American agriculture is increasingly dominated by large scale corporate operations

Every five years the USDA undertakes a census of American agriculture. The latest survey has just come out in recent weeks. The big message is that the big are getting bigger.

Aligned to this message is that family farms continue to decline. This is particularly the case in dairy. However, it is also the case in cropping, where the new generation of prospective family farmers prefers the urban life, but does not necessarily want to sell the land. So leasing of land is huge, particularly in the cropping heartland of the Midwest.

In total there are over two million American farmers. Seventy-five percent of the production comes from five percent of the farmers. More than half of American farms are cash-flow negative. The average age of American farmers is now 57.5 years, up 1.3 years in the last five years.

To understand large-scale American agriculture, it is necessary to understand something of American immigration from Mexico and Central America. Without the new immigrants, there would be no-one to work the big orchards and farms.

Many of the immigrant workers lack documentation.  However, that is just a hindrance rather than a defining problem. The system works because agriculture has a dispensation from online registration of workers.

False documents are easily obtained, and with a paper system it takes many months for the Government to catch up with things. The next day the worker produces a new set of documents under another name.

Despite the rhetoric, the system survives because it is in almost everyone’s interest. The workers have a better paid job than in their home country. The farm owners like it because the workers are diligent – much more so than other labour. Even the Government likes it, because the illegal workers are still paying social security taxes but can never collect benefits.

Every industry is different, but for us New Zealanders the American dairy industry is particularly interesting.  It is also very large, producing nearly five times the milk that we produce.

The American dairy industry also produces more milk than is required for consumption within the country. The surplus is exported, mainly to Mexico but also elsewhere.

Per-capita milk consumption in America has been dropping sharply for more than 30 years but cheese consumption has been increasing, at least until recently. Indeed, cheese is much more important than fresh milk. That means that producers and consumers can be in very different parts of the country.

The average American dairy farm now has about 250 cows but averages can mislead. Sixty-five percent of farms in 2017 had less than 100 cows and produced only 11 percent of the nation’s milk.  Fifty-seven percent of the nation’s milk was produced on less than 2000 farms, with each of these having more than 1000 cows. The biggest American farm owner that I know has 60,000 cows on multiple farms.

The number of farms selling milk has decreased from around 50,000 in 2012 down to 39,000 at the end of 2017. Another 1800 farms have dropped out in the 15 months through to March 2019. Go back 20 years and there were 100,000 dairy farms.

Despite this decline, milk production keeps going up.  This is in part because it only takes one big farm to replace many small farms. Also, milk produced per cow continues to rise by around 1.3 percent each year.

Life on American dairy farms is tough.

On family farms, cows are milked twice a day, every day of the year. There is none of this forty or even fifty hours a week stuff.

On the big farms, often with several thousand cows, all the workers are likely to be Hispanic. The language in the milking parlour is always Spanish.  

On these big farms, the cows are often milked three times per day and the milking parlour is in operation for close on 24 hours per day, stopping just to do a clean-up. Here is an earlier article on these systems.

The farm workers get paid around $11 per hour and often, by choice, they are working 12-hour shifts, 6 days a week.   This is the way the workers can get ahead. They do it for themselves and their children.

For the last five years the economics of American dairying have been particularly tough. With milk production greater than within-country needs, the farm gate price, or mailbox price as Americans call it, is linked to export prices.   A high American dollar has not helped things.

The bigger farms can still make a profit but only with efficient operations and Hispanic labour. The small farms often find themselves drifting into debt.

And so, every year, many dairy farmers sell their cows, take a job in town, and either work the farm as a cropping farm in the weekends, or lease the farm to other cropping farmers.

The American cropping industry is dominated by the Midwest where many of the soils are particularly fertile. Operations are high technology, with big machinery, big farms and ever-increasing yields. It’s all about corn, soy and some wheat, but with corn being number one.

Much of the feed goes to pigs, poultry and feedlot cattle. These livestock enterprises are typically big corporate operations.

Average corn yields increased from 134 bushels per acres in 1998, to 154 bushels per acre in 2008, to 176 bushels per acre in 2018. 

For those who struggle with those strange American units, one bushel per acre approximates 63 kg per hectare. But the big message is independent of choice of units. It is the huge yield increases that have occurred and still occur that help define American agriculture.

The drivers of the ever-increasing plant yields have been high technology plant breeding, together with the reality that almost all plants grow better with increased carbon dioxide in the atmosphere.

As for small versus large, I am not saying that large farms are good.  I am simply telling it how it is. It is the way of the capitalist world.  

So what are the messages for New Zealand in all of this?

Perhaps the first message is that things are often not at all like what we read in the newspapers. Alas, that applies not only in agriculture.

The second is that American farmers are in many ways much like New Zealand farmers. Apart from the accent, they speak the same language and think the same way. Of course, the farm workers do indeed beat to a different drum in a different language, but perhaps with some similarities to our own immigrant labour. However, our labour is much better paid.

Like many Kiwi farmers, many American farmers also have failed to see in advance the changes that are occurring to their industry. Many of these American farmers are tired, old and somewhat disheartened. This farming business is not easy anywhere on the globe.

*Keith Woodford was Professor of Farm Management and Agribusiness at Lincoln University for 15 years through to 2015. He is now Principal Consultant at AgriFood Systems Ltd. His articles are archived at http://keithwoodford.wordpress.com. You can contact him directly here.