You drunken sailors...
I've already ranted about this, but if anything the Ag Meme of the Year is getting stronger.
"The year 2014 will be the sobering up period," said Michael Swanson, an economist and senior vice president with Wells Fargo, the largest private lender to U.S. agriculture. [More that will tick you off]
I wrote about the characterization of the last few years as a party in TP recently. In fact, I think I'll just save some time and repeat myself:
Party? What party?It’s hard to turn a page in ag media without encountering a description of recent years as a party, which is now sternly declared “over”. The metaphor is inaccurate at best, and faintly insulting to farmers at worst. There is scant evidence of either mindless revelry or foolish extravagance.
This image of farmers squandering prosperity originates, I believe, with critics who remember 1973. Returning in ‘75 after a decade away I discovered fellow Boomers exhilarated by that still unrivaled income spike. We put our name on lists to buy a new tractor; men who seldom drove 150 miles to Chicago flew often to Las Vegas; we couldn’t buy big enough pickups. Goaded by government policies (10% investment tax credit), equally giddy lenders, and elders we delighted in defying, many did go overboard.
But agriculture had just emerged from a grim economic period, and was still an occupation of exhaustive effort and financial naiveté. Children didn’t just leave the farm – they fled. The socioeconomic gulf between farm and city was wide. Young men urged off to college (like fathers drawn off to war) saw other lives and decided they knew what “better” looked like. Mostly it centered on living large. Returning home, they already had an idea of how to celebrate, and only needed the resources. In hindsight, the results were unsurprising.
During the Eighties, the survivors grew up. So when this current run of good fortune occurred, the response was markedly different, which is reflected in USDA financial reports.
We have used prosperity to reinvest in our long-term future. When critics point to “outlandish” land prices, remember, regardless of price, land is an investment, not a consumable. We have installed tile, terraces, and pivots at an unprecedented pace. We have built homes and bins and buildings that will serve our grandchildren and beyond. We have paid down debt to historic ratios. The balance has been herded into long-term notes with rock-bottom fixed rates. These aren’t the actions of people at a particularly fun party.
Unnecessary New Paint? Even this supposed failing is not without rationale: “Yeah, but we can go X years without buying another machine”. Farm machinery is correctly classified as a “durable”, and dealers fear demand has just been pulled forward. Our sheds are better seen as a well-stocked tool chest. We have also learned that even if we admit to being “over-machined”, the narrower fieldwork windows of our era of climate change often prove we have barely enough.
Above all, after decades of laments, we took the earliest profits and finally, in the words of my father, “outbid the world” for our sons and daughters. We “bought” our best and brightest home.
To be sure, our living standards (expenses) have increased. However, a 20% increase while net farm income was more than tripling does not strike me as disproportionate. Even the notable upswing in farmer leisure from golf to getaways is better seen as an overdue revision of an all-work-all-the-time ethic that only served to drive our children from the land, stress our marriages, and narrow our vision. Rural lifestyle rebalance and firsthand global experiences were valuable investments.
Perhaps the transition from lower-middle class to upper-middle class was simply easier than the abrupt change from lower to middle class in the ‘70’s. Or maybe 21st century producers had already learned what money could not buy.
Nag, nag, nag. Meanwhile, we have been regularly harangued about our historic tendency for financial excesses. (We heard you, already.) Perversely, the only example of embarrassing indulgence that comes to mind involves one perennial haranguer: the Farm Credit System. (More soon)
I have been a relentless – OK, tiresome - critic of our profession for our subsidy addiction and brazen boasting, but on this issue I am convinced it’s a bum rap. While we gratefully rejoiced to advance long–desired goals, producers managed this bonanza with remarkable self-discipline and forward thinking.
So, regardless what happens to farm income, this party isn’t over. It never happened in the first place.
There are many possible strong rebuttals to this condescending characterization that are conveniently left out of media quotes:
- There was not party in the protein sector: from hogs to milk to chicken. In fact, the last few years have been multiple trips to heck and back.
- I think the financial community is pissed because we invested in farmland, where they couldn't get their hands on the wealth to churn and derive commissions. Once we bought land, that money was put of reach and they were holding a 30-year 4% mortgage which was the best they could charge.
- Bankers have been prophesying interest doom for over a decade now. Swanson has to my sure knowledge, as I have followed him at conferences over that time period. Even by their self-serving standards they are starting to look a little foolish, even making Chicken Little a calm comparison. These aspersions to the character of agriculture are simply a way of diverting attention from their clueless doomsaying.
- The lending community truly does hold agriculture in contempt. While they tell us what we want to hear face-to-face, they tell Wall Street what irresponsible adolescents we really are.
If I banked with Wells Fargo, I would be sure to point out this derogatory description and customer disrespect and suggest it may be one reason why WF needed bailout money during the recession.
Farmers are quick to rail against anti-GMO or CAFO opponents. It's time we realized much of image problem could actually be generated by people like Swanson describing us as incompetent drunks, while claiming to be on our side.