From GENE LOGSDON
I often wonder if the people who read my meanderings through the pastoral world care about news about big farmers going broke. We probably should care, but I wouldn’t blame those who didn’t. Big business, big government, and big farmers have forged an agricultural economy that is not sustainable. Everybody knows it. We have watched economic bust follow every economic boom regularly over the years. Why not just accept it all as the price of human greed and go our separate ways. But I can’t help being fascinated, the way rattlesnakes fascinate me.
What brings me to this subject (again) is the news that a huge farm— the Stamp Farm of 46,000 acres in Michigan— declared bankruptcy recently. I watch DTN/Progressive Farmer on the Internet for my daily information on farming. Its report, “No Farm Too Big To Fail,” by Marcia Karley Taylor, March 25, 2013, gives the names and numbers and details but I’ll just dwell on the part that is of interest to me. The farm grew to this huge size with borrowed money. The last couple of years, economists have assured us that the farm expansion to huge size was nothing to worry about because farmers were buying land with saved money, not borrowed money. That was not the whole truth (I don’t think it was even half true and said so often). Not taken into account was the huge amount of money farmers were borrowing that was going into land rents and new equipment. These big, fast-growing farms are called, in ag circles “alpha” farms to distinguish them from big farms that have grown large more slowly and conservatively with mostly earned money, not borrowed money. So we have the same old story, over and over again, of people borrowing too much money. Thus it shall ever be, I guess.
I can’t even imagine a farming operation of 46,000 acres but even “smaller” farms of 4000 acres or so could be on the verge of falling off this fiscal cliff. You can almost feel the tremors that are shivering through the moneylenders who have been supplying the cash for this folly when they comment on the bankruptcy of Stamp Farms. Among other things, they say they are going to demand more detailed business plans in the future. Harrumph. Sounds like those investment bankers of 2007.
The rosy glow of $8 corn suddenly isn’t glowing so rosily. Farmers in the southeastern U.S. say they are going to switch to corn this year because cotton and peanuts have not been profitable lately. In the Kentucky bluegrass region, Wendell Berry tells me that thousands of acres of good pastureland are being plowed up for corn and soybeans, leading to horrible erosion problems. Dakota farmers are wishful thinking about how climate change is going to make them the corn belt of the future. My favorite farm columnist, Alan Guebert points out in his “Food and Farm File” that 1.3 million acres of grassland in Nebraska, the Dakotas, Minnesota and Iowa have been converted to corn and soybeans in recent years. None of this land is good corn land and using it that way is a disaster in the making. The experts are saying that if all this translates into bigger supplies of the “golden” grain and therefore cheaper prices, that’s all she wrote for a lot of alpha farms. The farmer who became an overnight millionaire with $8 corn will go broke with $5 corn. I’m thinking they might go broke on $10 corn even faster because it will just encourage bad farming. There is no way we can keep up this money folly.
At some point it would seem that the collective wisdom of mankind would dictate a change in how we assess profits and losses in a natural system like farming. We know what the problem is. It was expressed years and years ago by one William Shakespeare: “Neither a borrower nor a lender be/ For loan oft loses both itself and friend/ And borrowing dulls the edge of husbandry.” I can’t find in all of nature any example of a life that once created, goes on growing and never dies the way money is supposed to do. That is why, historically, a pastoral economy has always defined all interest on money as usury. The meaning of the ancient root of the word, usury, was “foul brood.” There are no foul broods in the food chain.