After 51 years of dedicating my life to agriculture, I’ve developed a unique perspective and a wide network of information sources, and I have witnessed some interesting trends that have shaped my vision for the future of row crop agriculture. Because of my love for agriculture and ag producers, I want to share what I’ve learned and what I see coming. This is the first blog article I have ever written—the first, I hope, of many. This first series of articles will deal with consolidation in row crop agriculture, and the second series will tackle issues faced by dads, especially those challenged by the transition of their farm business—both ownership and management—to their children. I hope dads and the next generation will read and learn from those articles when they appear on our blog.
Are Family Farms in Danger?
One of the questions I am frequently asked is, “Why is the singular purpose of your organization (FamilyFarms Group) ‘Keeping Families on the Farm’? Why is that even an issue? We have had farm families in the U.S. for hundreds of years. Are they in danger? Really?”
The short answer is yes, farm families are being driven away from their farming legacies, sometimes after generations. In any consolidating industry, there are only two players: consolidators and those who are consolidated. Neither is right or wrong, but you had better decide which you will be and act accordingly in positioning your farm business. Your success will not be based on your ability to produce. Instead, the success of your farm business will depend upon access to enough capital, informed management, and having good processes in place. It won’t surprise you when I say that these are not characteristics found in your typical farm business.
What Influences Consolidation?
Key statistics provided by the US. Census of Ag clearly indicate consolidation is already happening in row crop agriculture, and it’s occurring with increasing speed. I have identified five macro factors in crop consolidation:
The USDA Ag Census over the past many years shows the average age of farmers is getting higher and higher while fewer and fewer young people are choosing agriculture as their profession.
Rapid Integration of Technology
Technology is making it easier for farmers to handle more and more acres (e.g., GIS/GPS, autonomous equipment). Note that simply capturing data is NOT enough; you must be able to analyze the data and apply your findings in making strategic decisions.
Many farmers are finding it more and more difficult to get their operating loans each year, and the amount of those loans is ever increasing. Once you hit $5–7M, the rules of accessing capital change. Remember, if you want access to capital, you have to play by (and understand) capital rules.
Staffing and Organization
Organizational structures become more complex and difficult as farmers take on more and more staff to farm more acres to support their families.
The inability to envision what the future will bring in the highly volatile world of agriculture makes it difficult to adapt to change.
Look for more detailed comments about each of these factors in future articles.
What Can We Do About It?
I’m telling you the truth: If we could, FamilyFarms Group would stop consolidation from taking over row crop agriculture. Unfortunately, we cannot—and we believe no one can. However, we can and do help many farm families deal effectively with these factors, helping them see what is coming, prepare and, as a result, not only survive but thrive in this constantly changing ag environment. We can’t help every farm family, but we are able to help most who come to us with an open mind and desire to learn and implement.
If you would like to know more about FamilyFarms Group and how our system can help you and your operation deal with consolidation, please give us a call at (618) 372-7400.