The number is high, but farming in generally is a high risk bet.
I often say to people, I need to spend (i.e risk) $100,000 for the chance to make $20,000-$30,000 if everything goes correctly. One major event and you just lost 100K. Scale up or down depending on the size of the farm.
Sustainable farming is a terrible business as long as giant unsustainable factory farms are a thing. If you want to make money farming, you need to either go the vertical integration or agro-tourism route.
Not trying to refute what you are saying because I honestly don't know, but this seems to contradict the original article. Of course sustainable/organic farming is going to struggle to compete in the normal international commodities market, but in the article it mentioned that organic grain could be sold directly for 2-3x the base commodity price. Seems like that kind of progressive price scale might make it not such a "terrible business".
The problem there is that farmers must do a lot of marketing to achieve that 2-3x multiple of commodity prices, so even if you're nominally more profitable, the additional time investment isn't really worth it, compared with taking your crops to a co-packager to get a 10-20x mark up.
I've got several friends and there are a host of others who disagree and whose works completely disprove your point. A search should easily turn up plenty of results so I'm not taking time to look up sources on this one.
Yes it is. I don't mean to ignore that. Not everyone gets it and its not 100% coverage (usually 50-85% in my experience).
I would argue the pendulum has swung too far with crop insurance. There are acres that have no business being in production and rely on federally subsidized crop insurance programs. Needs to be re-thought IMO
Yes, farmers have banded together and make large purchases and grain sales. These are known as 'co-ops' in the US. The idea of them is great.
There is a WIDE variance on the quality of co-ops. Some are great and well-run and provide the intended benefits to farmers. Others would make the mafia looks less corrupt (seriously, the CEOs of some co-ops make 500k+ salaries).
It seems that banding together on grain sales cuts both ways. I gather that selling to (or is it through?) the co-op gets you access to the commodity markets, which generally makes selling your goods easy. However, when you are buying seed for the next year's crop, you have no guarantee that the market price when you sell it will cover your costs. At least that's part of what I get from:
> Between cash and cover crops, Wicks and Givens are planting about 4,500 acres this year. Some of that land is leased from Wicks’ mother, who retired in 2019, and the rest they lease from neighbors. They’ve contracted most of the barley to Anheuser-Busch, though they’ll sell some to nearby Hutterite colonies for chicken feed. They’re also growing lentils, chickpeas, Kamut and Einkorn for smaller mills including Timeless Seeds and Montana Flour and Grain, both based in Montana.
> Their yields are smaller than their conventional ones were, but Wicks said it’s worth it. Previously, they were at the mercy of international commodity markets, as well as ever-increasing seed, chemical and fertilizer prices. Organic producers often have more leverage, because they usually grow a diverse range of crops and sell directly to processors. Plus, many Montana organic grain and pulse growers forward-contract their crops, meaning they lock in a per bushel price before even planting. Wicks and Givens often sell their organic crops for two to three times the price of conventionally grown ones.
A similar, likely smaller scale, tale is told in TasteMakers[1]. In this episode I think it was the beef supplier that said that he couldn't count on the commodity price of beef, but by contracting with the local artisan butcher prices were set for the year. Who knows what percent of his herd goes to that butcher.
Yes, this is the path for many small players. We had a craft beer revolution, and there is a 'craft beef' revolution slowly happening.
How well can this model scale remains to be seen. Also, do not underestimate the meat cartels. They have deep pockets (and the cutthroat executives) and can go to the mattress far longer than small-time players.
I often say to people, I need to spend (i.e risk) $100,000 for the chance to make $20,000-$30,000 if everything goes correctly. One major event and you just lost 100K. Scale up or down depending on the size of the farm.