Free Enterprise FS ?

[rook]

smgrath - on an earlier post your point #6 said traditional agriculture is dead. Could you please elaborate on that? Are you talking just beef or all ag?

thanks...

[smcgrath76]

Dead was probably the wrong word. I think that the commodity production approach is not dead, but that it is extremely difficult for smaller family farms to conduct themselves competitively in this arena. It takes a lot of capital to achieve economies of scale that some of these operations can achieve. This means the business structure will be such (size, ownership, investment) that these types of funds can be raised.
Smaller farms (not sure where you draw the limit here) will need to focus on cooperation, value added, value chain participation, etc. in order to compete. To generate a return on investment will require innovation and unique/special product placement. One product will not do it, as long term success will ensure that others will try to copy it. For long term success of "family farms" those farms will need to either become large corporate commodity producers, or become value chain participants producing a hard to replicate product (not sell calves through auction).
The other choice many producers have taken is to subsidize their operations with off farm income. There is nothing particularly wrong with that, but it is also outside of the traditional family farm model.
I don't see a lot of opportunity for the guy with 150 cows to sell calves off the cow unless he is operating at an extremely low debt level, and that can only last on an industry scale until the next intergenerational transfer.

[smcgrath76]

Supporting math...
to earn $50,000 a year, a producer with 250 cows (family sized) and no other enterprises needs to establish a $200 per cow margin. Assuming not all cows get pregnant and that some replacements are kept, this number is even higher. This is hard to do in a commodity business where all product is relatively equal in quality and price when it comes to selling time.

[rook]

thanks for that. I agree - I see agriculture becoming two types - large commodity and smaller market/product focused. There will continue to be hobby operations and farms with off farm income.