Eye Opening Truths About Ag Consolidation
We are sure you’re all aware that farm consolidation is impacting the North American farmers. While you may understand that consolidation is impacting your farm, are you clear on the end result of a consolidating industry? That is, what will our future be like if we don’t proactively respond to the rapidly changing ag environment?Whether you have farmed for 15 years or decades, think back to when you first started. Did you ever believe that the ag industry would be where it is today? If you’re just starting out, question how much farming has changed since you were a kid.
In the last 50 years, the number of farms in poultry production has decreased by 98%. Poultry farmers were squeezed out by consolidation in the processor markets, with processors setting the prices that resulted in the independent growers being forced into processors models.
In 1988 (30 years ago), there were 320,000 pork producers in the United States. By 2012, we saw the number of pork producer decrease to 55,882, with 48,000 producing less than 1% of the revenue. In 1992 (16 years ago), contract farming accounted for 5% of U.S hog production. In 2010, 5% of hogs were sold on the open cash market, with the remaining 95% of all hogs either owned outright by a company like Smithfield or sold under contract. North America has seen a 70% decrease in the number of hog operations and a 30% increase in production.
HALF of dairy farms have silently disappeared from 2007-2018, with the U.S. seeing a 90% decrease in dairy farms since 1970. Owners with 2,000+ cows increased 128% in 8 years; the largest 3% of dairies produce half of the milk.
The beef industry had seen a 46.8% decrease in the number of cattle farms in the U.S. from 2007 through 2012 – from 50,009 to 26,586. The five largest feed lots produced 20% of the entire U.S. capacity.
Today in the U.S., there are about 90 million acres of corn, 90 million of soy beans, 70 million of wheat, cotton and milo combined, and about 100 million acres of other crops. What we’ve seen in North American row crop consolidation is that the largest 11% of operations farm 80% of the ground, with the smallest 52% of operations farming 2% of the ground. From 2001-2011, the number of crop operations over 10,000 acres has increased by 179%
The issue we need to consider is the speed with which row crop consolidation is happening.
The next 20 years will be pivotal in U.S. agriculture. We currently have around 2.1 million farms in the U.S. In the next 25 years, we will see many producers retiring, passing away or just unable to make it, leaving us with roughly 800,000 producers by 2043. 25 years isn’t that far off! Competition will become fierce.
Farms who proactively position their farm to compete will have a chance to keep future generations of their families on the farm. Others will be reactive to a consolidating industry and will be left frustrated, questioning what happened.
The question you face now is this: What will you do to position your family farm to compete in a consolidating industry?