This is a difficult essay to write. I have been going through some files that include 40+ years of articles about the farmland market and the overall trends in the agricultural economy.
Those files include many articles about the despair in agriculture in the 1980s. I recall some heart-wrenching moments from that time when farmers reached out to me, seeking a way to save their land. I can still see, all these years later, the pain on their faces as they told their stories to me.
Will history repeat itself? What has changed since the 1980s in the ag sector? I have been pondering those questions as I re-read many of the articles that I saved from long ago. What I see now is very troubling, and the combination of factors that farmers are facing today seems much more challenging than was the case back then.
All of us have heard the saying about “they aren’t making any more of it (land).” And we have seen the headlines over the past two decades about population growth in the world outpacing the ability of the world to grow enough food to keep pace with that growth. This is in the context of major technological advances in agriculture, and large amounts of investor capital that have come into the sector. These factors have fueled a pretty consistent trend of rising land prices
The world has changed. Population trends are going the other way. And, since the turn of this century, the world has added 398 million acres of cropland, primarily in subtropical countries such as Brazil and India. We now have what may turn out to be the defining factor for United States agriculture over the next few years (or longer), and that is the Trump tariffs. A wrecking ball has been taken to the export markets that are essential to the livelihood of U.S. farmers. And we are not likely to get those markets back. Our competitors are laughing all the way to the bank.
For too long, U.S. agriculture has from time to time relied on ad hoc government programs which are, at their essence, bailouts for, say, weather disasters and related items. Now, there is talk about using tariff revenue for another bailout to rescue farmers from the declines in crop prices. What kind of policy is that? How can any farm design a business plan the viability of which is, at least in part, based on ad hoc bailouts?
Notwithstanding what I just said, I do not see a way out of this train wreck other than a massive bailout by the government, and I am not talking about some one-off deal, but rather a multi-part, well-designed program. As much as I hate to say it, this program would be akin to making farmers akin to government employees. It goes against all sorts of capitalistic notions.
But what is the alternative? More farms going out of business? Greater distress in the small towns that are the backbone of the farm economy? Sharp declines in land prices? It would also be a fool’s errand to bet the farm on some weather disaster occurring in another part of the world’s farming regions. Our political “leaders” have their heads buried in the sand not to see what is happening now.
One life lesson that never changes is that we reap what we sow. And we have sown the seeds of a long-term crisis for U.S. agriculture. We cannot sell what we produce. And now, with our traditional trading partners looking to other partners, what is the alternative? We risk losing a generation of young farmers because of these misguided policies. And we are looking at further consolidation of farms.
In a nutshell, I thought that farming in the 1980s was tough. But it was nothing like the situation that we have now. The tables have turned in ways that are not good, and uncertainty is not helpful for those of us who have farming DNA in our blood. In some measure, we do this because we love it. But neither love nor land equity will pay the fertilizer bill.
Ben Palen is director of Ag Management Partners. He is a fifth-generation grower who farms in Colorado and Kansas, and who has provided consulting services to farming operations in the U.S. and other regions of the world during the course of a 40-year career.
