IT WAS THE MID-1970S when my father-in-law Leroy Hogeland and two of his neighbors decided to put up a silo, that quintessential symbol of the American farm. “Chopped” hay and corn was the thing back then, as opposed to the big round bales which are preferred today to feed to livestock, and a silo would mean that the trio could store hay as long as they wanted and feed more cattle to sell when their weight was optimum and prices were highest. Leroy took out a $14,000 loan (equivalent to about $80,000 today) from the local bank and built the silo and a small lot beside it in which to feed the cattle on his Iowa farm.
The building worked out well. So well, in fact, that in the early 1980s he decided to buy thirty-five calves to add to the forty head of cattle he already had. He went again to the local community bank and borrowed more money. But by this time many other farmers had also had the bright idea to put up a silo, likewise increasing the number of cows they were raising. And by the time Leroy’s calves were grown, there was a glut of cattle on the market. The price of beef plummeted. In an attempt to pay off his debts, Leroy sold all 75 cows; the amount he made from the sale didn’t even cover the loan.
Today the concrete lot still sits on the hillside amid rusting equipment and bent roofing, trees growing through it all, like a scene from Planet of the Apes. Right next to it stands the empty silo, the idea of storing corn and hay aborted after the cattle fiasco, the wind howling through it eerily, the tall concrete now home to birds.
MY FAMILY’S FARM, and the experiences of America’s oft-celebrated family farmers like them, illustrate the difficult choices posed by agriculture economics.
Wealth on a farm is typically not found in the form of cash tucked neatly away under the mattress or in a 401(k) waiting for a farmer to turn 65-and-a-half. Wealth on a farm is locked away in its assets; farmers are usually “land rich, cash poor,” especially now that land prices are so high.
Even on a farm without contract farming, the price tag for basic equipment is mind-boggling. A used John Deere combine, commonly used in 2019 for harvesting corn or soybeans, can now easily run an operation close to $500,000. Photo by Pierre Charbonneau / Unsplash.
Farmers borrow money in order to grow the very same thing everyone else is growing, with the hope that being efficient and yielding as much product as possible will allow them to get ahead. But it doesn’t always work that way. Soybean field photo by Vincent Parsons.
In 2019, for example, an average acre of farmland in California was worth $12,830. Even in Iowa, the flatland of the former prairies in the northwest region of the state (land better for growing corn) can go for $9,300 an acre. (An auction recently sold land in northern Iowa for $12,000 an acre.) In south central Iowa, where the Hogeland farm is located — on land my father-in-law Leroy jokingly calls the “infertile crescent” for its erodible topsoil and sloped hillsides — a 530-acre farm like ours is likely worth $2 million, even though the net profit one could make farming the same land in an average year would not come close to paying off the monthly mortgage.
Yet farms today have more than just the cost of land sucking up potential profits. In order to stay in the game, farmers pour huge sums of money into their operations. Take, for example, the farmers who supply rotisserie chicken for Costco’s new slaughterhouse in Nebraska. Much as Leroy did, farmers take out loans, but now the building costs $1.5 million — to build a facility made to the company’s specifications — and farmers raise the company-owned birds as they are told.
And what happens after the building is free and clear of debt? If chicken farming has changed so much in the past 20 years, what kind of facilities will be required to raise chickens in the year 2040? Personally, I couldn’t stomach the anxiety of knowing my family would be indebted for the next 15 years to pay off a million-dollar plus chicken house.
Even on a farm without contract farming, the price tag for basic equipment is mind-boggling. A used John Deere combine (albeit a top-of-the-line ride equipped with heated leather seats, yield and moisture sensors, and GPS tracking), commonly used in 2019 for harvesting corn or soybeans, can now easily run an operation close to $500,000. For me, the cost of a $15,000 used pickup feels gigantic, but a $500,000 combine? I can’t even imagine.
Yes, starting any kind of business requires a significant investment. To open a restaurant, for example, you need capital to build out a kitchen, decorate, and pay staff before you make a dime. But with a restaurant, a tech company, or even an online clothing shop, entrepreneurs look to differentiate themselves, to stick out and provide something unique that customers can’t find anywhere else.
Farming corn or cattle, almonds or avocados for the mainstream, conventional market, on the other hand, is not like other businesses in the United States. Farmers borrow money in order to grow the very same thing everyone else is growing, with the hope that being efficient and yielding as much product as possible will allow them to get ahead. It’s a high-volume strategy, much like Taco Bell or Walmart uses — the margin so small for each individual chalupa or pair of socks that the company had better sell a ton of them. But even Taco Bell attempts to diversify by offering ten different beef-and-tortilla combinations, unlike most farms, which often put all their eggs in one basket (pun intended) and then need to sell as many eggs as possible even though the market for eggs waxes and wanes.
“It’s like a treadmill. You pay what you owe and you borrow some more, pay what you owe and borrow some more.”
Willard Cochrane, an agricultural economist who worked with President John F. Kennedy and was a leading architect of farm policy in the US, called this the “agricultural treadmill,” a debt-dependent spiral that ensures farmers continue to produce the same products because they are in too deeply to get out. It’s a concept that Lynn, my mother-in-law, discussed in my interviews with her in 2014:
“It is like a treadmill. You pay what you owe and you borrow some more, pay what you owe and borrow some more. Well, a lot of times we paid off the debt and there wasn’t any left over or maybe still some debt. And that is the way it snowballed, just getting more and more, bigger and bigger. It is like playing poker — you hope what you make pays off the debt.”
Adding to the problem is that the more productive the seeds and sprays, combines, and confinement facilities become, the less profit you can make on each item. The technology ensures an ever-increasing supply of corn or wheat or soybeans, which, by definition, means lower prices when the supply inevitably outstrips the demand. Much like superpowers in a cold war arms race, the more farmers invest and produce, the more their neighbors also need to invest and produce, driving the price for goods lower and lower as more and more product floods the market.
Farms need to stick with the new technology, even if it means little profit, because what would you do with a $1.5 million confinement facility but grow the chickens or pigs it was built to house?
The treadmill also works to keep farmers in the system much as a slot machine allows us to believe that, even though we have lost the past ten times we played, maybe next time we will win big. When prices are high, producing more seems logical, a way to get ahead while the getting is good. Then, when commodity prices inevitably fall, you’d better produce more if you want to earn the same income. Buying an expensive combine can seem like just the thing to increase your yields, a strategy often promoted by extension agents and tractor dealers.
Farmers who come late to the party — who decide to put up that hog confinement facility after many others already have — struggle to stay afloat, the prices having already dropped as the market is flooded with product, notes Cochrane. “Average farmers ... adopt the new technology, not to get ahead, but just to get back to where they were before ... Mr. Laggard, the last to look at the new technology, would be ‘cannibalized’ by his more progressive neighbors, an image strangely inconsistent with that of the hallowed family farmer.”
The more farmers invest and produce, the more their neighbors also need to invest and produce.
Leroy was no Mr. Laggard.
THE STORIES OF HOW the family dealt with extreme conditions are important for us to know. So are the other tales I chronicled: about how Leroy’s grandfather and others “raped” the land and about how they shipped animals to Chicago via the railroad. About how Leroy tried to grow the farm bigger — putting in a silo, joining MoCo 10, a hog raising business venture with eight other farmers and nonfarmers — and made or lost money in the process, depending on the fickleness of the market and whether everyone else in the area was doing the same thing. Leroy has shared with me his rationale for adopting higher-tech seed and sprays (less work and higher yields) and explained the benefits of raising pigs indoors.
The abandoned silo on the author’s family farm in Iowa. Stories of how farmers have dealt with adversity are key for understanding the food system today. They allow us to humanize those we may write off as the minions of big business, uneducated or in it only for themselves. Photo by Beth Hoffman.
Author Beth Hoffman and her husband John Hogeland moved from San Francisco to southern Iowa in 2019 to run a 540-acre farm that has been in Hogeland’s family since the 1880s. Photo provided.
These stories are key for understanding the food system today. So often, we forget the value of such knowledge, shared around kitchen tables, about mundane and huge events alike. These stories provide an antidote to the myths about farming because they reveal people’s true motivations for doing what they do and allow us to humanize those we may write off as the minions of big business, uneducated or in it only for themselves. For every story Leroy told me of taking out a loan to grow bigger or buy more, there was an accompanying story about how the project ended, often in ruin. Without an understanding of the past — even if the truth challenges our beliefs or exposes the mistakes of our ancestors — there is no repairing of the present. If we don’t acknowledge how things really went down, we become dazzled by romantic stories about a time that never was.
Living on a working farm is not about making your life simpler. It isn’t only about putting your hands in the dirt (although you certainly can) and magically feeling more grounded, or getting up each morning to enjoy the sunrise as you milk a cow. It also shouldn’t be all about self-sacrifice or endurance, independence, or ruggedness. Unless you are raising food solely for your family, farming is a business. It is not a hobby, even if you don’t make much money at it; it’s hard work, often both enjoyable and very stressful. And every farm is embedded within an industry full of extremely complex problems — problems that can begin to be untangled only if we understand the history of how we got here.
This excerpt is reproduced by permission of Island Press, Washington, DC.
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