Family farm

From Wikinvestor

A family farm is a farm owned and operated by a family, and passed down from generation to generation. It is the basic unit of the mostly agricultural economy of much of human history and continues to be so in developing nations. Alternatives to family farms include those run by agribusiness, colloquially known as factory farms, or by collective farming. Perceptions of the family farm

In developed countries the family farm is viewed sentimentally, as a lifestyle to be preserved for tradition's sake, or as a birthright. It is in these nations very often a political rallying cry against change in agricultural policy, most commonly in France, Japan, and the United States, where rural lifestyles are often regarded as desirable. In these countries, "strange bedfellows" can often be found arguing for similar measures despite otherwise vast differences in political ideology. For example, Patrick Buchanan and Ralph Nader, both candidates for the office of President of the United States, held rural rallies together and spoke for measures to preserve the so-called family farm. On other economic matters they were seen as generally opposed, but found common ground on this one.

The social roles of family farms remain fairly unchanged today. Staying in line with traditional and conservative sociology, the heads of the household are usually the oldest man followed closely by his oldest sons. The wife generally took care of the housework, child rearing, and financial matters pertaining to the farm. However, agricultural activities have taken on many forms and change over time. Agronomic, horticulture, aquaculture, silviculture, and apiculture along with traditional plants and animals all make up aspects of today's family farm.

Bolder promoters argue that as agriculture has become more efficient with the application of modern management and new technologies in each generation, the idealized classic family farm is now simply "obsolete", or more often, unable to compete without the economies of scale available to larger and more modern farms. Advocates argue that family farms in all nations need to be protected, as the basis of rural society and social stability.

Viability of the family farm

Synergy Farm, a family farm in central New York state.

According to the United States Department of Agriculture, ninety-eight percent of all farms in the U.S. are family farms. Two percent of farms are not family farms, and those two percent make up fourteen percent of total agricultural output in the United States, although half of them have total sales of less than $50,000 per year. Overall, ninety-one percent of farms in the United States are considered "small family farms" (with sales of less than $250,000 per year), and those farms produce twenty-seven percent of U.S. agricultural output.

Depending on the type and size of independently-owned operation, some limiting factors are:

• Economies of scale: Larger farms are able to bargain more competitively, purchase more competitively, profit from economic highs, and weather lows more readily through monetary inertia than smaller farms.
• Cost of inputs: fertilizer and other agrichemicals can fluctuate dramatically from season to season, partially based on oil prices, a range of 25% to 200% is common over a few year period.
• oil prices: Directly (for farm machinery) and somewhat less directly (long distance transport; production cost of agrichemicals), the cost of oil significantly impacts the year-to-year viability of all mechanized conventional farms.
• commodity futures: the predicted price of commodity crops, hogs, grain, etc, can determine ahead of a season what seems economically viable to grow.* technology user agreements: a less publicly-known factor, patented GE seed that is widely used for many crops, like cotton and soy, comes with restrictions on use, which can even include who the crop can be sold to.
• wholesale infrastructure: A farmer growing larger quantities of a crop than can be sold directly to consumers has to meet a range of criteria for sale into the wholesale market, which include harvest timing and graded quality, and may also include variety, therefore, the market channel really determines most aspects of the farm decisionmaking.
• availability of financing: Larger farms today often rely on lines of credit, typically from banks, to purchase the agrichemicals, and other supplies needed for each growing year. These lines are heavily affected by almost all of the other constraining factors.
• government economic intervention: In some countries, notably the US, government subsidies to farmers, intended to mitigate the impact on domestic farmers of economic and political activities in other areas of the economy, can be a significant source of farm income. Bailouts, when crises such as drought or the "mad cow disease" problems hit agricultural sectors, are also relied on. To some large degree, this situation is a result of the large-scale global markets farms have no alternative but to participate in.
• government and industry regulation: A wide range of quotas, marketing boards and legislation governing agriculture impose complicated limits, and often require significant resources to navigate. For example, on the small farming end, in many jurisdictions, there are severe limits or prohibitions on the sale of livestock, dairy and eggs. These have arisen from pressures from all sides: food safety, environmental, industry marketing.
• real estate prices: The growth of urban centers around the world, and the resulting urban sprawl have caused the price of centrally located farmland to skyrocket, while reducing the local infrastructure necessary to support farming, putting effectively intense pressure on many farmers to sell out.

Over the last century, the people of developed nations have collectively taken most of the steps down the path to this situation. Individual farmers opted for successive waves of new technology, happily "trading in their horses for a tractor", increasing their debt and their production capacity. This in turn required larger, more distant markets, and heavier and more complex financing. The public willingly purchased increasingly commoditized, processed, shipped and relatively inexpensive food. The availability of an increasingly diverse supply of fresh, uncured, unpreserved produce and meat in all seasons of the year (oranges in January, freshly killed steers in July, fresh pork rather than salted, smoked, or potassium-impregnated ham) opened an entirely new cuisine and an unprecedented healthy diet to millions of consumers who had never enjoyed such produce before. These abilities also brought to market an unprecedented variety of processed foods, such as corn syrup and bleached flour, which have been linked to higher rates of childhood diabetes, heart attacks, and obesity. For the family farm this new technology and increasingly complex marketing strategy has presented new and unprecedented challenges, and not all family farmers have been able to effectively cope with the changing market conditions.