Why Do I Have to Go Broke Trying to Feed the World?

Category: Ag Business, Ag Consulting | No Comments

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corn-1.jpgIn the world of agriculture, and especially in commodity crops, farmers have always wanted to grow as much as they possibly can. It is in a farmer’s nature to always strive to grow more year after year. “Commodity crops” are those whose prices are set at the commodity exchanges and include corn, soybeans, wheat, beef, pork and a whole host of other mass-produced products.

In recent years, experts have preached that in order to feed the world by 2050, food production has to more than double.[1] This is a very noble and moral pursuit, but it raises a question for many of the farmers I work with: “Why do I have to go broke trying to feed the world?”

 

Increased Production Means Increased Costs

Growing more creates its own set of issues. Around the world, demand for food exceeds supply. As we grow more, however, logistical issues arise around handling and storing these products, causing costs to increase. As production increases, so does the need for items like grain bins and additional harvesting and hauling equipment as well as maintenance and replacement for that equipment. At the same time, price per unit goes down as production increases.

Are farmers in a Catch 22 scenario? Is the deck stacked against the American farmer? Is growing more the only choice? In any business, price is heavily influenced by supply and demand. With agricultural commodity exchanges across the world, that information is more readily available than in other industries. Only in highly consolidated industries is supply somewhat controlled. You can only control what you can control—what you spend in production.

 

Focus on Profit, and Production Is Likely to Follow

The solution is to focus on increasing your profit rather than your production. No one goes broke making a profit. Understand what it costs to produce a bushel of grain or a pound of meat, and work toward efficiencies that reduce those costs. Implement a system to track costs and identify what produces profit. Higher profits don’t necessarily correlate with more production. When you concentrate your efforts on profit, however, production will tend to follow.

 

SoilRight works with family farmers to help them make more effective soil management decisions that enhance soil and plant health, reduce costs, and increase profit and yield. Click the link below for a free consultation.

 

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[1] "Food Production Must Double by 2050 to Meet Demand from World’s Growing Population, Innovative Strategies Needed to Combat Hunger, Experts Tell Second Committee." UN.org. 9 Oct 2009. Accessed 11 Oct 2017.

Written By

Randy Darr

Randy Darr

Agronomist | gooddirt@soilright.com

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