7 ms·

What economies of scale specifically do farms have? A farm is not a factory where you can create a uniform process...

by fsloth 6y ago

opencl 6y ago
Ecen a pretty basic set of modern farm equipment and facilities will run into the millions of dollars, and will have very low utilization on small farms. A single modern combine can harvest >100 acres per day. With multiple big fields of crops that have different harvesting times your equipment will spend much less time idle.
- yorwba 6y ago
  That's right, but it's not necessary to aggregate small farms into large ones to maximize machine utilization. It's also possible to separate the machine-owning part from the other aspects of farming and aggregate only that, by forming an association of farmers who share equipment. (Shared ownership of the means of production, so to speak.) In German, that's called a Maschinenring. https://de.wikipedia.org/wiki/Maschinenring https://de.wikipedia.org/wiki/Maschinenring Not sure whether the concept is unpopular in the English-speaking world, or just not considered noteworthy enough to warrant its own Wikipedia article.
  - mywacaday 6y ago
    In Ireland we have agricultural contractors who specialise in owning/operating big equipment that are only contracted in when needed but they are then very busy at certain times of the year an 18 hour days for a few weeks wouldn't be unusual. Literally making hay while the sun shines I guess.
  - Retric 6y ago
    The overhead of transporting this equipment between farms makes the process significantly less efficient. The difference between harvesting 2,000 acres a day and 1,700 might not seem like a lot, but add in transaction costs and you can be talking 5+% higher food costs ignoring subsidies.
    - yorwba 6y ago
      If you merge multiple small farms into a single big one, the overhead of transporting this equipment between farms turns into the overhead of transporting this equipment between different parts of the farm. The distance that needs to be covered remains the same. Sure, the hand-off between farmers needs to be scheduled, but is that going to make the difference between 2,000 acres a day and 1,700? Do tractor drivers on big farms never take a break?
      - Retric 6y ago
        Individual farms aren’t simply a single open field. So, you need to physically drive between locations, verify that this is the correct location, enter the correct settings, ensure each farms resources are separate etc.
        yorwba 6y ago
        And which of these steps can be omitted on a big farm? Only "ensure each farms resources are separate", no? Isn't that just an accounting question?
        Retric 6y ago
        I think you’re underestimating the overhead of talking to people. If your doing something worth X,000$ you want some signatures before and after the fact. Even the possibility of driving to the wrong location is meaningful. But, it’s also little things like the distance a tractor travels before it needs to turn around. Picture painting a a wall with and without windows using those long rollers. The simpler the shape the faster you can go.
    - phpnode 6y ago
      It's not just that, certain pieces of equipment (combines in particular) are needed at the exact same time in multiple different places, and a delay of a day or even a few hours can be ruinous (if you don't harvest wheat at exactly the right time it can be more or less destroyed by the weather)
  - eru 6y ago
    There are transaction costs to these arrangements. See https://en.wikipedia.org/wiki/Theory_of_the_firm https://en.wikipedia.org/wiki/Theory_of_the_firm for the broader question of why we have (big) companies at all instead of everything being organised on eg a project basis and people and equipment hired just as needed.
- usrusr 6y ago
  But there's only so much farmland. Those super efficient machines increase the efficiency of its operator, not the efficiency of the land.
  - deleted 6y ago
    [deleted]
  - bluGill 6y ago
    they increase the efficiency of the land too. By doing perfect spacing between plants they ensure optimal growing conditions for each which in turns increase yields greatly. Two plants in the space of one shade each other and the net result is a lot more than half the harvest is lost since each needs to put the same amount of energy into making a plant before they can put any into creating the crop. Too far apart and sunlight reaches the ground uselessly (or worse a fast growing weed that will shade your plants!).
- spurgu 6y ago
  Well, there's this: https://www.opensourceecology.org/ https://www.opensourceecology.org/
jbj 6y ago
I'd imagine a lot of things can be streamlined from big companies that individual/independant farmers can't keep up with; one thing that came to mind was those big circles visible on aerial photos like those pictured here https://www.quora.com/Why-do-they-make-circular-crop-fields-in-Saudi-Arabia-I-have-just-accidentally-seen-it-on-Google-Maps https://www.quora.com/Why-do-they-make-circular-crop-fields-...
oblio 6y ago
Well, as a simple example, you can't efficiently plow or mechanically harvest lots of land which are very small or have a weird shape. If you aggregate them, it becomes much more efficient. Same thing goes for purchasing equipment or supplies, you can buy in bulk for a large farm. Modern farms ARE factories.
- kebman 6y ago
  What you are saying is true, but a lot of people hate the thought, since a farm has historically been a family working within a small community or a village, first and foremost for their own benefit, with the surplus going back to the village or greater society through trade or cooperation (or later by force through taxation by the Lord of the land). This was a good and healthy life that produced strong people. For thousands of years the farm was the producer of civilization and culture. Today, on the other hand, it has been reduced to a factory, and culture and tradition is increasingly molded by political organizations who sometimes don't have the family's best intentions at heart. The unit has been operationalized and a big part of what it once meant to be a farmer in a close-knit community has instead been reduced to being a factory worker on minimum wage (or less, if you're an illegal immigrant).
  - oblio 6y ago
    That's a "Golden Age" perspective. At best it was true for a minority of people for a rather short moment in time, compared to the time agriculture has been around. Historically agricultural workers were slaves or at best serfs. In any case, a brutal lifestyle, generally for someone else's benefit. Well, what you're saying does apply to a category of countries, underdeveloped ones. Countries at very low levels of what we'd consider civilization. There people were either shepherds or subsistence farmers but closer to what we'd call hunter-gatherers.
    - vagrantJin 6y ago
      > Countries at very low levels of what we'd consider civilization. Industrialized.
cm2187 6y ago
Not a farmer but I imagine better amortise the cost of machinery, better optimise a process when done at scale.
deleted 6y ago
[deleted]
AmericanChopper 6y ago
Harvesting, planting, fertilizing, irrigating... are all uniform processes. Larger farms can invest in more machinery (and more expensive machinery), and build more infrastructure for themselves. They can do more sophisticated testing of their crops/animals, can monitor the things they need to monitor to a higher level, they can absorb loss-incurring seasons more readily. All of that is economies of scale.
refurb 6y ago
Buying a $500,000 machine (that has massive throughout) makes sense when you’re farming 10,000 acres, but not so much when it’s 20 acres.
javiramos 6y ago
Leafy greens production is quickly being standardized and automated in a highly controllable format. e.g. [0] It would be reasonable to assume that the farming of many other crops will eventually transition to fully automated indoor formats. [0] https://infinite-acres.com/ https://infinite-acres.com/
- bluGill 6y ago
  Not really. Leafy greens are expensive in the store for what you get: a lot of labor required, and spoil quickly after harvest. It makes sense to automate indoors. Most crops need a lot more space, and a lot less labor. Indoor farming is not economical for these. Don't get me wrong: there are a number of crops where it makes sense. They are an important source of nutrients (and taste!), but a poor source of calories overall.
  - onecommentman 6y ago
    Or to grow in a small home garden. Leafy greens are the easiest crop to grow in a small plot, or even indoors. Greens, fruits and tomatoes/peppers are the easiest for home growers to become self-sufficient. The labor is credited as exercise and therapy.
estsauver 6y ago
I commonly hear farming described as "Geographically distributed manufacturing" in the industry. It's a lot closer to a uniform process than people think.
fennecfoxen 6y ago
Others pointed out the economies of scale in terms of production. I will point out that a large farming operation also has more resilience against risk. If some minor disaster takes out one of the fields on this farm, a blight on the one field, there are many other fields that may still be intact. This is even more so when you are Big Ag and you have multiple farms in different states. You might lose 5% of your crop to a bad hailstorm or an early frost in Oklahoma, but 95% of it is intact, while the small time Oklahoma farmer has no such consolation. Agriculture isn’t just a numbers game for production, but also for spreading risk.
- bluGill 6y ago
  Which is why historic small farms tended to be a lot of small fields. You didn't only only one patch of ground you had several. If the wheat field failed, maybe the barely elsewhere did okay and so you can at least survive until next year.
opinion-is-bad 6y ago
Just a few: Tractor amortization over additional acres. Administrative overhead rarely scales linearly. Better prices on inputs from ordering in larger quantities. Access to new tech that is too expensive for smaller operations to justify. A farm is very similar to a factory in many ways. You buy inputs (especially Nitrogen) and convert those into a usable output using biological machinery. This becomes especially true for people planting permanent crops (I.e almonds) where you also need to consider the maintenance on the plant (pruning, etc) as it ages. Uniformity of process is actually another place that large farms benefit. They can afford the quality managers capable of designing such systems. An owner-operator with one guy working part-time for him is less likely to bother.

What economies of scale specifically do farms have? A farm is not a factory where you can create a uniform process...

by fsloth 6y ago

What economies of scale specifically do farms have? A farm is not a factory where you can create a uniform process...

Ecen a pretty basic set of modern farm equipment and facilities will run into the millions of dollars, and will have very low utilization on small farms. A single modern combine can harvest >100 acres per day. With multiple big fields of crops that have different harvesting times your equipment will spend much less time idle.

yorwba 6y ago
That's right, but it's not necessary to aggregate small farms into large ones to maximize machine utilization. It's also possible to separate the machine-owning part from the other aspects of farming and aggregate only that, by forming an association of farmers who share equipment. (Shared ownership of the means of production, so to speak.) In German, that's called a Maschinenring. https://de.wikipedia.org/wiki/Maschinenring https://de.wikipedia.org/wiki/Maschinenring Not sure whether the concept is unpopular in the English-speaking world, or just not considered noteworthy enough to warrant its own Wikipedia article.
- mywacaday 6y ago
  In Ireland we have agricultural contractors who specialise in owning/operating big equipment that are only contracted in when needed but they are then very busy at certain times of the year an 18 hour days for a few weeks wouldn't be unusual. Literally making hay while the sun shines I guess.
- Retric 6y ago
  The overhead of transporting this equipment between farms makes the process significantly less efficient. The difference between harvesting 2,000 acres a day and 1,700 might not seem like a lot, but add in transaction costs and you can be talking 5+% higher food costs ignoring subsidies.
  - yorwba 6y ago
    If you merge multiple small farms into a single big one, the overhead of transporting this equipment between farms turns into the overhead of transporting this equipment between different parts of the farm. The distance that needs to be covered remains the same. Sure, the hand-off between farmers needs to be scheduled, but is that going to make the difference between 2,000 acres a day and 1,700? Do tractor drivers on big farms never take a break?
    - Retric 6y ago
      Individual farms aren’t simply a single open field. So, you need to physically drive between locations, verify that this is the correct location, enter the correct settings, ensure each farms resources are separate etc.
      - yorwba 6y ago
        And which of these steps can be omitted on a big farm? Only "ensure each farms resources are separate", no? Isn't that just an accounting question?
        Retric 6y ago
        I think you’re underestimating the overhead of talking to people. If your doing something worth X,000$ you want some signatures before and after the fact. Even the possibility of driving to the wrong location is meaningful. But, it’s also little things like the distance a tractor travels before it needs to turn around. Picture painting a a wall with and without windows using those long rollers. The simpler the shape the faster you can go.
  - phpnode 6y ago
    It's not just that, certain pieces of equipment (combines in particular) are needed at the exact same time in multiple different places, and a delay of a day or even a few hours can be ruinous (if you don't harvest wheat at exactly the right time it can be more or less destroyed by the weather)
- eru 6y ago
  There are transaction costs to these arrangements. See https://en.wikipedia.org/wiki/Theory_of_the_firm https://en.wikipedia.org/wiki/Theory_of_the_firm for the broader question of why we have (big) companies at all instead of everything being organised on eg a project basis and people and equipment hired just as needed.
usrusr 6y ago
But there's only so much farmland. Those super efficient machines increase the efficiency of its operator, not the efficiency of the land.
- deleted 6y ago
  [deleted]
- bluGill 6y ago
  they increase the efficiency of the land too. By doing perfect spacing between plants they ensure optimal growing conditions for each which in turns increase yields greatly. Two plants in the space of one shade each other and the net result is a lot more than half the harvest is lost since each needs to put the same amount of energy into making a plant before they can put any into creating the crop. Too far apart and sunlight reaches the ground uselessly (or worse a fast growing weed that will shade your plants!).
spurgu 6y ago
Well, there's this: https://www.opensourceecology.org/ https://www.opensourceecology.org/

jbj 6y ago

I'd imagine a lot of things can be streamlined from big companies that individual/independant farmers can't keep up with; one thing that came to mind was those big circles visible on aerial photos like those pictured here https://www.quora.com/Why-do-they-make-circular-crop-fields-in-Saudi-Arabia-I-have-just-accidentally-seen-it-on-Google-Maps https://www.quora.com/Why-do-they-make-circular-crop-fields-...

oblio 6y ago

Well, as a simple example, you can't efficiently plow or mechanically harvest lots of land which are very small or have a weird shape. If you aggregate them, it becomes much more efficient. Same thing goes for purchasing equipment or supplies, you can buy in bulk for a large farm. Modern farms ARE factories.

kebman 6y ago
What you are saying is true, but a lot of people hate the thought, since a farm has historically been a family working within a small community or a village, first and foremost for their own benefit, with the surplus going back to the village or greater society through trade or cooperation (or later by force through taxation by the Lord of the land). This was a good and healthy life that produced strong people. For thousands of years the farm was the producer of civilization and culture. Today, on the other hand, it has been reduced to a factory, and culture and tradition is increasingly molded by political organizations who sometimes don't have the family's best intentions at heart. The unit has been operationalized and a big part of what it once meant to be a farmer in a close-knit community has instead been reduced to being a factory worker on minimum wage (or less, if you're an illegal immigrant).
- oblio 6y ago
  That's a "Golden Age" perspective. At best it was true for a minority of people for a rather short moment in time, compared to the time agriculture has been around. Historically agricultural workers were slaves or at best serfs. In any case, a brutal lifestyle, generally for someone else's benefit. Well, what you're saying does apply to a category of countries, underdeveloped ones. Countries at very low levels of what we'd consider civilization. There people were either shepherds or subsistence farmers but closer to what we'd call hunter-gatherers.
  - vagrantJin 6y ago
    > Countries at very low levels of what we'd consider civilization. Industrialized.

cm2187 6y ago

Not a farmer but I imagine better amortise the cost of machinery, better optimise a process when done at scale.

deleted 6y ago

[deleted]

AmericanChopper 6y ago

Harvesting, planting, fertilizing, irrigating... are all uniform processes. Larger farms can invest in more machinery (and more expensive machinery), and build more infrastructure for themselves. They can do more sophisticated testing of their crops/animals, can monitor the things they need to monitor to a higher level, they can absorb loss-incurring seasons more readily. All of that is economies of scale.

refurb 6y ago

Buying a $500,000 machine (that has massive throughout) makes sense when you’re farming 10,000 acres, but not so much when it’s 20 acres.

javiramos 6y ago

Leafy greens production is quickly being standardized and automated in a highly controllable format. e.g. [0] It would be reasonable to assume that the farming of many other crops will eventually transition to fully automated indoor formats. [0] https://infinite-acres.com/ https://infinite-acres.com/

bluGill 6y ago
Not really. Leafy greens are expensive in the store for what you get: a lot of labor required, and spoil quickly after harvest. It makes sense to automate indoors. Most crops need a lot more space, and a lot less labor. Indoor farming is not economical for these. Don't get me wrong: there are a number of crops where it makes sense. They are an important source of nutrients (and taste!), but a poor source of calories overall.
- onecommentman 6y ago
  Or to grow in a small home garden. Leafy greens are the easiest crop to grow in a small plot, or even indoors. Greens, fruits and tomatoes/peppers are the easiest for home growers to become self-sufficient. The labor is credited as exercise and therapy.

estsauver 6y ago

I commonly hear farming described as "Geographically distributed manufacturing" in the industry. It's a lot closer to a uniform process than people think.

fennecfoxen 6y ago

Others pointed out the economies of scale in terms of production. I will point out that a large farming operation also has more resilience against risk. If some minor disaster takes out one of the fields on this farm, a blight on the one field, there are many other fields that may still be intact. This is even more so when you are Big Ag and you have multiple farms in different states. You might lose 5% of your crop to a bad hailstorm or an early frost in Oklahoma, but 95% of it is intact, while the small time Oklahoma farmer has no such consolation. Agriculture isn’t just a numbers game for production, but also for spreading risk.

bluGill 6y ago
Which is why historic small farms tended to be a lot of small fields. You didn't only only one patch of ground you had several. If the wheat field failed, maybe the barely elsewhere did okay and so you can at least survive until next year.

opinion-is-bad 6y ago

Just a few: Tractor amortization over additional acres. Administrative overhead rarely scales linearly. Better prices on inputs from ordering in larger quantities. Access to new tech that is too expensive for smaller operations to justify. A farm is very similar to a factory in many ways. You buy inputs (especially Nitrogen) and convert those into a usable output using biological machinery. This becomes especially true for people planting permanent crops (I.e almonds) where you also need to consider the maintenance on the plant (pruning, etc) as it ages. Uniformity of process is actually another place that large farms benefit. They can afford the quality managers capable of designing such systems. An owner-operator with one guy working part-time for him is less likely to bother.