The technology that we have grown to love is making it possible for anybody to “farm” and do it in a big way.
Every so often a business should define its competition and determine just how big a threat it will be in the future. The most immediate competition farmers face is direct competition from their neighbors down the road, mainly for land.
At least that's how I used to look at it.
The introduction of biotech products and other technologies has changed all that. Those products, which promise to make our lives easier, make it easy for a “new” farmer, as well.
You might say the industry is dumbing-down producers with Roundup Ready crops, for example, by lessening the need for weed identification knowledge. That knowledge used to put the good farmer at an advantage. Now that knowledge can go on the obsolete list along with check-wire planting.
All of the husbandry practices we have learned through experience may no longer give us the knowledge advantage we have needed to keep others from this business.
Crop farming has largely become just three simple operations: planting, spraying and harvesting. All can be out-sourced.
Our farm businesses run the risk of becoming dominated by service providers. It's a real threat with an increasing amount of land owned by non-farmers. Owners can manage their own land, hire someone else to do the work, and for their efforts increase their return 25-30% over cash renting the farm.
As producers try to survive, we choose to do business with firms such as XSag.com to save on input costs. It's our way of eliminating a dealer cost, just as a landowner might eliminate “farmer” costs.
This in turn causes our local retailers to redefine their direction. Since they can't sell us products anymore, they may choose to enter the custom farming market in a bigger way than in the past with just spraying.
Custom planting and harvesting are additions the former retailer can make to stay in business. Will it stop with custom work? Could the dealer become a corporate “farmer” and then get into the land rental market? This is America, the land of capitalism.
In my operation, the three largest budget line items are land rental, fertilizer and family living. These examples would incur the same production expenses except for that of family living. That cost would be replaced by a much smaller labor charge.
So does that savings become just additional profit? Or is it used to increase land rental rates in the attempt to secure more acres?
Farmers in this area have purchased semis to fully employ themselves year-round, at the expense of trucking firms already in business. In late December the tables turned when a large trucking firm rented a 1,970-acre tract of land for big dollars. When I asked why, the response was: “Because it's (farming) easy, three or four weeks a year.”
As you can see, the technology that we have grown to love is making it possible for anybody to “farm” and do it in a big way. At this point, government subsidy limitations are keeping some of this outside growth in check.
I, like most farmers, would like the government totally out of my income stream. But if it disappears, what happens?
Will the crop production side of agriculture turn into something like we see in the hog industry? Technology is what turned that industry from a mom-and-pop mortgage-lifting hog farm into a mega-farm environment controlled by large corporations.
It could be said that our current choices are shaping future prospects. With that in mind, we need to think beyond the reach of our wallets.
Steve Pitstick is a 1,500-acre corn and soybean farmer from Maple Park, IL. He can be contacted by e-mail ([email protected]).