11/10/2005

Farming Costs

As time continues to press on we see fewer and fewer farmers. The days of the "good ol' farm boy" are becoming a memory as companies continue buying out the small farmers. This puts a tremendous strain on the smaller farmers financially. In the article based on farmers in Woodbury County, it stated that that county produces $154 million in food per year. The down side of that is that it costs them $178 million to do so. One of the problems is that the big producers are growing the crops but sending them elsewhere. This in turn makes the local consumers purchase goods from other areas. They say that the food on average travels 1500 miles from the field to the end consumer. With this in mind, where does one get the motivation to be a farmer (outside of the corporate farming world)? I feel that this question is similar to one asking why consumers purchase what they do. In other words, each individual has his/her specific reasons and a trend is noticed among the reasons. This is of importance for me personally, because I have family member who was an extremely successful farmer up until about 4 years ago. Now, being a little man compared to these big farming corporations, he cannot keep up with their prices and he is slowly sinking. So as a business man, should he call it quits and count his losses or keep fighting a lop-sided battle in this demanding market?

2 comments:

Anonymous said...

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Dr. Tufte said...

The factors pushing this trend - mostly inelastic demand, economies of scale and scope, and technological improvements - are not unique to farming.

For example, we used to have things like family owned banks. The difference is that there is greater romance associated with the family farm. It's unfortunate for individuals, but probably healthy for the economy as a whole. It's yet another example of the prisoner's dilemma.