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Making a Living on a Small Farm
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Dr.
John Ikerd
University of Missouri
Published in Sustaining People through Agriculture
column, Small Farm Today, November/December, 2000 issue, permission
to use granted
In times past, forty acres, a mule, and a lot of
hard work were all that it took to make a living on a farm. But
those times are gone. A family could live well on a lot less money in those
times, but hard work also was worth a lot more back then – regardless
of whether it was done by a mule or by a man. The conventional wisdom was
that anyone who was willing to work hard enough could make it on the farm.
During the financial crisis of the 1980s, many farmers virtually “worked
themselves to death” trying to save their farm. If they could just
work hard enough, they could make it. But, they couldn’t – they
went broke.
Farm evolution
Work simply isn’t worth as much as it once was – at least not
on the farm. Tractors took the place of horses and mules. Other machinery
and equipment took most of the work out of most jobs around the farm. Physical
labor isn’t worth any more than the cost of using a machine to do the
same job – maybe even less because machines are less bothersome to
fix or replace and far easier to manage than are humans.
Mechanization made farming easier. Farmers became machine operators rather
than laborers. But a
mechanized farmer could farm a lot more land or raise a lot more livestock
than could a farmer doing everything by hand. And farmers still had to expect
to put in full-time on the job if they expected to make a full-time living.
So a full-time mechanized farmer had to have a lot more land and a lot more
capital tied up in machinery and equipment just to make a living. With mechanization,
farms became larger and it became more difficult to make a living on a small
farm.
Agricultural chemicals also made farming easier, taking some additional
labor out of farming, but mostly,
making a farm far easier to manage. A farmer didn’t need to know nearly
as much about maintaining the
natural fertility of the soil – they could take a soil test and apply
the right fertilizers. They could specialize in
crops or livestock – they didn’t need manure to go back onto the
fields to maintain fertility. Farmers didn’t need to know how to till
the fields to control weeds – they could spray with herbicides. They
didn’t need to understand how to use crop rotations to control weeds,
insects and other pest – they could use commercial pesticides.
Livestock farmers didn’t need to know how to keep their animals healthy
and growing, they had antibiotics and hormones to fill in the gaps in their
knowledge. Farmers now could farm by recipe. As farms became easier to manage,
each farmer was able to farm more land or raise more livestock. However,
a farmer still had to expect to put in full time on the job to earn a full
time living. So with increasing use of agricultural chemicals, farms grew
still larger, and it became still more difficult to make a living on a small
farm.
In economic terms, there are only four basic factors of production, or four
basic ingredients in any production process – land, labor, capital,
and management. Over time, machines, agri-chemicals, and other technologies
have resulted in substitution of capital and land for labor and management.
Consequently, a typical full-time farm today requires far more land and
capital today than fifty years ago. It takes far more money to buy and operate
a farm today because of high land and equipment costs and expenses for fertilizers,
pesticides and other commercial inputs. But, in a typical farm today, labor
and management are far less important than fifty years ago. If a farmer
has enough land and enough money to buy the latest equipment and technology,
they don’t have to work much or even think much – except about
how to manage their money.
In economic terms, each of the four factors earns something in return for
its contribution to productivity. Land earns rent, labor earns wages, capital
earns interest, and management earns a salary. Profit or loss is the reward
or penalty for taking the risk associated with investing land, labor, capital,
and management in an enterprise without knowing whether the net results
will be positive or negative. Profit is the reward for taking the risk of
farming rather than renting the land, putting the money in an insured CD,
and working for someone else. In general, each factor of production earns
a return in relation to its contribution to the production process.
Inputs and returns
As the nature of farming has changed, the returns to land and capital have
grown and the returns to labor and management have declined. It isn’t
necessary to quote statistics; it’s just plain common sense. Returns
to labor and management are returns to the farmer – to the human investment
in a farming operation. The land and capital can be owned by anyone –
increasingly by someone other than the farmer. Actual farming is about working
and thinking – labor and management. And in general, the return to
farming can be no more than proportional to the working and thinking done
by the farmer. If there isn’t much working and thinking going into
producing a crop or a batch of livestock, there isn’t going to be much
in it for the farmer – and it will be tough to make a living without
a lot more land and capital. Farmers who don’t do much working or thinking
simply can’t expect to make a living on a small farm.
Contract production
The ultimate low-return agriculture is contract production. Farmers are
being told that the only way they can
remain competitive in agriculture is by signing a comprehensive production
contract with one of the giant
agribusiness corporations. But, farmers need to stop and think – who
can logically expect to benefit from
contract production? Under most contracts, the corporation arranges for
capital – mostly loans to be repaid by the grower. The corporation
provides all of the technology – genetics, equipment, feed, health
care, etc. And the corporation provides virtually all of the management
– the grower’s mainly do what they are told to do. The grower
provides the labor, but the highly mechanized operations require little
labor. Contract livestock or poultry operations require little land, although
the grower is expected to find some place to dispose of manure. In summary,
the grower provides a small amount of equity capital, a small amount of
land, and some low-skilled labor. The corporation provides everything else.
The grower gets a fixed amount per animal produced, regardless of costs
or price, so the contractor even takes most of the risk. So who is going
to benefit from a corporate contract operation? Certainly not the grower
– the grower doesn’t do anything that would justify making a living
in such an operation.
Management intensive
So what does all this say about making a living on a small farms? It says
small farmers have to put a lot more of themselves into their operations
– a lot more management and labor – than do most farmers today.
It says a farmer can’t expect to make a decent living if someone else
makes all of the important decisions and they only contribute some low-skilled
labor. It says that farmers must rely on management and labor far more and
rely on land and capital far less if they expect to make a living on a small
farm. It says that the way to turn a small farm into a full-time farming
operation is to find ways to substitute management and labor for land and
capital.
There is a limit to how hard anyone can work or, more important, would want
to work on a farm. Working harder is still not the secret to making a living
on the farm – even though most of us would be better off if we did
a bit more physical labor and a bit less sitting. However, thinking is potentially
far more productive and is far less limiting than is working. So the key
to making a living on a small farm is more intensive management mixed with
an appropriate amount of skilled labor. A small farmer has less land and
capital so they have to do more thinking and decision making per acre or
dollar invested – and they have to be willing to work when working
is the logical thing to do. They have to put more of themselves into it
if they expect to get more for themselves out of it. The successful farmer
of the future might quite accurately be labeled a thinking worker or a working
thinker – the key is to do both together, simultaneously, in harmony.
It takes more thinking to work with nature to reduce costs of inputs and
increase profits while taking care of the land – more eyes per acre
as Wes Jackson says. It takes more thinking to find and keep customers who
want, and are willing to pay for, the things a small farmer can produce
in harmony with nature – relationship marketing as Joel Salatin calls
it. It takes more thinking to fit your unique talents and skills as a farmer
to the needs of your land, to your particular customers and your community
– linking people, purpose, and place.
Literally thousands of these thinking workers are on small farms today all
across the land – putting more of
themselves into their operations and are getting more for themselves in
return. Each is doing something
different, but one by one they are finding ways to make a good living on
a small farm.
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