By: Brian Dougherty Understanding Ag, LLC
I recently attended a Ranching for Profit (RFP) school where one of the instructors asked a very simple but thought-provoking question: “Do you control your business, or does your business control you?” In other words, do you accept whatever happens and hope for a better outcome next year, or do you take control and hold yourself accountable for the success of your business?
That got me ruminating about who is really in the driver’s seat on a typical farm or ranch business. And who was really in charge when I was co-owner of our family dairy farm? I had to admit, although I was managing the finances, the milking herd, and the crops, it probably wasn’t me or anyone else in the family. We were being carried along in a sea of change that was washing over the industry. I felt like I had a very small paddle and wasn’t really in control of the boat’s direction.
Looking at historical farm data, I could see that I wasn’t alone. Below is a graph showing the number of farms and ranches in the U.S. from its peak in 1935 to today. In mathematics, we call this exponential decay. Many people would argue that this is actually a good thing. Undoubtedly, good things have come from needing fewer people to produce food, fuel, and fiber. However, on balance I would argue that this has not been good for rural America.
If you look at the graph you can see a slowdown in the loss of farms and ranches starting in the 1970s. However, it only appears that way because of the astronomical loss of farms earlier in the century. If we zoom in on the period from 1975 to 2023, you can see that the slow downward march continues. We lost another 25% of farms since 1970 according to USDA statistics. The actual loss is much greater because the definition of a farm was changed in the 1990s to include more small farms in the data. Most of the farms and ranches in this dataset are not self-sustaining and rely on off-farm income and/or government support to stay in business. If this trend continues, another 15% of current farm and ranch businesses (about 285,000) won’t exist 20 years from now. That’s probably optimistic given that the average age of farmers in the U.S. continues to rise.
It’s easy to look at these graphs and just see a bunch of statistics, but it’s so much more than that. Those statistics are (or were) real people on real farms and ranches. People who likely would have preferred to stay on the land but were forced out for any number of reasons. People who poured their blood, sweat, and tears into their family operations only to watch it all float away. And it’s not just our farmers and ranchers who are affected, it’s their local communities scattered all across rural America that have decayed right alongside them. Resilience, livelihoods, and a rural way of life have been sacrificed on the altar of efficiency and progress.
Paradigms in Agriculture
A paradigm can be described as the lens through which you see the world. It shapes how you think and how you respond to events around you. One of the paradigms I had when I started farming was that the key to making more profit was getting bigger and more efficient. I needed to specialize in one or two commodities because I would do a better job of producing them. That’s what I was taught in college, and I suspect many of you were shaped by those same beliefs.
As I got older, my paradigm began to shift. I started to ask myself, who is actually benefiting from this system? It certainly wasn’t me or any other farmer I knew. We were working ourselves to death. The dairy industry was bleeding farms at a rapid pace. Most of the independent pork producers I knew could no longer make a profit or even find a place to sell pigs, and the beef industry was rapidly consolidating. Profits were mostly flowing to large corporations, with farmers and ranchers receiving enough of a trickle to keep them chasing after “the next drink of water.” Many died of thirst when the trickle ran out.
I came to realize that the paradigm I was operating in was exactly what contributed to the exponential decay in the graph above. My paradigm assumed that I was helping to feed the world, and as a result I thought that academia, industry, and government were all invested in the survival of our family farm. I came to realize that although a vast majority of the people working in it are well intended, the system as a whole is actually designed to push farms and ranches out of business. In the process it led to the decline of our rural communities. When I later became an Extension ag engineer, I became even more painfully aware of how the “more yield and greater efficiency” approach to commodity production was affecting the people I was trying to help. I started to seriously question whether I was helping or actually making things worse. Who would be left to serve if the people we were serving kept leaving the industry because of the paradigm we were all operating in?
Taking control of your business
At the RFP school we were continually challenged to “ask the paradigm question.” A paradigm question throws out your current belief system and starts with a blank slate. I challenge you to work through the flow chart and ask your own paradigm questions.
Are you satisfied with the current situation in the agricultural industry? Is it working well for you, your family, and your business? Are you maintaining or improving profitability over time? Is your soil improving or degrading over time? If you are happy with where you are and you believe that the future of your operation looks bright, then by all means keep on keeping on. If it ain’t broke, don’t fix it.
If not, what are you going to do about it? Who will make the change? Do you believe that industry, academia, or government will ensure that your business survives? If you are counting on someone else to keep you in business, or if you believe that things are mostly out of your control, then your business controls you.
Are you willing to change? Change is hard, and scary, and it just plain sucks sometimes. What are your alternatives? What seems impossible to change, but if changed, would be a breakthrough for your business or your quality of life? If the current commodity system isn’t working for your farm or ranch, are there ways you can opt out, rather than just dealing with what comes your way?
Ultimately, if you want to control your business rather than letting your business (or outside forces) control you, then you need to take action and be accountable for the success of your business. The status quo that has led many operations into the “hope it works out” box has turned a large majority of farms and ranches into statistics, as illustrated in the graphs above. As the RFP instructors like to say, hope is not a plan. The government is not going to ensure the survival of your business. Industry is not going to ensure the survival of your business. Academia is not going to ensure the survival of your business. Only you can ensure the survival of your business.
A New Paradigm
Operating in the “get bigger and more efficient to feed the world” paradigm has only worked out for the small fraction of farms and ranches that remain. Even if you are one of them, at some point it’s likely to stop working unless you start operating in a new paradigm. The cold hard truth is that the current commodity production system doesn’t care if your business survives or not. It will continue to function as long as someone is willing to be a price taker rather than a price maker.
What that new paradigm looks like to you is up to you. To me, it looks like a shift back towards a system that is more diverse, resilient, stable, and profitable for farmers and ranchers. I see the pendulum of change swinging towards back towards a system that enables more people to work with the land and have good paying jobs rather than trying to automate those jobs away. A system that helps to revitalize our rural communities with an influx of new ideas and people. A system where more farms and ranches work together and connect directly with their consumers to reduce the influence of outside forces on their survival. A system that does not function by continually squeezing out the ‘inefficient’ producers to make more profit for those at the top.
Taking the next step
Today’s agricultural system is very efficient but very unstable. We saw warning signs of that with supply chain shocks during the Covid pandemic. We see that in the worsening of herbicide resistance in weeds and increased need for pesticides that never actually solve pest problems. We see it in sky-high overhead and input prices that squeeze the profit out of commodity production. We see it in the inability of most farm and ranch businesses to survive without outside income or government support.
So, what can you do to not end up as a statistic? There is no easy button. Start by taking a hard look at your current situation. Are you compensated for the true value of your labor? Do you rely on government subsidies to keep the business going? Do you really need all of the iron in your shed? Is it worth trying to outbid everyone for that next field or pasture? Could you be more profitable with a different enterprise mix? Does your business provide a reasonable return on assets? Are you living off of depreciation or getting by because the land is paid for? Do you have adequate records to be able to answer any of those questions? If not, improving your recordkeeping system and understanding financial metrics is the first place to start. You can’t know what needs fixing if you don’t know what is broken.
Once you have a handle on your current financial situation, throw away the box (paradigm) you are operating in and dream a bit. Set aside some time to brainstorm ideas for de-risking and diversifying your operation. No one else is going to do this work for you. You have to be willing to be proactive in seeking alternatives and/or creating your own markets. Understanding Ag consultant Burke Teichert sums it up well when he says that we need to rely more on soil, sunshine, and ingenuity.
Does the new paradigm I described (or the one you come up with) sound appealing to you? What can you do to make it happen? Can you work with your neighbors to help each other out? Can you tap into resources or partner with others in your local community? What could you produce that other people need and can’t buy as a cheap commodity? What could you market to distant locations if you don’t have a population base close by? Could you stack multiple enterprises on the same acre? Could this create opportunities for your kids or other young people to get started farming? Could you generate income with agrotourism or hunting? How else can you generate income from your land that doesn’t require you to rely on purchased inputs? If you don’t have the time, skills, or desire to do any of this, could you find someone who does? Have some fun with this thought exercise. You might surprise yourself and have some breakthroughs that allow you to shift into a new paradigm that puts you in the driver’s seat.
At Understanding Ag, we help farmers and ranchers take control of their businesses. We live in the ”change your paradigm” box, only it’s not really a box. It’s a dynamic framework that allows new ideas to flow through to help revitalize and restore soils, profits, farms, and futures. When it comes to regeneration, we’ve “been there and done that,” and have helped many others do the same. Take back control.
Reach out to us if you would like a partner on your journey.
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