As U.S. agriculture grapples with a high-stakes convergence of squeezing interest rates, skyrocketing operational costs and state regulatory barriers like California’s Proposition 12, family farms are relying on collaborative industry checkoffs and trade associations more than ever. A panel of prominent soybean and pork producers urged the agricultural community to double down on innovation and scientific advocacy to build a resilient future for the next generation of farmers during the Agricultural Media Summit.
“Agriculture and the individual industries within it are interdependent on one another in so many ways, and the success of one sector can often lead to success in another if we allow it to,” says Maddie Hokanson, a seventh-generation pig and cattle farmer from Minnesota. “This can be seen with precision technology that was first adopted in the agronomy world that is then shared and adapted to be useful in the livestock industry as well.”
The Tightrope of Modern Farm Economics
While pork and cattle markets have seen recent recoveries, farmers are being squeezed by sticky input costs, high interest rates, rising labor rates and the ballooning cost of farm-barn insurance. Despite positive retirements [of older farmers] in the industry, Kyle Durham, a sixth-generation soybean grower in Missouri, says that farm bankruptcies are up year-over-year.
“When times are good, you spend a lot of money paying out debt,” says Durham, who serves on the board of directors for the United Soybean Board. “I think what’s compressing margins in the soybean and corn industry right now is that we all know agriculture is a cyclical business. The prices of the products that we produce go up and they go down, and not necessarily all at the same rate or at the same time. What we’re seeing right now is the confluence of high inputs and low commodity prices. The pain on the farm is real.”
Economic health is highly subjective, notes Hokanson, who serves on the Minnesota Pork Board. For example, her family benefits from cheaper feed inputs (like soybean meal); however, her husband’s family—which grows soybeans and corn—prefers higher crop prices.
“We’ve seen a bit of a recovery in the pork market in the last 24 months, and the cattle business has been doing well for quite a while, but this is not typical of what we’ve traditionally seen in the business,” she says. “I’m grateful for that, but that doesn’t mean we’re without issues and economic struggles.”
On the pork side, animal health is a major concern, even during good markets.
“If you don’t have pigs to sell, that certainly doesn’t help you out much, and your overhead and your operational costs still exist,” Hokanson says. “You still have your labor, you still have interest rates, you still have all those fixed costs of running a business that don’t go away regardless of what the markets are doing.”
The “Whack-a-Mole” Game
For Jackie Bowman Ponder, a lawyer and pig farmer from Indiana, animal agriculture is beginning to feel like a game of whack-a-mole. In addition to California’s Proposition 12, states like Massachusetts continue to introduce different standards for animal production. That is a logistical nightmare for the entire supply chain, she says, and the fragmentation risks driving out smaller family farms and accelerating industry consolidation.
“Prop 12 sets a precedent that states can tell other states how to manufacture, how to raise their animals and basically set up trade barriers,” says Ponder, who serves on the board of directors for the National Pork Producers Council.
She is concerned that just because a farm becomes Prop 12 compliant, it doesn’t mean that the farm is protected. Currently, other states are looking to pass their own types of legislation, and they’re not the same as Prop 12.
“Let’s be very clear about what the Prop 12 activists are looking for,” Ponder says. “It’s not animal welfare because it’s not grounded in science. The American Veterinary Medical Association and the American Association of Swine Veterinarians have all come out and said that there’s no scientific evidence to say that Prop 12 is better for animal welfare. What these people want to do is make sure that you don’t eat meat.”
Converting barns to Prop 12 standards drastically increases the cost per pig (by reducing barn capacity) or requires millions in new debt to build out facilities.
Combating the Noise with Truth
In addition to shifting markets and regulatory pressures, Ponder says it’s a confusing time because so many mixed messages freely float around social media without scientific backing and regulation. The way people get information has changed dramatically over the last 20 years. That’s why she says it’s more important than ever to get the true stories out about U.S. farmers.
“If you look at the fact that farm industry is a huge part of the GDP, I think that more policymakers need to pay attention to it and what they’re doing to help or hurt it, and the way of life that everyone talks about,” Ponder says. “They talk about remembering the good old days. Well, the good old days generally involve Farmer Fred in some way or the other, and if we’re not involved in policies and telling the story of how Farmer Fred has improved his farm and improved his livestock, and made it into the 21st century when it comes to technology, then we are doing our producers a disservice.”
Safeguarding “Freedom to Operate”
There’s no question that farmers want freedom to operate. This simply means having the latitude to make decisions and drive outcomes that are best for each farm’s own unique animals, environment, people and communities. Hokanson reminds farmers that this comes with responsibility, too.
“We want freedom to operate the way we see fit, but if you are asking the government to stay out, you also have to be comfortable with them staying out when issues arise,” Hokanson says. “You must develop a strategy and see it across all issues. When decisions can be made without burdensome, one-size-fits-all regulations, all areas benefit, including the longevity of the farm for future generations when that time comes.”
In her area specifically, they are seeing continued and increased pressure in the way manure and nutrients are handled on farms of all sizes and species. This is a great example of a one-size-fits-all approach working against the end result everyone wants to get to, she says.
“No matter if you are a farmer, a resident of a rural community, or living in a large city, safe drinking water is a priority we can all agree on,” Hokanson says. “The way manure nutrients are best handled in one region with a unique soil type and topography will likely be completely different from that of another region, even within the same state. Therefore, having the latitude to adapt application practices and timing is so very important in order to accomplish our mission of environmental stewardship.”
Another way her farm is ensuring its freedom to operate is by boosting biosecurity to keep doors open for global trade. Beyond washing, sanitizing and “baking” trailers, their trucks will actively drive hundreds of miles out of the way to completely bypass risky areas to keep their livestock healthy.
“It is my firm belief that we must decide together as an industry that we are committed to improving overall herd health,” Hokanson says. “And with that commitment will likely come short-term burdens – whether that be with our time, our finances, or our insights – in order to get to the long-term desire for healthier pigs that we all want.”
The Long Game
With the cost of modern pig barns and land values soaring, families are facing steep tax hurdles. Legal and accounting representation is critical to transitioning farms to the next generation without being forced to sell off assets.
“I’ve heard so many people say they would like their kids to come back home to the farm, but there’s not enough money to be made to split that many ways because the mom and dad aren’t ready to retire yet,” Ponder says. “I think it’s our obligation as a national organization to make sure that it is economically feasible for kids to come back.”
But how can farms do that in this market environment?
“We have to make sure that our farms are on the cutting edge of business and technology, because the next generation wants to be a part of that,” Ponder says.
A lot is at stake for the next generation of agriculture. Durham believes the bright spot in agriculture right now is its resiliency.
“Farmers across the country – soy, pork and beyond – have been forced to be more resilient,” Durham says. “That can be pretty painful at times, especially when it happens fast. But I think we are a more resilient bunch now than we were five years ago, and this is going to help us ensure a stronger future for those following us.”
