DOWN ON THE FARM

A “farm” today means 100,000 chickens in a space the size of a Motel 6 shower stall. ~ P.J. O’Rourke   

Eighty percent of Americans live in urban areas. Close to 100% of our food isn’t grown in urban areas, other than folks who now are cultivating 21st century victory gardens in their back yards. As you’ve probably noticed, the price of groceries rose last month. Prices swelled 2.6%, the largest increase in 46 years mostly because of pricier meats, poultry, fish and eggs. Ordinarily, farmers would be pleased when retail food prices have risen, but not now.

Why not? Because even though retail groceries’ prices rose, agricultural commodity crop prices that farmers receive have steadily dropped as their input costs have risen. They’re crosswise in the barn. According to the USDA, farmers have gotten squeezed as input costs have climbed about 11% and crop prices have fallen 11% since 2011. Like many others, our nation’s agricultural (ag) markets have been in tumult, beginning two years ago with #45’s disastrous tariff policies with China. In retaliation, more than 20% of US agricultural exports face reciprocal Chinese tariffs and other countries. I’ve written previously how these tariffs have wounded US farmers.

Today the Census Bureau also provided unsurprising but sobering news about food services sales for April. Sales at grocery stores dropped by a record 13.2% from March. These are bad times for retail sales of virtually every sort.  

Generally speaking, farmers have long been a key Republican constituency. Nevertheless, they’ve been showered with fiscal benefits by both red and blue politicians, especially for ag commodity growers. The very first US Farm Bill was passed in 1933 by President Franklin D. Roosevelt, which provided needed financial aid and subsidies to farmers in the heart of the Great Depression.

The Farm Bill, renewed every five years, represents an age-old, impressive, publicly-financed ag safety net. Like previous versions, the latest $867 billion (B) Farm Bill, signed into law in December 2018, includes substantial taxpayer-provided support for farm incomes, crop prices, financing, crop insurance and, importantly from a political perspective, nutrition assistance programs. The funding of these nutrition programs within the Farm Bill, like SNAP aka “food stamps,” persuades urban Congresspeople to vote for legislation that also aids rural denizens.

Not every US farm receives this largesse. Over 60% of farmers do not receive any ag subsidies; the vast bulk of support goes to growers of the nation’s “industrial” agriculture commodities: corn, soybeans, wheat, cotton, and rice. Most recent information indicates that the largest 10% of farmers have received about 75% of federal ag subsidy dollars.

Unlike his totally passing the buck for covid-19 testing, the president has passed many bucks during the past two years directly to certain farmers. An additional $61B funding to the USDA is now compensating farmers for the “unjustified foreign retaliatory tariffs” as well as the pandemic’s economic damage. This impressive sum works out to an average of about $30,000 for each and every person employed on a US farm. However, very few of these dollars are actually going to workers toiling among the farms’ rows or to non-commodity growers. This elevated $30,000 sum is quite distinct from the $1,200 checks other members of the public have received or are still expecting to obtain.

This bounty might be historically justified because tenured farming emerged right after hunting-and-gathering humans started growing crops in fixed locations about 10,000 years ago. Food comes first, of course and farmers produce the food. Agriculture’s special place in our stomachs if not hearts is also ensured because over the long course of human history it’s been the only line of work that the vast majority of humanity has ever undertaken. Only recently, in historical terms, have many of us worked away from the soil, as shown in the chart below.

Share of Labor Force in Agriculture by Nation and Year

Nation	1500	1800	2012	2017
England/UK	58.1%	31.7%	1.2%	1.3%
Netherlands	56.8%	40.7%	2.5%	1.2%
Italy	62.3%	57.8%	3.7%	3.9%
France	73%	59.2%	2.9%	2.8%
Poland	75.3%	56.2%	12.1%	11.5%
US		90%	1.5%	0.70%

Sources: Ourworldindata.org, the World Factbook 

    The displayed educated guesses for ag’s share of national labor forces in 1500 show that up to three-quarters of laborers worked in the fields. England’s and the Netherlands’ ag labor shares indicate their farmers were somewhat more efficient than those in Italy, France or Poland. The mechanized Agricultural Revolution was in full “bloom” by 1800, shown by the reduced ag labor shares, especially in England. That was not true at first for American farmers, who did not have initial access to improvements deployed at English farms. By 1880, farms’ share of US workers was reduced to 49%.

This multi-century agricultural revolution included improvements in: crop rotation methods, roadways and canals, land management, selective breading of plants and animals, creation of regional and ultimately national markets for foodstuffs, allowances for exclusive ownership of land plots and new farming technologies. The English, Danish and others made significant, early enhancements to iron plows, so they could be guided more accurately and faster by fewer oxen. Another ag technology improvement was the creation of the seed press by none other than Jethro Tull. Mr. Tull’s marvelous mechanical seeder, patented in 1701, distributed seeds evenly across a plot of land and at the specified, correct depth. His original seed press was fragile, heavy and expensive; his efforts to improve it did not allow much time for his abiding interest in progressive rock music. Oh, well. Better versions of his seed press ultimately became very widely used.

The majority of the US agricultural improvements have been capital-using and labor-saving. In the 19th century, such improvements included the cotton gin, mechanical reaper and steel plow. This is unsurprising because historically the US has been resource "rich" (especially land and minerals) and labor "poor." Creating more efficient and productive machines remedied our nation's relative lack of labor. These farm machines allowed the relatively scarce workers to become much more productive.

These impressive improvements farm agriculture have produced more food for more people using less labor and land. In other words, extensive advancements in ag productivity occurred between the mid-17th and late 19th centuries. In 1880 it required 2.5 acres of farmland to produce 100 bushels (bu) of corn. In 1987 it took just 1.1 acres to produce 100bu of corn; in 2017, just 0.6 acres.

Similar advances in ag technologies have reduced the amount of labor needed to produce many foodstuffs. From the above chart all the listed nations except Poland now have less than 4% of their labor force working in agriculture; the US has just 0.7% of our labor force working on farms.

The second chart below shows my Agriculture Productivity Index for ten nations. This index measures the economic contribution of a nation's entire agricultural sector by comparing the nation's share of GDP derived from agriculture relative to its share of labor employed in agriculture. The higher the value of this index, the more productive is the ag sector; the more ag output is being produced measured against ag labor input.

Agriculture Sector Productivity

Nation	Agriculture Productivity Index, 2017
US	1.28
Australia	1.00
Italy	0.54
UK	0.54
China	0.66
France	0.61
Russia	0.50
Canada	0.80
Netherlands	1.33
Poland	0.21

This chart shows that in 2017 the Dutch and US economies have the highest ag sector productivity. Poland’s ag sector has the lowest. The US ag sector is over 11x larger than the Netherlands’ and 6.5x larger than Poland’s.

Every nation provides some level of subsidies to its agricultural sector because strategically all nations require domestically-produced food. Low Index values, less than 1.0, may mean inefficient or quite subsidized ag production. The members of the European Union (EU) in 2017 included Italy, the UK, France, the Netherlands and Poland from the chart. The EU spends $65B per year – over 3x what the US spends – subsidizing agriculture. It’s perhaps the largest, single-sector subsidy program in the world.

Let me end on a sweeter note. One very different, slender, non-industrial and quite tasty slice of US agriculture is organic farming. Organic farm sales represent just over 4% of total food sales and less than 0.01% of all farms. Demand for organically-produced, local farm products continues to show double-digit growth, despite its somewhat higher prices.

Surprisingly, this small-ish corner of the ag market is now booming, perhaps because of the viral crisis. More consumers are heading for community-supported agriculture (CSA) that is now thriving. According to the 2012 USDA Census of Agriculture, there are over 12,600 farms that market their produce through a CSA. CSAs are most definitely not what P.J. O’Rourke’s quote cited at this blog’s opening refers to.

Unlike many other farm operations, no CSA farmers are plowing their unsold crops into the soil, nor tossing perishables due to lagging demand. Au contraire, CSA farms are busier than usual. CSA members, like us, buy a share of a farm’s harvest throughout the season or year; it gets delivered every week in a box, headed finally for your kitchen. Our CSA, Full Belly Farm, is located northwest of Sacramento in the beautiful Capay Valley. Our box this week contained carrots, strawberries, chard, lettuce, spring onions, potatoes and Tokyo turnips. Yum.  

CSA programs around the country are experiencing a surge in people wanting to become members. Judith Redmond, a founding partner of Full Belly Farm, says, "The interest in getting fresh, organic produce just has skyrocketed during this crisis.” CSA farms like Full Belly are busy attempting to increase production to meet rising demand. Fingers remain crossed. The CSA supply-chain is quite brief and utterly local: the farm picks its ripe produce in the fields, inspects it, washes it, and within a day or so and brings it in a box that the member opens up at the delivery location and takes home. This is what our spring boxes of CSA veges can look like.

Source: Full Belly Farm

The state of American agriculture is thus very diverse, ranging from huge, subsidized industrial agricultural operations to far smaller, more personal CSAs. Many of the giant ag operations are being tormented by the effects of the covid microbe. Fortunately, CSAs are becoming more sought-after and popular probably because of the coronavirus. Here’s hoping we food consumers continue benefiting from small CSA boxes.