Is Industrial Farm Economics Unfriendly to Humans (and farmers)?

Touch the Soil News #623

(Feature photo – in 2017, even big farms will face uncertainty. Over the years, farm auctions have become bigger and bigger.)

In 1935, America had around 7 million farm operations. Today that number is around 2 million of which less than 100,000 produce the majority of the nation’s agricultural output. In short, the advice of economists to farmers to grow, buy more equipment and buy more land has resulted in bankrupting most farm operators.

The USDA just released its estimates for net farm income in the U.S. for 2017. Estimates are that 2017 net farm income will be 57 percent less than in 2013 (see info-graphic below). At the heart of the problem is that there is no national or international agreement on having any kind of food stocks for the unexpected. Could Congress function if its members received 57 percent less income?

Take wheat for example. In 2012, before net farm income collapsed, the average price of a bushel of wheat was $7.24 per bushel. Today, the price of wheat is around $4.60 per bushel – a 36 percent drop.

For 2017, the USDA estimates that the world will produce 1 percent more wheat than what is consumed. A 1 percent increase in production can contribute to a 36 percent decline in price. Every bushel of wheat that is not sold in a given year is considered an oversupply and farmers punished accordingly. Since 2012, the world also has 415 million more people.

The market does not recognize some level of wheat stocks for global food security. In times of abundance, farmers are financially punished. In times of less than abundance, millions more people starve (in addition to the 850 million starving already) as the price gets pushed up out of reach.

Following is a short video on the USDA’s estimates of collapsing farm income:

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