TIME Flies: Part 1

June 1, 2009

Nowadays, it’s pretty difficult to get a mainstream news organization to pay much attention to the business of farming or the importance of the profession to the country. Big-city reporters today tend to focus on the sensational and the conflicts created by a handful of over-zealous farm opponents.

Apparently, it hasn’t always been this way.

When interviewing a Minnesota farmer, Pat Benedict, for a recent article, we discovered that he actually appeared on the cover of TIME magazine back in 1978. The accompanying story, “The New American Farmer,” is as eye opening today as it was then.

Over the next month, Farm Policy Facts will dissect this nearly 6,000-word article to display how most of the themes discussed three decades ago still hold true today.

Part one: The myth of the large farm and “corporate agribusiness.”

According to the 30-year-old TIME article:

Pat Benedict is archetypal of the farmers who make U.S. agriculture the nation’s most efficient and productive industry and by far the biggest force holding down the trade deficit. Revolutionary changes are sweeping the croplands, making agriculture an increasingly capital-intensive, hightechnology, mass-production business. As a result, U.S. farmers are dividing into two distinct classes. Small farmers, who do not have the technical expertise, are rapidly leaving the land. Large farmers, like Benedict, who know how to use credit and the latest in agricultural science, are gaining an ever greater share of the market. They produce most of the food that the U.S. eats and almost all that it sells to the world.

[T]he necessity for the successful farmer to become a financier-salesman-engineer-scientist has accelerated a rural social revolution. Former Secretary of Agriculture Earl Butz vigorously preached the virtues of large-scale efficient farming, a message often translated in the croplands into five blunt words: Get big or get out.

Some 70% of the 2.7 million farms left in the U.S. (down from 4 million in 1960) gross $20,000 or less each year, and the people who work them should not be classed as farmers at all. Some have failed to make a living growing crops and now commute to town to work as factory hands or clerks; others are mainly fertilizer salesmen, rural storekeepers or the like who raise, say, a few hogs as a sideline. “Farmers” in the $20,000-and-under class get 80% of their income from off-the-land jobs.

The 30% of U.S. farms classified as medium-sized or large take in no less than 90% of all cash receipts from agriculture. At the top of the scale, farms grossing $100,000 a year or more are increasing—to 162,000 last year, from 23,000 in 1960…These big farms are on the cutting edge of the marketing and technological revolution, as exemplified by the operations of Benedict Farms Inc. and its president and sole stockholder, Patrick E. Benedict.

[But], over the years, Benedict has averaged a return of only 3.5% on the $3.5 million present value of his investment… Such profits on even the most efficient farms are too meager to interest big corporations. The fears that the family farm would be taken over by “agribusiness” have proved unfounded. Corporations with more than ten stockholders account for less than 2% of U.S. farm sales. Even farms large enough to incorporate themselves generally operate as a family affair—emphatically including Pat Benedict’s. His farm, like many others, has been incorporated only to save on estate taxes for his heirs.

TIME correctly defined the very issue that many of agriculture’s opponents use to discredit farm policy. Farm policy opponents paint pictures of giant agribusinesses and huge corporate farms taking over rural America in recent years. Huge corporate farms, they say, are wrongly the main beneficiaries of federal farm policy.

These opponents were wrong when they made these claims in 1978 and they’re wrong today. Ninety-eight percent of U.S. farms are family owned, and the number of non-family corporate farms—an percentage of sales from those farms—has remained virtually unchanged since 1978 (before the modern-day farm bill was even around), according to the Department of Agriculture (USDA).

Large farms, defined by the USDA today as any with sales of $500,000 or more, encompass nearly every full-time farmer in America. And any full-time farmer will tell you that gross sales is not the same thing as net profit. According to USDA data, a 650-acre cotton farm will need to sell more than $500,000 a year just to cover production costs—the same can be said for an 800-acre corn and soybean operation.

These farms produce three-quarters of the country’s food, and because they are so essential to America’s food security, they are covered under the 2008 farm bill. Importantly, the farm bill also provides a strong safety net to part-time producers who might not grow as much of America’s food and fiber, but are important parts of rural America nonetheless.

Ironically, those sectors of agriculture that opted against having a direct form of a safety net in the farm bill have been the most susceptible to vertical integration with large agribusinesses—a tiny detail most farm policy opponents conveniently ignore.