Merri and I often joke that if a food product requires description, then it’s not what it’s called. For example a “fruit juice drink” ain’t got much juice. Or a “cheese food product” really is not cheesy. These “food products” are really not much in the way of food.
Sadly this is not funny.
This instead shows a system that has placed the global middle class under great stress. Their purchasing power is so oppressed that they are forced to eat low quality food. This is one sign of a destructive cycle that chains billions of people to poor health, locks them into unfulfilling jobs just so they can have “free” health insurance.
This is one more reason I feel that Small Town USA has great potential. Let’s take a Bird’s Eye Vue of this problem for just a second. We have seen that there are three huge forces headed for collision.
#1: A bursting population (100 million more people needing 70 million new homes in the next 34 years) that is consuming larger amounts of land per person.
#2: A boom of retiring baby boomers whose retirement income runs short.
#3: Internet workers who want to get away from the crowded cities.
One reason people want to get away from crowded cities is to regain clean air, pure water and access to real food.
We saw in a recent message that there are enormous problems for the small farmer that can create some great opportunities.
The farming problem (and one even deeper) can be seen in the excerpts below from a long letter sent to me by a small farmer.
Dear Gary, (Your note) pointed out graphically the profound ignorance and massively flawed perception held by the vast majority of the US population (even among enlightened, thoughtful folks such as you) about “farming” and its intimate and increasingly tenuous, yet pivotal, connection to the global as well as the US economy.
Where do people think their food comes from? Do they ever even think about it at all?
Yes, there are empty farmhouses all over the Midwest– lots of them. Your question is, “Why?” I will take a stab at answering it, from a farmer’s perspective. I qualify: I was born and raised on a small family dairy farm in upstate New York, and Ed and I now farm 2500 acres of row crops (milo, wheat, corn, soybeans, forage sorghum, and in the last two years, some cotton) in Southwest Kansas.
For starters, I’ll wager that few if any of your subscribers have a clue how backbreaking and thankless a task farming is (particularly dairy farming), much less the level of education, expertise, resourcefulness, selfless dedication and rock-ribbed determination it takes to be ANY kind of farmer— and remain a farmer.
People fail to understand the massive scope and infinitesimal detail a farmer has to know, learn, keep track of and integrate–from weather forecasting and interpretation, to analyzing the yield potential of various crops, to when and how much to water, to whether or not his fields have sufficient heat units to grow cotton, to exactly when to price his produce, to using complicated commodity hedging strategies to (hopefully) protect profits and mitigate losses to some degree. My Ed has a 4 year college degree in Agriculture. He makes hundreds of decisions all day every day that make a typical CEO’s job look like child’s play. Just a few samples–and these don’t even scratch the surface:
(For example) There is a never-ending water issue. There are only two types of farmland: irrigated and dryland. If you go the dryland route, there are hundreds of additional decisions there too that I won’t even go into. Notably, dryland crops do not yield as much as irrigated so you are behind the eightball from the start here in the Great Plains where rain is sparse at best, even in a wet cycle, and we are in a drought cycle.
Irrigation has its own set of challenges. First, a used sprinkler itself will run you about $70,000, without the well and the pumps and motor or engine to drive the pump and the regulators….. then there’s the decision of what fuel to use to run it. Diesel used to be cheaper than electric, but with fuel costs through the roof with no end in sight, electric is really the way to go now. So look at conversion costs: each sprinkler will run about $7500 IF you can find good used motors… we have 15 sprinklers. Oh, I forgot to mention: if you pump more water than your allotment, even if your crops are burning up with the current 9 year drought, the 109 degree temperatures and the 45- 60 MPH winds we have in the summer, you only get one warning—- then the State will shut down your well permanently. Where’s the water going? People in towns NEED big lush green yards and Las Vegas NEEDS massive water features, and as you observed, tourists NEED water slides coming out of their hotel room windows.
The PRICE of a dairy farm would shock you. In Iowa , halfway decent farmland goes for about $4000 an ACRE . So we are talking a modest farm of 300 or so acres would run you in the neighborhood of……. $1.2 MILLION, and that’s BEFORE you buy the livestock, the equipment necessary, etc. And you can’t just set up a diary anywhere it looks pretty— there has to be a processing plant within cost effective driving distance. Are you getting the picture? You are in it for at least $2.5 MILLION before you harvest a drop of milk, which these days is going for about $9.50 a hundredweight. Now, if you work cows like they do in factory dairies (which I find absolutely horrendous), you can probably get close to 20,000 pounds of milk per year per cow, but their productive life span is only 2 lactations, then they go to slaughter. If you do it like you are envisioning, in the more traditional, pastoral sense, you might get only 8000 pounds per year, but their productive life span is longer. But if you have that kind of debt service and that kind of commodity pricing… CHOOSE.
Yes, we have huge machinery, and gosh, are you right about it being expensive!! However, owning it is imperative: as you noticed, there is no other way to work the land cost effectively. It has to be planted, the weeds and other pests have to be controlled, and it has to be harvested. Yet in NO way can we be construed “big agri-business”. Our 2500 acres is considered a very small spread. In fact, we fall in that unfortunate category of “too small to be big and too big to be small”. That means it is too big to work it alone and yet we cannot afford to buy more land to enable us to achieve a sufficient size to justify the REALLY expensive, efficient modern equipment and a staff of hired help. We work it with only 2 men– Ed and our full time hired man. I keep the books and help with the harvest when I can and when they need me. Like a recent country song says: “Diesel is the price of gold, and it’s the cheapest grain I ever sold….” Last year, we paid about $17,000 for a tanker load of fuel; this year, it was almost double that. Our fuel bill alone this year was nearly $150,000. A used sprayer at auction was $27,000. A modest used GPS system (which saves tons on seed, fertilizer, pesticides and harvest) was $18,000. We spend probably $60,000 for repairs annually because our tractors, our combine and our sprinklers are all old and were bought used to begin with, so we baby them along. Insurance on our equipment runs us about $1400 a month. You would probably faint if I told you what utilities run. Yet grain prices have remained relatively unchanged for over 50 years.
People are screaming bloody murder about the price of gas: what would they do if food prices really reflected farming costs? There would be the French Revolution all over again. Think: people can carpool to work or take the bus or consolidate trips or do several things to save on gas, but two people cannot drink the same glass of milk nor eat the same piece of bread.
We have had two very bad years in a row. This year was worse than last year: normal yield on winter wheat is 60-70 Bushel per acre; a good year can yield 90. This year we had some fields that only yielded between 11 and 15 BPA due to drought, abnormally high winds and winter temperatures, and a widespread infestation of mosaic in large areas of the Midwest. One field yielded 8 BPA. That said, the price of wheat still did not go up accordingly. Even in good years, since fuel costs have skyrocketed, we make about enough to service our debt. The bankers are getting richer, not the farmers. All we are is an updated version of the old South’s sharecropper scheme. It’s a hole you can’t get out of.
THAT’s why there are empty houses all throughout the Midwest , and that’s why nobody wants to farm in the traditional ways. It’s simple: People can no longer afford to. Giant corporations with resources who can control all phases of the industry can. They own the land, the equipment, the seed companies, the fertilizer companies, the chemical companies, the elevators, the fuel companies, the calving operations, the factory dairies, the feed lots and the slaughterhouses— and probably the trucking companies too. They can squeeze every penny out of every phase of the industry.
People need to understand that how well we little farmers do financially DIRECTLY and intimately affects their life in ways they do not currently comprehend. At the very least, what is in order is some genuine understanding and respect and SUPPORT for what these dedicated people do, what it costs them to make everyone’s life so easy and clean and convenient, and what life in these United States would be like without them.
If you REALLY want to do something tangible to support family farming so that the entire food system for the world does NOT fall into “big agri-business” voracious maw, you have got your work cut out for you. Because that’s where the thing is inevitably headed as things stand right now. There is no alternative. Respectfully, Estia
This letter shows that farmers are caught in this system right along with the consumers. Everyone has been sucked deeper and deeper into this big business hole. This is a sick system that affects everyone. The consumer does not like eating food that may not be as healthy as it should be. The farmer doesn’t like growing it. Big business profits from it but, sure, but the CEOs of big business are trapped as well. They have to meet consumer demand, make a profit in a highly competitive situation.
Everyone is caught in this same web. The real blame can be pinned to human nature. Everyone wants to grow old. Everyone wants their children to live and thrive. Everyone wants to have more…for less. An ancient Vedic saying is that “the price of sex is death”. Mankind has been stretching this rule using technology to enhance fertility, increase child survival and expand life spans. The convenient way to deal with the resultant population explosion is mass production, shifting of production to low labor areas and through centralized distribution.
This system also assures that the rich get richer and the poor poorer.
Nature has this way of always correcting distortions and we as business people and investors need to watch for trends that results from such pressures. The inequities created by the system will create new opportunities for both the small farmer and the financially pressed middle class consumer. Investors and businesses who spot these opportunities will profit.
Here is one distortion that I think will create opportunity. The current process, dominated by agribusinesses, pushes small town home prices down. This creates a supply of homes that are attractive and livable. The same process creates a market of people who want to get away from the crowded cities, bad food and who want to live near their source of food.
Farmers can benefit by supplying this new market of people who move to them.
There is a great article entitled “No Bar Code” by Michael Pollan in the May June 2006 Mother Jones magazine that begins:
I might never have found my way to Polyface Farm if Joel Salatin hadn’t refused to FedEx me one of his chickens.
I’d heard a lot about the quality of the meat raised on his “beyond organic” farm, and was eager to sample some. Salatin and his family raise a half-dozen different species (grass-fed beef, chickens, pigs, turkeys, and rabbits) in an intricate rotation that has made his 550 hilly acres of pasture and woods in Virginia’s Shenandoah Valley one of the most productive and sustainable small farms in America. But when I telephoned Joel to ask him to send me a broiler, he said he couldn’t do that. I figured he meant he wasn’t set up for shipping, so I offered to have an overnight delivery service come pick it up.
“No, I don’t think you understand. I don’t believe it’s sustainable—‘organic,’ if you will—to FedEx meat all around the country,” Joel told me. “I’m afraid if you want to try one of our chickens, you’re going to have to drive down here to pick it up.”
This man was serious. He went on to explain that Polyface does not ship long distance, does not sell to supermarkets, and does not wholesale its food. All of the meat and eggs that Polyface produces is eaten within a few dozen miles or, at the most, half a day’s drive of the farm—within the farm’s “foodshed.” At first I assumed Joel’s motive for keeping his food chain so short was strictly environmental—to save on the prodigious quantities of fossil fuel Americans burn moving their food around the country and, increasingly today, the world. (The typical fruit or vegetable on an American’s plate travels some 1,500 miles to get there, and is frequently better traveled and more worldly than its eater.) But after taking Joel up on his offer to drive down to Swoope, Virginia, to pick up a chicken, I picked up a great deal more—about the renaissance of local food systems, and the values they support, values that go far beyond the ones a food buyer supports when he or she buys organic in the supermarket. It turns out that Joel Salatin, and the local food movement he’s become an influential part of, is out to save a whole lot more than energy.
You can read the entire article at http://www.motherjones.com/news/feature/2006/05/no_bar_code.html
What all this means is, Small Town USA makes sense. For farmers who adapt, for consumers who move.
Prices in Small Town USA are low now compared to what they will be if the assumptions are correct. The extra three million or so folks arriving in the US each year for the next 34 years need somewhere to go! This will create plenty of demand for more property and more food in the years ahead. If my bet is correct, enough of those will move to rural areas and this will help consumers as well as farmers as they work together to farm food produced in a healthy way.
Until next message, good health and investing to you.
Eating the right types of food can dramatically improve one’s health. Learn numerous ayurvedic nutritional secrets at Vaidya Mishra’s upcoming Ayurvedic Health Cleanse Course in Ecuador January 8-9-10, 2007. See details at www.garyascott.com/catalog/vedcl/
Merri and I are in Ecuador now reviewing some terrific real estate bargains you’ll be able to see when you visit us for a course this winter. Here is one property you can see for sale if it’s still for sale.