk this afternoon cost me $2.59.
  - markkanof 8y ago
    A 1/2 gallon of organic whole milk at a grocery store in Portland, OR is 3.99 or 4.59 depending on if the store brand is available or not. Not disputing any of your knowledge of the industry, just adding another data point.
- khuey 8y ago
  Even in San Francisco a gallon of milk at Trader Joe's is under $3/gallon.
  - shagie 8y ago
    There's some interesting mechanics in the milk subsidies. The original subsidy was based on the distance from Eau Claire, Wisconsin ( http://icetronauts.tripod.com/milk.htm http://icetronauts.tripod.com/milk.htm ). > Under the system established in the 1930s, the farther a state was from Eau Claire, the higher were the federal price subsidies paid to its dairy farmers on milk sold for bottling. > For example, the maximum subsidy, or differential, paid to Wisconsin dairy farmers is $1.20 per 100 pounds of milk, while farmers in southern Florida are paid $4.18 per 100 pounds. California is even further away. The particulars of it are at https://www.gpo.gov/fdsys/pkg/GAOREPORTS-RCED-95-97BR/html/GAOREPORTS-RCED-95-97BR.htm https://www.gpo.gov/fdsys/pkg/GAOREPORTS-RCED-95-97BR/html/G... It is still based in part on Eau Claire. https://www.bostonglobe.com/business/2013/06/08/what-does-boston-have-with-milk-prices-wisconsin-turns-out-lot/AUfXl8MXtCffhdw3PD79bJ/story.html https://www.bostonglobe.com/business/2013/06/08/what-does-bo... Between water policy, oversupply during the Eau Claire Base Point and existing subsidies... California is a very odd place to produce milk and the cheap milk is a legacy of those policies. And the last spring and hot summer in Eau Claire ( http://www.aos.wisc.edu/%7Esco/clim-history/stations/eau/eau-gddu-2018.gif http://www.aos.wisc.edu/%7Esco/clim-history/stations/eau/eau... & https://madison.com/wsj/business/usda-wisconsin-milk-production-slows/article_51ca73f4-b466-5f2d-ab1b-8b08874643c0.html https://madison.com/wsj/business/usda-wisconsin-milk-product... ) will impact the price of milk there, along with the tariff spat with Canada... which in turn changes the amount of the subsidy across the country.
celias 8y ago
Planet money did a piece the "government cheese" program during the Carter and Reagan administrations that was supposed to help dairy farmers https://www.npr.org/sections/money/2018/08/31/643486297/episode-862-big-government-cheese https://www.npr.org/sections/money/2018/08/31/643486297/epis...
abtinf 8y ago
Setting aside the specifics of milk, there are situations where it is more economical to run a business at a loss than not at all. Let's say producing a product costs $5 in fixed costs (interest, depreciation, etc) and $1 in variable costs (labor, raw material, etc), for total of $6 per unit. If you can sell the product for more than $6, you make a profit. If you sell the product for $1-$6, you lose less money than you would if you didn't sell it, because you have to pay those fixed costs even if you don't produce any units. You should only stop production if the price falls below $1.

jdhn 8y ago

The article only mentions land value once, and in my opinion this is a huge oversight. There's articles going back to 2010[0] that speculate that a land bubble had been going for a few years, and when that's coupled with quantitative easing it means that people had to borrow increasing amounts of money to buy an equivalent amount of land. Combine that with decreasing crop prices and additional debt load that was taken on as a result of buying/fixing equipment, and you have a perfect storm. [0] https://www.tandfonline.com/doi/abs/10.1080/13504850802297970?journalCode=rael20 https://www.tandfonline.com/doi/abs/10.1080/1350485080229797...

ttul 8y ago
I recall that the guy who made a billion or so betting against the housing crisis mentioned in a doc that his new thesis was farm prices... I wonder if he is out yet.
F3Life 8y ago
A lot of these farmers presumably owned their land prior to QE? Maybe it’s the ones who bought land after who are going to the wall. In the UK, economists say QE has been a success to the point where some say we have learned how to print money without creating Weimar-style inflation. However it looks like the inflation has simply transferred to assets, particularly property including farmland. And we don’t yet know what the impact is. Again in the UK, we might say in the future, increasing property prices resulted in a reduced birth rate, and an increased need for inward migration to plug the gap. Just speculation, but we don’t yet know how this experiment plays out - and with your interesting insight, we might ask whether the end of mid-scale farming was the impact. Given the importance of this group, for many reasons, on American culture and identity, what will be the victim of QE?
- downrightmike 8y ago
  In the US, the subprime mortgage lending crisis was caused by good borrowers over leveraging the cheap mortgage rates they could get and buying extra homes to flip. When the money dried up and there was no one to flip to, they went under en mass. If farmers have been over leveraging on farm land, then something similar to a crash makes sense especially if yields are down or prices fall because of surplus.

krapht 8y ago

This process of farm consolidation is inevitable. Agriculture benefits from economies of scale, even 2000 years ago the Roman latifundia fed an empire efficiently.

orf 8y ago
Did they? What's up with all the famine then? The empire relied on an obscene amount of grain shipments from North Africa and Egypt (plus sicily to begin with). Roman food distribution was anything but efficient or fair
- freehunter 8y ago
  Efficient doesn't mean perfect, or even free from flaws. In the ancient world, humans were very much at the mercy of the weather day to day, and one bad season could wipe out entire cities. Doesn't mean their farming practices weren't efficient for the time and available technology.
- enraged_camel 8y ago
  I'd say they did pretty damn well given the lack of contemporary farming technologies and practices.
- jandrese 8y ago
  There is an argument that all famine is political, and has been for several centuries. It seems crazy on the surface, but it's hard to find counterexamples.
  - khuey 8y ago
    All of the worst famines are political, because the combination of political and natural factors push the death tolls beyond what nature itself is capable of.
- Nasrudith 8y ago
  That was an economic issue - or at least perceived as such contemporarily. This is all second hand recollections so don't take me as an expert or anything. From what I recall of Revelations interpretation much of it was coded political satire like remarks about famine but plenty of wine. Essentially prolonged war harmed citizen-soldier farmers and there was a glut of slaves from their victory over Carthage. That meant the wealthy could benefit from buying up poorly maintained farms and they made more profit from growing grapes for wine than growing grain. Inequality essentially lead to the famine indirectly. If the major buyers were the people enmasse wine would be less prioritized. Grain shipments would still happen given relative advantage in trade but it wouldn't have had such a dysfunction as food demand would have the proper 'clout'. I recall hearing about one further irony later in history. One reform that made things even worse for equality was having state supplied armaments instead of citizens being expected to provide their own. It has long been essentially common sense and the way a military seems like it should work. One would think that would be better for equality by allowing rich and poor to fight and advance in status but it helped set up a proto-generalismo situation by having the power derived by the state instead of citizens.

cheez 8y ago

Are farmers not able to use financial instruments to hedge their costs? Simply borrowing money with no hedge seems VERY scary to me. I guess that's just the game?

NTDF9 8y ago
I'm not aware of these instruments. What are some examples of hedges to farm borrowing so I can look them up?
- icahnvalyou 8y ago
  All the commodities mentioned in the article have had active futures markets for decades. A farmer will typically sell contracts to deliver their crop as a hedge against the price moving against them during the season. https://en.wikipedia.org/wiki/Futures_contract https://en.wikipedia.org/wiki/Futures_contract
- protomyth 8y ago
  Go to any of the major player's sites and they have programs for farmers such as https://www.cargillag.com/ https://www.cargillag.com/ - ProPricing is there marketing name https://www.cargillpropricing.com/ https://www.cargillpropricing.com/ You can do it yourself if you learn hedging. Iowa State has https://www.extension.iastate.edu/agdm/crops/html/a2-60.html https://www.extension.iastate.edu/agdm/crops/html/a2-60.html and University of Missouri https://extension2.missouri.edu/g602 https://extension2.missouri.edu/g602
- village-idiot 8y ago
  Most farmers and their direct consumers will buy/sell a portion of their harvest in advance in the form of commodity grain futures. This protects the farmer from dropping prices and their consumer from rising prices. It's one of the reasons why prices don't shift around a ton from winter to summer anymore. You can also hedge risk against changes in production cost by using instruments that track the difference between raw grains and their immediate products (e.g. Soybean Crush). But that's not really a game the farmer might play. These systems have their limits, and are really there to protect all parties against sudden shifts caused by external events like drought and international trade. When the trend is long and smooth in one direction there's very little the farmer can do to fix their situation via purely financial means. No baker is going to pre-purchase their wheat at old prices when the market price has been slowly declining for a decade.

delbel 8y ago

these aren't "farmers" these are big agricultural 4000 acres mega-farms. they took out huge loans and make ridiculous purchases ($400k tractors) and relied on pie in the sky subsidizes, some are to actually not to farm. if you have an oxygen machine and your power company threatens to turn it off, you can get a doctor's note to prevent this. They specifically go through this with you during collection and refer you to the program, which is a federal grant and state program. I helped my neighbor do this who is on an oxygen machine. She even got solar installed "just in case the rid went down"

chiefalchemist 8y ago

I read and read quickly, so perhaps I missed it. But all the examples seem to be farmers of commodities. If you're producing something that's consistently being over-produced, what do they expect to happen? Don't get me wrong. Obviously, the food supply is important. It's also difficult (i.e., weather). None the less, running full force into producing a commodity can't be the best option they have. Is it?

randomdata 8y ago
As a grain farmer in Canada, I see this year as being one of the better years for commodity prices. Wheat was back to levels we haven't seen in a long time. Corn has held a little above average. Soybeans have taken a big hit in the last couple of months, but there were some good marketing opportunities earlier in the year. Unless harvest is a complete failure, there doesn't seem to be much to worry about. A welcome change from the last few years when the price was lower. Not being in the US, I don't necessarily see the effects of the trade war like the US farmer is seeing, so I am unable to comment about that. But as far as the regular market price goes, which the article also raised concern about, I really don't see the issue. The grain farmers should be positioned fairly well right now.
- ams6110 8y ago
  What about futures contracts? I didn't see that mentioned at all and I thought that was the primary means that farmers used to remove uncertainty over what they would be paid for their harvest? Update: this is discussed in another sub-thread on this page.
- chiefalchemist 8y ago
  Yes. But if you're going to do whatever one else is doing, that's not a plan to prosper. It's suicidal. For example, I didn't see a single mention of "...so we're going to go organic..." Again. Don't get me wrong. Food supply is important. One article does not a trend make. That said, sharing a bad idea with 100 or 1000 other people (farmers) still makes it a bad idea. I realize change isn't something most farmers seek, none the less, they are not immune to the definition of insanity.

janee 8y ago

Other than smaller farms suffering, what would be the dangers of farm consolidation? I was looking for a section in the article that talks about it, but couldn't really find any.

downrightmike 8y ago
In the last US census less than 1% reported were farmers. Huge change in demographics in 100 years. A lot of that has been made possible by large agribusinesses. The small guys day's have over for a while.
UncleEntity 8y ago
For some reason we need small (relatively inefficient) family farms as opposed to large corporate farms. Not too sure why other than purely political reasons, farm states vote first in the primarys for this specific reason.

cletus 8y ago

I see the multi-generational family farm being doomed as anything more than a niche boutique to make premium-priced organic produce in the next few decades. The reason for this is automation, though it isn't really touched on by this article. At some point in the near future robots will not only be able to construct greenhouses for growing crops with hydroponics but they'll also be able to do most of the work too. Look at these examples of hydroponic (vs soil) yields [1]. Hydroponic yields are in typically in the order of 3-10+ tims that of soil. In greenhouses you can control temperature, grow year-round and not have your crop wiped out by inclement weather (barring hurricanes/tornadoes, which may destroy your greenhouses but this is less of an issue than a frost or snowstorm destroying your crop). When human labour is only minimally required to construct a greenhouse or man it you'll see (IMHO) the biggest change to human food production since the advent of agriculture. It's also why I'm not particularly worried about the ability of the planet to feed itself. If food were produced this way, Earth could easily support a population of 50-100 billion. The article mentions that two bad years can lose the farm. The only way to counter such risks is scale. That's why mega-farms are becoming and will become the norm. Of course along the way I fully expect massive increases in government subsidies because of the political power of farmers (in the US and EU) but you just can't turn back time. [1] http://uponics.com/hydroponics-yield/ http://uponics.com/hydroponics-yield/

BariumBlue 8y ago
For hydroponics, I've heard of lettuce being commercially grown, but nothing else - it's more expensive than just farming a large section of land. And for automation, yes it is a threat, but often times more expensive than just paying cheap labor, which it seems the world won't be running out of in the short term
- xoa 8y ago
  >it's more expensive than just farming a large section of land. Does that take into account all the externalities that are currently still ignored in standard farming? I mean, one could argue that they'll continue to get ignored indefinitely sure, but I wonder if we're starting to reach a tipping point there again and while cletus didn't mention it I think that's one of the most compelling arguments towards hydroponics. Pure physical barriers could mean the elimination of pesticide and herbicide requirements for example, and both of those hide and enormous amount of expense upstream and downstream. Nutrients (fertilizer) can be applied vastly more effectively and efficiently, and possibly at least as importantly excess can be recovered or processed before any emission which can entirely eliminate runoff issues and entry into the environment. Even thinking politically, the general public often enjoys the views and imagine romanticism of farming, but the general public can also quite easily notice and hate algal blooms, outbreaks shutting down beaches, nutrient baths causing explosions of invasives like zebra mussels, etc., and just general reductions in recreational water quality even beyond any other effects. Those also represent big, powerful industries as well. And there is the land itself, hydroponics means arable land is unnecessary for basic food production, and there are other compelling uses for said land. Also land-wise and politically, one argument that frequently gets brought up is "food security" and governments reasonably worried about having enough basic food available in an emergency. But at least for rich countries, if anything LED hydroponics could offer a better story there (at a price), since the facilities can even be put underground/underwater or in other non-arable, dense and defensible positions. They can be protected from new forms of diseases and pests far more effectively. Small developed countries that currently must import might be able to achieve that politically attractive (whatever the practical merits) "food independence" that is current infeasible for them. I mean, I don't think there will be any super rapid changes here, and I do think many places will continue to have some agriculture as a boutique offering, but hydroponics long term looks pretty compelling in a lot of major ways.

GlenTheMachine 8y ago

“We’re heading to a place where we don’t have farmers; we just have food production.” This. I don't know what the solution to this is. I have a small farm, and raise meat sheep. But it's very much a hobby. The problem is, though, that almost all of the other farmers in my area, the ones I meet at the feed store or the livestock auction, they're also hobby farmers. There is exactly one “real” farmer (meaning that it's his full time job) in my area. He raises specialty row crops and runs an agricultural co-op, the kind where you pay a certain amount a month and get a box of fresh vegetables every week. But hobby farmers can't feed the country. We can't even feed ourselves, if it comes to that. The problem is that these vegetables, which don't have to be shipped any distance and don't have the overhead of a grocery store, are still more expensive than the equivalent groceries in the local Safeway. The economies of scale in agriculture have become so strong that there's no way to compete on price any other way. And people understandably don't want to double their grocery bills just to buy local. I grew up on a 300 acre cattle farm. Fifty years ago a family could make a living on a 300 acre, well situated east coast farm. Not any more. You'd have trouble just paying for gas, groceries, and medical care. Forget paying down a mortgage or god forbid buying new farm equipment. The only way to even stay on the farm, is to either walk into a situation where everything - land, house, barn, equipment, everything - is already paid for. Or to get a full time job in town and farm on the weekends. That's what my dad did. And it's what my sister and brother-in-law do now. We have a situation where we've harnessed economies of scale so much that we have only a small handful of corporations producing our food. They mainly want to grow exactly the same small number of crops, to keep supply chains simple. We've wrung all of the redundancy, both financial and biodiversity, out of the system. So what happens if someone figures out how to weaponize that against us? What happens if Chinese investors own half the farm land and we go to war with China? Or what happens if we encounter this generation's version of potato blight on corn or wheat? This is not just a human tragedy. It's a huge national security issue, and it looks like nobody is paying attention.

shoo 8y ago
This is interesting, thank you for sharing. Is the main problem simply the reduced price of output (due to competition with large scale industrial agriculture), rather than other factors (such as potential increased costs of inputs, degraded soil quality, access to water). > We've wrung all of the redundancy, both financial and biodiversity, out of the system. I have similar concerns, not just about farming but other parts of a globalised economy. It is far more efficient to have everyone very specialised, with long-range dependencies. It is far less resilient to have one huge coupled economic system than a number of smaller, approximately independent systems. [+] Similarly, it's more efficient (in the short run, or the lucky case) to not leave any contingency or insurance against rare events. > What happens if Chinese investors own half the farm land and we go to war with China? I wouldn't worry about this one -- unless foreign investors have a means to enforce physical security of their ownership claims, there's always the option of the government with control over the physical assets to expropriate them, either by simply changing the law, or declaring special war time powers. For example, re: WW1 > the attack on enemy aliens and their property involved diverse institutions (governments, parliaments, the judiciary, armies and administrative bureaucracies) and actors (local businessmen and entrepreneurs, lobbies and interests groups but also ordinary people animated by patriotism or who saw in the attack on enemy property an opportunity to improve their own economic status). https://encyclopedia.1914-1918-online.net/article/property_rights_and_economic_nationalism https://encyclopedia.1914-1918-online.net/article/property_r... edit: [+] to call myself out for claiming things based solely on intuition, it's not at all obvious that many smaller independent economies are necessarily always more resilient than a single arbitrarily structured large economy -- it might depend on the structure of dependencies, and how much choice there is for alternatives if subsystems fail, and how much slack is in the system, and dynamic factors. To argue in the other direction, smaller, isolated economies also tend to be at more risk of failure if any of their larger participants fails (see also: common wisdom about risk of buying real estate in small single company or single industry towns and so on...), so there's probably more robustness for those economies where the impact of failure of any single participant upon the overall system is roughly negligible. but i think there is usually a pretty strong conflict between efficiency redundancy.

kingkingking 8y ago

This is one of the best test comments ever. Its bigly.

whitedeveloper 8y ago

This is one of the best test comments ever. Its bigly.

HIPisTheAnswer 8y ago

Not quite; the greatest crisis humanity has ever faced is upon us. Trickles down into farming, and everything else. We are just getting started.

gnulinux 8y ago
This sort non-evidence-based apocalypse talking, fear mongering isn't my favorite part of HN. I wish you could base your claims to some links, or books.

rmason 8y ago

I worked with farmers for over twenty years. It is a relentless game of ever increasing efficiency. But what I observed were marked differences in ability to market the crops they grew. One guy I was good friends with would always sell enough of his crop ahead to pay all his bills if the price was above his cost of production. Sometimes he'd sell two or three years ahead when prices were good. He said in a ten year period he had lots of neighbors who made more money than he did some years only to lose it during the bad years. He said that gambling with borrowed money didn't make any sense, only with your profits. Knew two guys who let their wives do all the farms marketing. They went to school for it and would network online with other farm marketers. They felt that they were too emotional about it and that it helped their wives feel like true partners.

mac01021 8y ago

The article illustrates the crisis, producing an example of how farmers fail to make ends meet: >A gallon of milk costs a farmer approximately $1.90 to produce, but in the last year, farmers have been receiving as little as $1.35 per gallon. But they don't explain the underlying economic forces. The only possible reason (I think) that a farmer can't charge more than $1.35 for a gallon of milk is that some other farmer is able to produce a gallon of milk for less than $1.35. So, clearly, some farmers are quite successful, and their success (or maybe just their efficiency) is part of the reason that other farmers are having a hard time? But the article doesn't talk about that much. Slightly off topic: I pay my local supermarket $3 for a gallon of milk and now I'm curious about the breakdown of what that markup is spent on.

BariumBlue 8y ago
> the only possible reason that a farmer can't charge more than $1.35 for a gallon of milk is that some other farmer is able to produce a gallon of milk for less than $1.35 Not necessarily - if you have demand for 300 units of milk and there are enough producers to match, then when demand halves, the producers are still producing 300 units of milk and paying for the costs to produce that amount of milk. To offset those costs as much as possible, they'll willingly momentarily sell under marginal cost - the production costs have already been spent anyways
- heavenlyhash 8y ago
  Oh boy. If you and GP think there's a purely unregulated Laissez-faire market for dairy products in the U.S., you've got some fun reading to catchup on. A sibling comment lower down the page provides some links: https://news.ycombinator.com/item?id=17996881 https://news.ycombinator.com/item?id=17996881
  - rmason 8y ago
    What can change things dramatically at least in the upper Midwest is if the US is able to convince Canada to eliminate or greatly lower the tariff on milk and cheese. In our area of Michigan a huge new cheese plant is going in and the only justification I can see for that large an investment is they already know the dairy tariff is ending. https://www.lansingstatejournal.com/story/news/2018/08/09/555-m-milk-processing-factory-coming-st-johns-glanbia/850914002/ https://www.lansingstatejournal.com/story/news/2018/08/09/55... St. Johns is a small farm town North of Lansing which is Michigan's state capital.

dbs 8y ago

Large scale agriculture will add up, until someday it doesn't. This fable told by Jeremy Grantham explains it quite well. <i>My favourite story is about the contract between the farmer and the devil. The devil says, "sign this contract and I'll triple your farm's profits". But there are 25 footnotes, as there always is with the devil. Footnote 22 says that 1% of your soil will be eroded each year, which is actually horrifyingly close to the real average over the past 50 years. The farmer signs and makes a fortune on a 40-year contract. And his son then signs up for the next 40-year contract and makes a fortune. And his son then signs up for the third and final contract. He still does very well, and in the final 20 years the family has accumulated enormous wealth, but the soil has gone. It's the same story for all his neighbouring farms and everyone is out of business. My sick joke is that at least he will die a rich farmer when all the starving hordes arrive from the city.</i> https://www.theguardian.com/environment/blog/2013/apr/16/jeremy-grantham-food-oil-capitalism https://www.theguardian.com/environment/blog/2013/apr/16/jer...

TulliusCicero 8y ago

> He can offer help to many farmers, but what was once a robust network of state-funded farmer advocates has shrunk dramatically Do we have a robust network of state-funded plumber advocates or cashier advocates? If farming is unprofitable for many, then the expected market response is people exiting the market, which itself will make it more profitable for those who remain. Farming is largely a commodity game. That we need fewer farmers over time due to technological advances is entirely expected and even good! A society where a large percentage of people still had to be farmers to have enough food to eat would be a poorer one.