By Michael Krajovic,  Uplifting Humanity 7/5/11

(Preface – This is an article dealing with American agriculture that is globally relevant.  Most of the world is trying to achieve America’s level of industrial agriculture, but is not aware of the America’s decline in food quality or availability.  The recommended proposal, while innovative and urgently needed, is just another example of trying to fix a growing problem that is ultimately a result of failed monetary and economic systems which are hundreds of years old and that need to be “revolutionalized” in order to create a sustainable and peaceful world.)


The agricultural landscape has drastically changed in America over the last hundred years.   Unable to be adequately compensated for their labors through the imposition of a speculative commodity food market, thousands of farmers and millions of people were economically forced off the farm.  They migrated into urban areas which have grown into massive metropolitan regions.  This growth has led to the destruction of farmland through suburban sprawl and the emergence of food deserts in urban centers.  Food deserts are created as farmland is consumed in successive waves of development, forcing urban populations geographically farther from fresh food supplies.

The trend of losing farmers, farmland and farm businesses continues today as a triple threat to not only America’s food supply, but the entire world.  The side effects are increasing food insecurity and a growing global sense of desperation.  This results in greater pressures to industrializing food production in order to maximize food quantity.  Eastern Europe, Africa and Asia are all industrializing their agriculture trying to make farmers more efficient to produce more food.  This comes at the expense of both quality and safety as centrally processed foods become the main dietary staple.  Obesity, infertility, depression, diabetes, food borne illnesses and other preventable health hazards are becoming common place even in the most developed countries.

Also surprisingly, food deserts  are now appearing in rural areas as farmers stop growing fruits and vegetables for their local communities because they are more labor intensive to grow than industrial commodity crops like corn, wheat and soy beans.  Combined with the continued monopolization of the food distribution and food retail, small local grocery stores cannot compete against the big box retailers like Walmart; however, in sparsely populated, small communities, the large retailer may be located twenty or miles away.  This creates a barrier for accessing fresh and nutritious foods for the residents many small, rural communities.

Wall Street investors sense an opportunity.  Future shortages and desperation mean higher food prices and the potential for tremendous returns on investments.   All types of hedge funds, pension funds, corporations now compete to own farmland or invest in food related biotech companies, fertilizer companies, etc. to hopefully profit from the coming food shortages and rising prices.  At the same time foreign countries scramble to compete in the purchase of farmland in an effort to secure food sources for their populations.  All of this puts immediate pressure on small and mid-sized farmers who are not large enough to generate enough income to financially survive the wild price swings in commodity wholesale food prices, and to pay for inputs like seed, energy  and fertilizer whose prices are also just as unpredictable.   The end result is a continued loss of not only farms, but farmers.  The average age of a farmer is over 58 years old in America, and there are very few people that are willing to take their place.  Each year thousands of farmers are forced to retire due to old age and their farms follow the same fate.  Something must be done to preserve the small and medium sized independent farmer.

The problems to preserve this dying breed of independent farmers are indeed challenging and many worthwhile efforts are being made to meet them.  While these noble efforts will help some, they will not be able to reverse the historically steady decline and eventual loss of small to midsized farms at the expense of both local rural economies and the larger national economy.  The problem is more severe than realized, and cannot be reversed without moving in a new direction other than just more industrialization. 


With many of America’s farmers nearing the age of retirement and having struggled financially to just survive all of their working lives, the main source of savings for their retirement is their land.  Very few of their children, having witnessed their parent’s hard work, financial struggles and sacrifices, want to stay on the farm.  Thousands and thousands of farms have already been sold to pay for retirements, turned into residential or commercial development to accommodate the growth of metro areas.  In less developed rural areas, the farm is sold for less sometimes in bankruptcy foreclosure, usually for the market price of single residential use, or to become part of a larger farm or a much larger corporate agriculture conglomerate, some foreign owned.

Many people that are aware of this trend, hope that these farms will remain a locally owned and operated by a family member or a new generation farmer.  But for this to happen, the farm must be profitable.  Most are not.  That is why they are failing. Outside of dairy, most farmers in many states like Pennsylvania are hobby farmers, the term used to describe those that might own around a hundred acres or more, plant commodity crops, and have a full time job in another industry outside of agriculture to support themselves.  They now face, through the unstoppable passage of time, both the creep of old age and rising property taxes as desperate states and local municipal governments try scramble to increase revenues.  At the same time, they are faced with the rising costs of inputs like seed, fertilizer, equipment, fuel and utilities.  And of course the biggest agriculture challenge they face, unique to this production industry, is their frustrating inability to set their own fair price for their food to recover these costs and make a family sustaining wage.  They are held captive to the speculative commodity markets and the unpredictability of wholesale food pricing, like indentured servants years ago with the exception that they have no end to their contract.

The key question is how can these current and pressing challenges be overcome to motivate a new generation of people to go into farming today when the historical trend would lead one to conclude it is not even worth trying?  Every year that goes by, the situation becomes more desperate as our farmers age and step closer to retirement. In a few short years, this trend will become a national, mega-disaster.

While it is commendable for the United States Department of Agriculture (USDA) to be investigating new ways to encourage the private banking sector to make more agricultural loans through loan guarantees which will help in some situations, it will not reverse the overall trend.  Banks love to extend new credit.  It is how they make money.  One of the first hurdles to overcome for any borrower so that a bank will put their own capital at risk to make a loan is to have adequate collateral.  The fixed assets of a farm, land and buildings, have in most areas established asset values, which make great collateral.  Banks can easily swap these assets for credit, but it is not enough.  Backing a loan through a guarantee program will help, but the main banking question that still needs to be addressed is – where does the revenue come from to repay the loan?  And given the historically wild volatility of the speculative futures’ markets of trade, in milk and other food commodities, farmers will not be able to adequately answer this very simple, but extremely important question.  If the farm business cannot guarantee their revenue stream to repay the loan, the bank will most likely in every case not make the loan even with a government guarantee standing behind the loan.   Why?  Because it is bad for the banking business to foreclose on loans.  They really do not like the negative publicity of having to force a family out of their home, especially in small communities.  They will do it if they have to, as is happening hundreds of times each week across the country, but it is not the business they are in; and it cost them time, resources and profits.  Speak to bankers from both large corporations and small community banks and they will confirm the same conclusion – their banks will not make the loan if the cash flows of the business cannot pay back the loan.

But the really key question which gets to the essence of problem that needs to be answered is – How can a new farmer make it financially and be profitable with a new mortgage and greater debt to pay, when the previous farmer who inherited the farm with little or no debt could not make the farm work?

The answer to this question is self evident – they can’t.  This is the reason for this crisis.


There needs to be a new financing program in production agriculture which will support the growth of a new generation of farmers in America.  One has already been proposed by the Fay-Penn Economic Development Council, located in Pennsylvania.  The organization has been able to gain the support of many groups around the country including the National Farmers Union, the International Economic Development Council, the National Sustainable Agriculture Coalition and others.  It is worth noting that this is the first time in the history that the world’s largest economic development association has engaged in supporting agriculture.  This demonstrates the growing recognition of the crisis in agriculture and importance of this program to economic development and new job creation.

The proposal is to create a program that provides innovative financing to farmers who are producing food for the local market.  At a time when governments are seeking to create new employment opportunities, there is an entire new generation of young entrepreneurs who would like to start farming, and there is evidence to support this.  They do not want to be hobby farmers or commodity farmers, but farmers that produce healthy food for local markets.  Whether it’s free range chickens, grass fed beef, specialty crops of fruits, vegetables, CSA’s or organic farmers, there are already many examples of local farmers succeeding.  They are successful because they have become directly connected to the local market and consumer where they can receive at or near retail prices for their food.  They have bypassed the big financial futures’ markets and their volatile wholesale pricing.  In the true spirit of American entrepreneurship and free enterprise, they have been able to take control of their own business activities to establish their own free market.  In this they have become like other typical businesses, responsible for their own pricing, production, marketing, distribution and planning.

Why this can work now and perhaps not before is because there is a rapidly growing demand by millions of consumer for locally produced food across the country.  It is fresher, more nutritious and safer than the massive, centrally processed industrial food system.  The market trend has been well documented.  The organic market demand in the United States continues to grow at nearly a 10% annual rate.  This creates a great opportunity for new local farm businesses in every community across the country to be able to take charge of pricing their own products to service the local market.


In order to support the growth of this agricultural business sector at a fast enough rate to counter the rapid decline of small to midsize farms, the nation needs a new “state-of-the-art” economic development financing program which will support these new agriculture business ventures.  The precedent for funding innovative financing programs is well established in other business sectors.  To support economic development, governments have for many years provided innovative financing and grant programs to create jobs in the manufacturing and technology sectors.  The justification for the appropriation of funds by both federal and state legislators has been the importance of manufacturing and technology companies to state economies and new job creation.  These are industries where people go to earn a paycheck, not spend it.  They bring money into an economy, not take it out.

Local agriculture can generate the same positive impact and more.  It can create new wealth in economies.  While manufacturing can create value added wealth by working with raw materials, agriculture can truly create new wealth by transforming a seed into a marketable product.  But due to the dominance of the commoditization of agriculture in many parts of the country, the industry is not nationally considered as economically significant as other business sectors.  Farmers are not widely recognized as nationally important as manufactures, researchers, defense contractors, construction contractors, all of whom are dependent upon annual massive government spending to operate.  In the national debate on government spending to stimulate the economy, agriculture has not been prominently mentioned in any strategy.  While the role of the US Department of Agriculture has been expanded to support government spending in such areas as renewable energy and rural broadband deployment, there has been no mention of production agriculture playing a significant role.  This is not in reference to current farm subsidies to underwrite the insolvency of modern agriculture, but targeted programs that serve as catalysts to support profitable farm businesses that can operate without ongoing government subsidies.  If done properly, small and mid-sized farmers can leap frog ahead of these other industries and stand alone, generating cash flows and wealth in all communities throughout the country and not be dependent upon continued government contracts for revenue.  For decades, governments have provided innovative financial and grant programs to support the manufacturing sector to produce widgets and the technology sectors to develop new enterprises such as green energy, so why can’t we provide innovative financial and grant programs to support the agricultural sector to produce food for local economies?  With the agricultural crisis intensifying, it is no longer debatable, but something that must happen.


If society fails to do this, as some investors would like to see, the inevitable will occur, which is the monopolization of the world’s food supply by global corporations.  Like other industries, our monetary system and the supporting economic system will eventually lead to continued agricultural consolidation through mergers and acquisitions to the point where just a handful of companies will dominate the entire industry sector.  Look what has happened in media, airlines, retail, banking, etc.  Agriculture is already moving in that direction.  It is utterly amazing that within our lifetimes, the concept of “food deserts” has ironically emerged in our country that has just experienced the greatest period of economic prosperity in the history of civilization on our planet.  And these deserts are now appearing in small rural communities that are becoming isolated from quality and healthy foods.  Small grocery stores are forced out of business by large box retailers that locate stores many miles apart making it more difficult for small towns to have regular and convenient access to fresh and perishable foods.

As many of the big players in agriculture are betting on, the world’s population will continue to increase to 9+ billion over the next 40 years and growing world food shortages will ultimately result in a period of higher pricing where demand exceeds supply.  This is why there is a major effort occurring all over the world to purchase farmland in other countries such as the Europeans and China purchasing land in Africa.  Countries are becoming very concerned about their food security. There are many examples of this, and as mentioned earlier, some are moving into the US to buy up farmland.  When faced with starvation, people will pay any price to eat.  While this may be a period of stable and rising profits, it will be a period of great global political instability and conflict. Russell Redding, a former Pennsylvania Secretary of Agriculture, summarizes this best when he said, “We are all busy and have to deal with many issues every day, but when we are hungry,  food becomes the only issue .”

Technology through genetic modification is viewed as the future savior, but the continual industrialization of soil is not sustainable.  There must be time for proper stewardship and nurturing of the land.  Squeezing out everything humans can get out of our topsoil through heavy industrial agriculture without putting anything back other than chemicals will not produce healthy food that can sustain civilization over centuries.  Current data on health trends in our own country over just a few decades support this observation.   It is one of the causes fueling the growth of consumer demand for organically grown foods.

This trend cannot continue without a parallel alternative.  The potential risks to the United States and the world are too great.  Large corporate farms will not go away.  They will continue to get their share which will continue to increase dramatically with current trends.  This is not a call for an anti-big corporate program, but a program for helping the small to mid-sized farmer survive in every country of the world.  Society needs to maintain enough producers to ensure that consumers have choices of where to purchase their food, of who they can buy their food from, on the quality of the food they purchase, and keep the free market system alive.


The US Department of Agriculture and other agriculture departments throughout the world by developing programs that encourage food production agriculture by small to mid-sized farms could play a much greater role in employing hundreds of thousands and eventually millions of the unemployed in the United States and the world.  Sadly many foreign countries are trying to industrialize agriculture without a long range vision of how to avoid the problems the US system has created.  This will eventually lead to a duplication of the agricultural and health challenges facing America.  But with the right economic development financial incentives and planning, local food production could become a major part of the long term economic recovery of not only the United States, but in small communities throughout the world.  Some of the founding fathers of America, like Ben Franklin and Thomas Jefferson, recognized the importance of agriculture to creating new wealth and its importance as the foundation of both local and national economies.  With local agriculture, much greater wealth stays within the local community.  With industrial agriculture, as much wealth as possible is taken out of local communities to feed the investors of corporate farms, processors, distributors, wholesalers and retailers.

If just a fraction of the world’s economic stimulus funds that were authorized, appropriated and directed to address the economic crisis of the Great Recession of 2008 to create special programs to provide financing on “Main Street” for local production agriculture, it would create several times more jobs per $ billion than anything in current economic recovery strategies, and unlike defense, construction and other infrastructure investments, it will not be dependent upon future appropriations to maintain employment after the initial money is spent.

Such a program would also be unprecedented in making farmers become more like other local business owners, raising their stature in the business community, perhaps even becoming fully engaged members of Chambers of Commerce or economic development agencies.  The will have to, because they will have to become more directly connected to the consumers in their community like other retail businesses or manufacturers in order to be successful in the local market.  This is how it is in many third world countries.  They will no longer be out of sight and out of mind as they are in many parts of the country, forgotten and underappreciated, especially in the suburbs and cities of major metropolitan areas in developed countries.

In closing, the industrialization of world agriculture is not the long term solution to the world’s growing economic and food security challenges.  While the American industrial food system had a great run and boasted record production of quantity, health problems caused by long term soil overuse are beginning to emerge.  Foreign countries should take notice.  Bigger, larger, greater yields are not infinitely sustainable through chemicals and dead soil.  Living soil with micro nutrients and plants grown without toxic chemicals are important to sustaining human life and reducing costly, but preventable health treatments that drain money out of economies.  The world needs to organize itself into economically, agriculturally and environmentally self sustaining regions where quality food production from local agriculture becomes the foundation for establishing a high quality of life for all of humanity and its communities.


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