--- In [EMAIL PROTECTED], "K. Feete" <[EMAIL PROTECTED]> wrote:
>I think the measure I'd use, and that I've heard my father use, >is "cost
>per pound of milk produced". This includes cost of labor, >cost of fossil
>fuels, cost of feed, cost of depreciation to the >land,
What depreciation of the land? The historical trend for farm prices is
upwards. Yes, there was a bust after the speculative boom of the late 70s,
when inflation made everyone think that land was going out of sight, causing
land to go out of sight, but Wisconsin or Illinois, or Iowa farm land bought
in the 1960s would have been a good investment in the year 2000.
>et cetera- essentially *all* the costs involved in producing milk or any
>other product), including the long-term costs. That last is an important
>one. A lot of farmers, as I think someone pointed out, *did* get rich in
>the 70s and even the 80s, but for most of them it was because they managed
>to harvest their short-
>term gains in the form of the productivity of their land and essentially
>distilled it and sold it off, then got out when the getting was good, if
>they were smart.
Kat, there may have been a few idiots who damaged their land, but my
father-in-law regularly won honest productivity contests (where they measure
the storage bins before and after) and his land yield kept on improving. He
has told me that they�ve learned a lot about taking care of the land. He
still owns his farm, and rents it out to a farmer he knows for decades.
He�s owned the farm for about 40 years, and before that it was his folk�s
farm. His family has farmed that land for about 75 years. You would think
that the depreciation of the land would show up in 75 years, wouldn�t you?
But, that is one case; what about the US as a whole. Since he is a corn
farmer, I decided to look at the historical yields for corn. They are:
Years Yield per
harvested
acre
Bushels
66-70 78.2
71-75 86.9
76-80 96.1
81-85 105.6
86-90 111.7
91-95 118.6
96-99 130.5
One sees yields continuing to increase.
One other thing worth noting, modern corn crops have a lower impact on the
land than older crops. My father in law use to rotate soy beans in with the
corn. He stopped doing that when new corn hybrids were developed that were
more �land friendly.�
The wholesale �using up� of the land through repeated growth of the same
crop is something I remember from my Minnesota history class. Minnesota
wheat farmers were prosperous for about 8-10 harvests, IIRC. Then nutrient
depletion in the soil started taking its toll. Since the growth figures I
cited were for 40 years, and since my father-in-laws farm was in the family
for 70, I see evidence against, not for your hypothesis.
>At any rate, the large farms in this country are *not* efficient in terms
>of cost per pound of milk. They can still make money, in part by not
>factoring in some costs (like long-term degradation), in part by what I
>call the WalMart equation. Most stores have to sell their products at a
>certain percentage profit or they go broke,
That number is 0%, if you factor in all the costs. Now, at 0%, the
investors are not happy, but that�s another story. You can run at 0% profit
for years and not go broke, by definition. Now, I�m guessing that you are
not factoring in all the costs. The cost that a small store or farm owner
usually doesn�t factor in is the cost of their own work. If this is
factored in, then the economics of scale work out to favor larger
operations.
You can see exactly how that works by seeing dairy farm income from
Wisconsin at
http://www.wisc.edu/dairy-profit/99cost.pdf
The income per cow is about the same for farms with <50 cows and farms with
>250 cows (613 vs. 591). But, this income did not include paying the
farmer�just paying dependants. The <50 cow farms had an income of $25,000,
while the >250 cow farms had a income of $261,000.
As you would guess, there was a considerable amount of hired labor in the
largest dairy farm: $130,000 worth. However, the 50 cow to 75 cow farms had
minimal hired non-family labor (about $5,000) (about $7500 for family labor)
and netted an income of $46,000.
All of these farms produced about 20,000 pounds of milk per year per cow.
The median farm had a herd of about 65-70 cows, as close as I could tell.
My guess is that the income for a herd this size is about $50,000. Not
enough to become wealthy, but above the mean family income for the U.S.)
So, I think the real economics of scale for a decent living off a farm is
getting the herd size to the point where the farmer makes efficient use of
his own labor.
I�m separating the last half of the reply and making it another post.
Dan'm Traeki Ring of Crystallized Knowledge.
Known for calculating, but not known for shutting up
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