AheadRace eLearning Module # 01 - Selling to Farmers
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The e-learning module covers the structure and operations of U.S. farms, focusing on farm management systems and technology adoption, particularly in the context of falling agricultural prices. It highlights the dominance of family-owned farms, the challenges faced by small farmers, and the shift towards genetically modified crops facilitated by large agricultural firms. Additionally, it outlines the impact of government policies, such as the 2014 Farm Bill, on farm operations and the slow adoption of new technologies in the sector.
AheadRace eLearning Module # 01 - Selling to Farmers
- 1. Selling to Farmers e-Learning Module Start
- 2. Learning Objectives After completing this module, you will: Describe the farm structure of US Production Explain how US farms operate under federal and state frameworks to combat falling prices Explain the concept of Farm Management Systems Recognize the scope of technology adoption by farms Back Next
- 3. Topics 1 Farm Structure of U.S. Production 2 Farm Operations and Combatting Falling Prices 3 Farm Management Systems 4 Technology Adoption Back Next
- 4. The Boom The post WWII boom in US farm productivity was driven largely by: • consolidation of family farms • mechanization of farming and intensive farming • automation of planting, harvesting and storage • higher crop yield achievements through better irrigation and more powerful fertilizers Did you know? By 2012, 3.2 million farmers operated 2.1 million farms covering 915 million acres that generated food, fuel, and fiber – however the number of principal operators declined by 4.3% from 2007 to 2012 and their average age rose to 58 years old (according to USDA Farm Demographics and a new 5 year survey is set for 2017). Back Next
- 5. US Production Of this farm population of 2.1m farms, the largest farm producers control US production although family farming remains the industry backbone and certified organic farming production value is growing 25% annually but is still just only 1% of the farm population as of 2014 (USDA). Nearly 90% of US production value is derived from four prominent crops: • Corn ($52.4B) • Soybean ($40.3B) • Wheat ($11.9B) • Alfalfa ($10.8B) Source: Wikipedia from a 1921 Encyclopedia Back Next
- 6. Production Diversity at Family Farms Production is much more broadly diversified at family farms (USDA – 3/5/15): Food equals family – 97 percent of the 2.1 million farms in the United States are family-owned operations. Small business matters – 88 percent of all U.S. farms are small family farms. Local connections come in small packages – 58 percent of all direct farm sales to consumers come from small family farms. Big business matters too – 64 percent of all vegetable sales and 66 percent of all dairy sales come from the 3 percent of farms that are large or very large family farms. Farming provides new beginnings – 18 percent of principal operators on family farms in the U.S. started within the last 10 years. Back Next
- 7. Topics 1 Farm Structure of U.S. Production 2 Farm Operations and Combatting Falling Prices 3 Farm Management Systems 4 Technology Adoption Back Next
- 8. Farm Operations The farm operations of the largest 60,000 US farms are materially different from the remaining 97% of small farms, by necessity. Scale allows these operators to focus on price leadership and every aspect of their business processes are automated, adjusted to market conditions in real time, and hedged with insurance protection and Chicago Mercantile Exchange (CME) options hedging contracts. But all US agricultural firms operate under the framework of Federal and State subsidies, lending programs, and perks. Back Next
- 9. Adoption of GM Crops Large farms in the US, however, partnered with oligopoly seed & pesticide firms and also largely dominate their shared legislative agenda to their near exclusive benefit. Genetically modified organisms (GMOs) or crops engineered to be herbicide tolerant (HT) or toxic to specific insects (Bt), or both, have taken over U.S. farming acreage since their introduction in the 1990s. While recognizing the failure of small farmers to recover from the 2007-2008 recession, the Obama Administration effectively allowed large farms to author the 2008 Farm Bill which Senator Charles Grassley (R-Iowa) explained, “the original intention was to help small- and mid-sized farmers get through the difficult times. Instead, nearly 70 percent of the farm payments are received by 10 percent of the recipients, helping inflate land prices, enticing big producers to get bigger, and discouraging beginning farmers.” An underappreciated aspect of this bill is that it incentivized GMO seed usage in cultivated cotton and corn plantings, resulting in a surge towards nearly 80% GMO production like soybeans. Back Next
- 10. Adoption of GM Crops Back Next Source: USDA Economic Research Service
- 11. The Farm Bill The Agricultural Act of 2014 (“the Farm Bill”) sought to repeal of $4.5 billion in annual direct cash payments, a long disfavored policy where farmers received a fixed amount of money for every acre they owned, regardless of whether it was planted or not. This bill replaced the direct cash payments with a nearly equal amount of subsidies for crop insurance. The New Republic explained what happened, “federally subsidized crop insurance programs pay almost two-thirds of a farmer’s premium, as well as most of the insurance claims, guaranteeing revenue regardless of crop failure or even price swings. The current farm bill expands the program to cost the government $90 billion over ten years, an increase of $7 billion. But that’s just an estimate, which may be low.” Back Next
- 12. Fighting Falling Prices Small farm businesses get subsidized borrowing rates from the USDA and other benefits. But, many of them focus on information sharing, best practices, creative use of organics, and the introduction of new products into a culturally diverse and vibrant US ‘direct to consumer’ agricultural products market. One diversification program showing success is ADAPT (Ag Diversification Adds Profits Today), long sponsored by Successful Farming magazine starting with an expenses-paid farmer extension conference in the wake of the Farm Crisis of the 1980s where Farmer Ralph Spiegel listed seven steps he saw as the route to follow when starting a new farm venture. Back NextClick the image to enlarge
- 13. Fighting Falling Prices Recognize a need or market. Learn about the product, its uses, and production . Talk to other producers about problems, solutions, costs. Secure adequate capital. Be prepared to work. Be prepared for errors. Hope for a bit of luck. 1 2 3 4 5 6 7 X
- 14. Topics 1 Farm Structure of U.S. Production 2 Farm Operations and Combatting Falling Prices 3 Farm Management Systems 4 Technology Adoption Back Next
- 15. Farm Management System The concept of a farm management system is now widely adopted in the US agriculture sector, even among the typical 400 acre farms run by small farmers. Inputs from preferred suppliers are specified, including the cost of full time and seasonal labor, and the associated costs are all mandated to be reported in the required Schedule A tax forms required by all self employed workers. Farmers also must file forms with the Occupational Health and Safety Administration (OSHA). Back Next
- 16. Topics 1 Farm Structure of U.S. Production 2 Farm Operations and Combatting Falling Prices 3 Farm Management Systems 4 Technology Adoption Back Next
- 17. Slow Adoption The agriculture sector in the US has been slow to engage in technology adoption due to a number of key issues. Certainly, the Federal Government regulators have been anti-progressive about farming and have even discouraged “truth in labeling” such as with GMOs. State programs are widely divergent and range from being highly restrictive (i.e. California) to meaningfully promotional (i.e. Georgia). Equipment suppliers like John Deere have acted like prestige automakers, as the improvement of the industrial scale systems has occurred steadily- so has the cost of these “platforms” and the focus on selling farmers attachments and add-ons. Finally, the prudent farm management profile has been to be risk averse given the major uncertainties of weather, market pricing and crop-specific demand profiles. In fact, many banks even discourage crop swapping by farmers as they extend only enough business credit to continue pre-planned production to fit into their existing cash flow models. Back Next
- 18. Changing Times Over the last eight years, weak national economic growth coupled with a strong dollar has depressed crop prices and farm margins. Proposed solutions from various parties has spanned: • The US government has urged farmers to diversify their crop production. And groups like ADAPT strengthened that message with assistance on niche marketing. • Equipment suppliers promise higher productivity from increasingly fully automated systems and many can indeed be programmed to self-drive harvest, self-clean, measure the volumes harvested, and even initiate product processing. • Agricultural Technology (AgTech) firms encourage the embrace of Internet of Things (or IoT) to add connected devices to monitor crop condition, production, threats and yields. Readwrite pointed out this summer that, in the next year, we expect the cost of the devices and software to even out to the amount saved in labor and other inputs. Back Next
- 19. Human Labor vs Technology Back Next
- 20. Fighting Falling Prices AgTech entrepreneurs are already beginning to deliver advanced farm management systems involving smart field-located fertilizing and anti-pest drones, real-time kinematics (RTK) navigation systems, GPS-based field monitoring drones, and 24x7 automated machinery- all profiled in this PBS documentary. Back Next
- 21. Knowledge Checks The post WWII boom in US farm productivity was driven largely by __________. Back Select the correct option. ⃝ consolidation of family farms ⃝ mechanization of farming and intensive farming ⃝ automation of planting, harvesting and storage ⃝ higher crop yield achievements through better irrigation and more powerful fertilizers ⃝ all of the above
- 22. Knowledge Checks The post WWII boom in US farm productivity was driven largely by __________. Back Next consolidation of family farms mechanization of farming and intensive farming automation of planting, harvesting and storage higher crop yield achievements through better irrigation and more powerful fertilizers
- 23. Knowledge Checks To combat falling prices, many small farms focus on information sharing, best practices, creative use of organics, and the introduction of new products into a culturally diverse and vibrant US ‘direct to consumer’ agricultural products market. Back Select the correct option. ⃝ True ⃝ False
- 24. Knowledge Checks To combat falling prices, many small farms focus on information sharing, best practices, creative use of organics, and the introduction of new products into a culturally diverse and vibrant US ‘direct to consumer’ agricultural products market. Back Next True
- 25. Knowledge Checks What does advanced farm management systems involve? Back ⃝ smart field-located fertilizing and anti-pest drones ⃝ real-time kinematics (RTK) navigation systems ⃝ GPS-based field monitoring drones ⃝ 24x7 automated machinery ⃝ all of the above Select the correct option.
- 26. Knowledge Checks What does advanced farm management systems involve? Back Next smart field-located fertilizing and anti-pest drones real-time kinematics (RTK) navigation systems GPS-based field monitoring drones 24x7 automated machinery
- 27. Congratulations To build more such modules contact us: www.aheadrace.com