Tuesday, April 06, 2010

Answers that work...

But few like.  I have been asked over the past few years by young people wanting to get into agriculture how to "get a chance".  For their most part, I have found their expectations to be wildly impractical (who gives a 21-year old their own company straight out of school?), but we seldom phrase it in those terms. My answer has been as truthful as I can be, but as diplomatic as possible.  It also seems to be not too far from what is happening.

First, if they want to be in industrial agriculture, I advise them to pick their parents very carefully. It seems clear to me there are vanishing small odds of becoming say, a 1500-acre corn-soy farmer from scratch without 1) a very long-shot benefactor or 2) a parent handing over acres. I am not saying it can't be done, but that the probability is similar to making the NBA.

One of the choices that are available is to join a large operation as an employee.  In fact, this option no longer looks as "second rate" as it used to.  Consider doctors:

But an increasing share of young physicians, burdened by medical school debts and seeking regular hours, are deciding against opening private practices. Instead, they are accepting salaries at hospitals and health systems. And a growing number of older doctors — facing rising costs and fearing they will not be able to recruit junior partners — are selling their practices and moving into salaried jobs, too.
As recently as 2005, more than two-thirds of medical practices were physician-owned — a share that had been relatively constant for many years, the Medical Group Management Association says. But within three years, that share dropped below 50 percent, and analysts say the slide has continued.
For patients, the transformation in medicine is a mixed blessing. Ideally, bigger health care organizations can provide better, more coordinated care. But the intimacy of longstanding doctor-patient relationships may be going the way of the house call.
And for all the vaunted efficiencies of health care organizations, there are signs that the trend toward them is actually a big factor in the rising cost of private health insurance. In much of the country, health systems are known by another name: monopolies.
With these systems, private insurers often have little negotiating power in setting rates — and the Congressional health care legislation makes little provision for altering this dynamic. If anything, the legislation contains provisions — including efforts to combine payments for certain kinds of medical care — that may further speed the decline of the private-practice doctor and the growth of Big Medicine.
The trend away from small private practices is driven by growing concerns over medical errors and changes in government payments to doctors. But an even bigger push may be coming from electronic health records. The computerized systems are expensive and time-consuming for doctors, and their substantial benefits to patient safety, quality of care and system efficiency accrue almost entirely to large organizations, not small ones. The economic stimulus plan Congress passed early last year included $20 billion to spur the introduction of electronic health records.
For older doctors, the change away from private practice can be wrenching, and they are often puzzled by younger doctors’ embrace of salaried positions.
“When I was young, you didn’t blink an eye at being on call all the time, going to the hospital, being up all night,” said Dr. Gordon Hughes, chairman of the board of trustees for the Indiana State Medical Association. “But the young people coming out of training now don’t want to do much call and don’t want the risk of buying into a practice, but they still want a good lifestyle and a big salary. You can’t have it both ways.” [More]
There is are many analogies between these two professions, so I think the attraction of working alone will fade as fewer and fewer farm children experience it, and more develop life values attuned to group work.

The other choice is agrarian ag. As the economy limps along, it seems to be looking better and better to beginners.

Some of those creative but unemployed young people are returning to the rural areas where they grew up. Once there, many start innovative businesses or rejoin family agricultural businesses. Other youngsters are choosing to stay home, with big cities no longer quite so alluring.

“A lot of young people are maybe going home and looking for room on the farm, but there’s not enough from traditional agriculture to support them. So they’re taking a certain acreage out of corn and soybean crops and going into specialty crops. We’re seeing new food crops, niche livestock, wineries, free-range chickens, boutique cheeses, a whole set of things on 10 acres where you can potentially generate enough income to support a family if you get a good niche going,” Macke says. [More]

I will be looking for early indicators of what health insurance changes will mean to all parts of rural employment.  But the boost it will give to the self-employed could be considerable, adding intense competitive pressure from single family farms for acres. In fact, solving the health insurance problem could at least slow the loss of solo operations perhaps.


Anonymous said...

john, i think hcr will be very beneficial for rural america and small business owners farmers included. Awhile back you asked the question why farm bureau refused to endorse hcr even though it would obviously benefit their members. i've thought about that all winter, finally decided its just politics, they knew their membership would be dead set against hcr,they also knew that whether or not they endorsed hcr wouldn't affect its chances of passage, and after hcr is accepted in a few years or so nobody would remember that they didn't endorse it, so they didn't. So they didn't lose any dues paying members etc. just politics, avoid taking a stand unless its absolutely necessary. Should be easier to bring a partner into the operation and labor should be easier to keep, just my opinion, thanks

Anonymous said...

As someone who values true individual autonomy (being able to choose how you spend your time the most valuable asset not just freedom to buy stuff) it is discouraging to see it being lost among all professions. IMHO part of making it self employed in rural America if you didn't pick the right relatives is being able to live comfortably on a small income which is not yet a strong idea in our culture. The biggest expenses that stand in the way are health insurance, kids and debt servicing/repayment. So perhaps with hcr we are taking a step in the right direction (thanks for the chart you posted the other day). I don't know what point to draw from this but I would guess the cash rent you pay on 80 acres is about what the median income is in many small towns. Maybe it wouldn't have to take as much as one thinks. Thanks.

John Phipps said...


Thanks for the thoughts. I'm still groping for the implications of this policy change, and you're right - I'm not sure what I'm trying to say completely.

Here is what I know now: two women I met are rethinking their 40 mi. commute to replace a hired man WHEN they can get competitive coverage on their own.

That has to mean something, I think.