Production Agriculture—Taking the Farm to Scale

Production Agriculture—Taking the Farm to Scale

Few images are more iconic of U.S. agriculture in the 20th century than a farmer seated on a tractor. But how much do we know about agriculture today? The latest tractors come equipped with global positioning systems (GPS) so sophisticated that they can tell farmers where to plant seeds within a fraction of an inch to maximize yield.¹

Consider the following ad for a new line of tractors in development. “The day may not be far off when a farmer does his spring planting, not from the driver’s seat of a tractor, but from his office desk. And instead of driving a single tractor, he will be able to monitor several automated units at once, as they till fields, plant seeds, dispense fertilizer, and harvest crops.”  This ad for Robotic Tractors comes not from John Deere or another farm equipment manufacturer, but from the website of Intel, the chipmaker.²

On a shelf alongside the kitchen table in his home, Arlyn Schipper has a collection of miniature scale models of all the farm tractors he’s owned since he started farming almost four decades ago. Schipper farms 6,000 acres of corn and soybeans in central Iowa. With so many acres, he is considered a large operator even by Iowa’s farm-size standards. The model tractors illustrate how technology has transformed the U.S. agricultural sector over the last half-century—and they also explain why Schipper has built a farm operation of 6,000 acres. When modern tractors allow him to plow 6,000 acres as easily as 600, and a single tractor puts him hundreds of thousands of dollars in debt, it makes sense to try to use the investment to its full potential.

As a board member of Foods Resource Bank, a U.S. based anti-hunger organization (and a sponsor of this report), Schipper volunteers with other U.S. farmers from the Midwest to share some of what they’ve learned about farming with smallholders in the developing world. On a trip to Zambia in the winter of 2011, he couldn’t resist the urge to strap himself to a mule and plow a row of corn as farmers do in the village he was visiting. One row was enough for him.

Low-Income Households Spend the Greatest Portion of Income on Food

Since the beginning of the 20th century, breakthroughs in agricultural technology have transformed farming in the United States, making possible astonishing increases in productivity and efficiency. Productivity gains in agriculture have coincided with farms getting bigger.³ The data show that each U.S. farmer is now producing enough to feed 155 people—compared to 19 people in 1940.⁴ Arlyn Schipper has never tried to calculate how many people his farm feeds, but he takes immense pride in the fact that the food he produces prevents people in the United States and around the world from going hungry.

Consumers in the United States spend a lesser share of their incomes on food than people in any other nation. Leaving aside issues of quality for the moment, everyone in the country benefits from low food prices. Low-income households, with the least to spend on food, perhaps benefit the most. (See Figure 1.2) Production agriculture—the kind done by Schipper and other large-scale operators—is crucial to maintaining U.S. food security and preventing hunger. This does not mean hunger has been eradicated in the United States—not as long as its underlying causes, primarily poverty, persist—but hunger rates would surely be higher if not for the relatively low cost of food.

Schipper hopes to see the family business he has built over decades carried on by his son, Brent, who is now farming alongside his father. At this stage of Brent’s career, it is impossible to overstate the benefits of having a parent as successful as Arlyn. His father’s mentoring alone is priceless. A more tangible benefit is the physical assets, such as tractors and land, Brent stands to inherit. In Iowa, the cost of raising a conventional crop of corn or soybeans ranges from $600-$800 per acre.⁵ This does not include the cost of the land itself—and in 2011, the price of an acre of Iowa farmland passed the $10,000 mark.⁶ In 1982, 12 percent of Iowa’s farmland was owned by someone age 75 or older. By 2007, that figure was 28 percent.⁷

When grain prices are high, as they’ve been for most of the past decade, farmland prices soar; this makes it much harder for beginning farmers to gain a toehold in the land market. Banks are less inclined to offer credit to a farmer without sufficient capital to back up a loan. Policymakers need to be concerned about rising land prices and other capital costs facing farmers who are just starting out. According to government figures, U.S. farmland values roughly doubled in nominal terms between 2000 and 2010; they rose by 58 percent in real terms (after accounting for inflation).⁸ USDA’s Farm Service Agency (FSA) has traditionally been the lender of last resort.⁹ The 2008 farm bill affirmed the role of FSA in supporting beginning farmers and enhanced other supports for them, but it’s not clear that these provisions are enough to stay ahead of the cost curve.¹⁰

New farmers are needed to help feed growing U.S. and global populations. By 2050, the U.S. population is expected to increase by nearly a third. Meanwhile, the average age of American farmers continues to climb—currently it is 57,¹¹ the same age as Arlyn Schipper. The issues associated with production agriculture, particularly the difficulties facing beginning farmers, must remain a priority of policymakers for some time to come.