How a society produces its own food is as much a social issue, as it is an economic issue. Here in the US, we are paying more for food. Simultaneously, it is safe to say our overall social health is deteriorating.
Economies of scale does not exist in agriculture the way that it is conventionally understood. For example, it is generally understood that if a manufacturing business expands, it is able to spread out its cost of production over a greater volume of product, thereby lowering the cost of production per unit and ultimately lowering the cost of the finished product.
This is not the case with farming, since the cost of expansion far outweighs any economic benefit derived from being able to spread the cost of production over more product. This, because farming is generally a breakeven business. Some years, you make money. Some years, you lose money. Some years, you break even. In the very end, you’ve hopefully been able to service the debt on the farm so that your retirement is guaranteed, and you are able to look back on your life and recognize that the farm did far more than simply generate an annual monetary gain.
Traditionally, people go into farming not necessarily to make money, but to raise a family in a structured environment that instills a sense of responsibility, risk, and reward. Quantifiably, kids that are raised on farms are more adaptable, healthier, and end up leading more productive lives than their urban counterparts. Likewise, communities that are surrounded by diverse and economically healthy farms enjoy greater food security and employment opportunities than communities that exist in an industrial desert. Thus, producing food is as much a social issue, as it is an economic issue.
Farmers should make money, and should expect to receive a livable wage. Sadly, the majority of US farms require an off-farm salary to maintain solvency. I know that as a farmer, I am expected to passionately throw myself at the ground like a happy little hobbit and grovel at the direction of industrialization and centralization that the US Ag industry has chosen to go, but I’ve read this story before. I know enough about world history to understand exactly how this ends.
As a farmer, I am constantly asked traditional questions like, “What’s the price of milk these days?” Or, “What’s a bushel of corn or soybeans worth this week?”
These are the wrong questions to ask.
Rather, farmers need to ask questions like, “What is the current cost to produce a gallon of milk?” Or, “How much are your input costs per acre of corn this year versus 15 years ago?” The problem is, asking questions like these illustrates exactly the futility of the direction agriculture is headed.
Did you know cows can now be milked robotically? For a cool $200,000 (not including installation), a dairy facility can install a robot that can handle up to 60 cows per day. So, if you only milk the Wisconsin state average of 220 cows, you’ll need 4 robots, each with an annual maintenance cost of at least $8,000 and as high as $20,000. That translates to over a million dollars just in startup costs, with $30,000 to $50,000 per year in maintenance, just to milk the state average of 220 cows.
I returned home to the Wegmueller Farm from college in 2006. In 2008, I started milking cows on my own. I designed a low cost of production, low overhead dairy facility with a break-even point of $10 milk, knowing that in my lifetime I have seen the price of milk fluctuate anywhere from $12.75 to over $30 paid to farmers. So, I designed a system that could weather the lowest of lows and provide a nice income during the good times.
By 2023, dairy production represented a loss in the tens of thousands of dollars per year for Wegmueller Farm. Why is that? It’s not because farmers aren’t being paid enough. The milk price has held steady in the upper teens/lower 20s. Rather, it’s because the cost of production has nearly doubled. At the start of 2024, my cost of producing milk had doubled since 2008, to $20. As for corn, it costs a thousand dollars to grow a single acre of corn, not including the cost of owning or renting the land. Think of that when you drive through the countryside in summer — $1,000 for every acre of corn, just in input costs.
The economic reason for the rising cost of production, is that large-scale “factory” farms influence the market, thereby raising the cost of production to reflect their costs, which will always be higher than what small-scale, traditional farming can withstand.
You can see the results of agricultural economies of scale reflected in the rising cost of food, which will only continue on an upward trajectory. Tragically, the rising cost of food is not, in any way, paying out to the farmer. Rather, the higher prices you are paying at the grocery store and at restaurants are a reflection of the increasing cost of production, which is ultimately a result of a national policy that favors industrialization and centralization. This, to the detriment of local food supply chains, and local farms, and local farmers.
But yeah, let’s continue to replace the little guy with robots.
— Dan Wegmueller is the owner of Wegmueller Farms and his column appears regularly in the Times. His website is
https://www.farmforthought.org.
