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Author Topic: Small farms - how do they survive?  (Read 1358 times)
Kluge
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July 31, 2012, 04:42:48 AM
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I was looking into land uses, and did a spreadsheet on farming. Here's a section of that going over how many bushels to expect per acre (averaged, so this probably has a high variance per year) with particular land of decent soil quality and no irrigation, using data pulled from the USDA's soil survey site:

Code:
                          Corn                        Wheat                            Alfalfa                Oats                         Soybeans
Annual Yield Expectation: ~98 bu                 39 bu                         0.1034189 mt         78 bu                          34.5 bu
Price/unit (revenue/acre) $3.5-$7.7 (~$343-755/ac) $6.2-$9.4 (~$242-$367/ac) $100-$200 (~$10-$21/ac) $2.8-$4.4 ($218-$343/ac) $10-17.25 ($345-$595/ac)

Assume a small 15-acre farm. Corn is clearly the winning crop for this particular land at ~$343-$755 in revenue per acre of land, keeping in mind the prices I pulled were rough highs and lows over the past five years.

With peak prices, on fifteen acres, farming corn would net this farmer a bit over $11k revenue annually. Irrigating, ~$20-25k revenue annually, though irrigation equipment with a suitable well is quite expensive (maybe $10k-$30k of equipment would be sufficient for such a small farm). After equipment, labor, seed, and water, I don't see how it could be possible to even turn a profit. If you counted your labor as worthless, maybe you could break even. However, this does not include subsidies. A survey found corn receives roughly $63 worth of subsidies per acre of land -- feel free to dispute those numbers, as I'm using the first I saw. Assuming it's correct, then you have ~$945 worth of subsidies on top of "real" revenue.

So my question is - what's wrong with my calculations and numbers? This can't possibly be right, otherwise - how is it possible for farms of less than a hundred acres to operate profitably?

Appreciate info. Cheers,
Ben

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July 31, 2012, 04:51:36 AM
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They either have animals that they feed the plants to or the farmers have full time jobs in addition to farming.  The latter is far more common around here (many have animals, but not enough to pay the bills).

All farming subsidies (at least in the USA) are royally fucked up.  Only huge farms get them, and it lowers the market price, subsidizing every consumer in the world.  We need a cap on how many acres can be subsidized for any individual, or a subsidy that lowers the price at the consumer end.

Unless we break the stranglehold industrial food has on our food supply, most of America is going to be fucked.  We'll be fine up here in the hills of WV, but I wish you flatlanders luck because you'll need it.  For every calorie of food we produce in this country we burn 6-10 calories of fossil fuels.  If every country in the nation had a ratio this bad, the entire world's reserves of oil would be gone in 7 years.

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July 31, 2012, 04:53:59 AM
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Are there any non-hobby farms that are that small? I grew up on an acre lot, and I have a hard time imagining anyone would even bother to operate a farm on a piece of land only 15 times that size. Most of the farms around where my parents live probably would use a good chunk of 15 acres just for their buildings and facilities.

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July 31, 2012, 05:10:04 AM
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Are there any non-hobby farms that are that small? I grew up on an acre lot, and I have a hard time imagining anyone would even bother to operate a farm on a piece of land only 15 times that size. Most of the farms around where my parents live probably would use a good chunk of 15 acres just for their buildings and facilities.
I'm not sure. There are 30 acres of cleared land neighboring our East side we could rent for almost nothing. Agricultural land rental is so cheap, I don't understand whoever made the ballsy decision to clear the forest in the first place. Cheesy

In total, that'd get us up to 45 acres -- still very small, and very unlikely to produce reliable profit at all, much less a liveable wage. I'm not sure you could go too much further without needing additional laborers requiring a fair salary. With farming knowledge, it should be fairly easy to guesstimate the annual income of a particular farmer per year, and what he "should" be willing to sell his land for, which I'm now guessing is dramatically less than it could be sold for if you planted grass, gave the land a couple years to recuperate, then ran some dirt roads through, parceled off the land, inserted a massive communal well, then sold the property by the acre. I'm not convinced it would be any more risky than farming, either, looking at the wild price fluctuations of agricultural commodities the past few years.

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July 31, 2012, 10:46:08 AM
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I find this a little bit surprising given the rise of commodities. Perhaps inflation in USD isn't biting quite as hard as we think.

Farmers in China I've heard have the same problem though in some sense, leading to moves to the city. Is it just economies of scale? Would it be more profitable to just live off the land yourself and save the cash on food?

So if not there where is the food of the world being produced for profit?

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July 31, 2012, 10:58:12 AM
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My parents own about 150 acres in Iowa. It isn't nearly enough to make a living off. My mom works for Job Corps and my dad did construction on the other side of the state to make enough money to raise my sister and me.

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July 31, 2012, 12:09:19 PM
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This is like asking how CPU bitcoin miners survive. Obviously, they don't. If you don't have enough land, it's not really worthwhile to farm grain.

Lived in Kansas about 20 years ago, and at that time no one grew grain unless they had a quarter square mile of land (i.e. 160 acres). There's almost certainly been consolidation since then. What you do is: (1) sell your land to a bigger farmer, (2) convince the bank to lend you a ton of money to buy an adjacent plot--good luck with that, (3) become a rancher, which takes much more work but less land, (4) get a job.

I imagine that small fruit farms might be profitable in places like California thanks to things like farmers markets, locavorism, etc. Not in the middle of Kansas though.
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July 31, 2012, 01:21:30 PM
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I used to be a farmer. Government subsidies make it hard for the small guy. I got sick of it pretty quick.

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July 31, 2012, 01:54:30 PM
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If you're going to be a small time farmer, you need to carve out a niche and grow something unusual or uncommon, and market it as such. I have friends in Indiana that have a tiny (less than 1 acre) backyard plot, and grow at least 5 varieties of tomatoes, and several less-common varieties of other vegetables. They put them on a roadside stand with a donation box, and instructions as to the recommended cost per pound, and regularly pull in much more than the value of the vegetables. Of course, there are those that will take the produce and walk, but that is outweighed by those that overpay for what they do get.

It's not sustainable and wasn't meant to be, but it could easily be if they felt like putting additional effort into it. Right now it's just a hobby that pulls in several thousands per month.

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July 31, 2012, 03:50:15 PM
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Any farms that you see that are that small are often for personal use, with some vegetables being sold at road side stands or farmers markets. You may see a 15 acre area being used for commercial farming, but it is likely that that is not the only piece of property that a farmer owns.

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Kluge
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August 01, 2012, 01:02:46 PM
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This is like asking how CPU bitcoin miners survive. Obviously, they don't. If you don't have enough land, it's not really worthwhile to farm grain.

Lived in Kansas about 20 years ago, and at that time no one grew grain unless they had a quarter square mile of land (i.e. 160 acres). There's almost certainly been consolidation since then. What you do is: (1) sell your land to a bigger farmer, (2) convince the bank to lend you a ton of money to buy an adjacent plot--good luck with that, (3) become a rancher, which takes much more work but less land, (4) get a job.

I imagine that small fruit farms might be profitable in places like California thanks to things like farmers markets, locavorism, etc. Not in the middle of Kansas though.
I looked into renting the land out to farmers. That appears to be pretty common, and what the neighbors do. Per acre, unimproved agricultural land value is estimated at roughly $2,473 where we are (data from 2011). Annual average rent of farmland in our section of the state is roughly $91/acre. 91*15=$1,365/yr, which is about annual property taxes. Unexciting, but a welcome possibility.

I'm really surprised that in the US, farmers are prized for being some of the hardest-working individuals, but they need either 200+ acres or a full-time job on top of what's portrayed as a particularly taxing job. They sound extremely undervalued, but I've never worked on a farm, so Idunno what all's actually involved.

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August 01, 2012, 01:15:12 PM
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Trivia

Did you know that Scottie Pippin is one of the largest celebrity beneficiaries of agricultural subsidy? 

Govt subsidy shouldn't be such an attractive proposition to the rich.  Show's how f'ed up things are.
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August 01, 2012, 01:50:34 PM
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15 acres may be a little small for wheat, but grow pot and you'll be in business  Tongue
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August 01, 2012, 02:35:38 PM
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This is like asking how CPU bitcoin miners survive. Obviously, they don't. If you don't have enough land, it's not really worthwhile to farm grain.

Lived in Kansas about 20 years ago, and at that time no one grew grain unless they had a quarter square mile of land (i.e. 160 acres). There's almost certainly been consolidation since then. What you do is: (1) sell your land to a bigger farmer, (2) convince the bank to lend you a ton of money to buy an adjacent plot--good luck with that, (3) become a rancher, which takes much more work but less land, (4) get a job.

I imagine that small fruit farms might be profitable in places like California thanks to things like farmers markets, locavorism, etc. Not in the middle of Kansas though.
I looked into renting the land out to farmers. That appears to be pretty common, and what the neighbors do. Per acre, unimproved agricultural land value is estimated at roughly $2,473 where we are (data from 2011). Annual average rent of farmland in our section of the state is roughly $91/acre. 91*15=$1,365/yr, which is about annual property taxes. Unexciting, but a welcome possibility.

I'm really surprised that in the US, farmers are prized for being some of the hardest-working individuals, but they need either 200+ acres or a full-time job on top of what's portrayed as a particularly taxing job. They sound extremely undervalued, but I've never worked on a farm, so Idunno what all's actually involved.

Farmers have a part-time job, actually. Not to denegrate it; there's a lot of risk managing a $1 million+ piece of property based on the weather, and they certainly work much harder than passive investors, but 9-5 wage slave work much harder than most grain farmers.

As I suggested above, small ranchers tend to work much harder; if anyone deserves that reputation, it's them.
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August 01, 2012, 09:17:37 PM
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Any farms that you see that are that small are often for personal use, with some vegetables being sold at road side stands or farmers markets. You may see a 15 acre area being used for commercial farming, but it is likely that that is not the only piece of property that a farmer owns.

The small local farms here sell produce (not organic, even) for about 2-3x the current going supermarket rates at their stands, and they always have lines of customers during harvest time.
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August 01, 2012, 10:44:46 PM
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It's fresh and local.. Smiley



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