Wednesday, April 23, 2008

Everybody has to be somewhere...

If you haven't read Greg Vincent's masterful article about cash rents in Central Illinois in the latest Top Producer, you really need to. And also check some of the response he has been getting.

I knew this piece would open up a can hard feelings, but there are still many people who feel that those who currently farm should continue to farm. And to my way of thinking too few of them understand their actual relationship with landowners.

But the point that always confounds me is the "local business" argument. The theory (see comments above) is Big Time Operators blow in from "other places" (presumably the land of Mordor) and bring all their fertilizer, seed, etc. with them, hence starving local businesses.

OK, but where do those inputs come from? In many cases, a local dealer somewhere else. And this retailer is doing great, thanks to his BTO. As far as seed, I would imagine BTO's often are farmer-dealers to get the discounts available from this way-too-many-layered business - hardly a new strategy. Indeed, in my part of the country Moody Farms has opened their own fertilizer, chemical, etc. supply business for themselves and any farmer that actually adds to the choices of local producers.

One solution for local businesses then is to grow your own BTO, and hope one of them becomes a really BTO. But the main point is inputs are still being bought folks, and even BTO's are local somewhere. They likely go to church, complain about school teachers, and even dabble in local politics, just as often as mm, non-BTO's.

When we're looking for moral high ground to justify our fragile competitive position, at least we should aim for logical scenarios.


Anonymous said...


Anonymous said...

John, I really do respect and appreciate your opinions. Usually I agree spot on. However, from my humble perspective, You are missing the mark regarding Big Time Operators (BTO's) & how their business dealings impact a community. The BTO's in our area purchase seed ,farm equipment & fuel direct from national/regional suppliers. They import & apply their own fertilizer,have their own crop insurance & tiling business, do their own trucking, use a lot of foreign labor and finally they bypass the local elevator & sell direct to out of the area processors. They are masterful @ maneuvering around any rule, regulation, or other obstacle that gets in the way. The logical conclusion of the path farming in our country is on would be to wind up with just a very few walmart size farm operations in each state. I can not accept that this is in the best long term interest of our Nation. A wise man once noted:"There is a point where ambition becomes greed".

John Phipps said...


We are all reaching conclusions based on our own data, and obviously yours is different.

The "local" question is problematic for me because I now consider local much wider that I used to. One example - my CNH dealer. Like many machinery dealers there are now statewide with about 10-12 (??) separate dealerships.

Is Birkey's still a "local" dealer?

It appears to me that some services and products lend themselves to local for various reasons: trust, freshness, speed, etc. and some are less so (books from Amazon).

What if farming now leans toward the Birkey's business model? In fact, what if we have been driving toward it for decades.

Greed is a tricky label. I will try to post more on this reference anxiety soon.

Anonymous said...

I think Birkeys is a great example. We have one in our town, and they are a great group of people working hard to serve our community and farmers therein, however they are part of a larger organization with corporate governance elsewhere. Could it be acceptable to people that a farmer creates an operation of such size that they control large acres spread over several counties, with a local operator responsible for those operations?

Such is the case with many national and international firms. They have corporate governance but what happens on the ground is up to the local office. I could see where a producer is the "head farmer" of a 10,000 acre farm spread over four counties making decisions on financing, machinery, and rents, but a local associate is responsible for the day to day- seed selection, fertility, logistics.

Maybe that is the model to keep farming local yet on the scale that allows growth and durability.

John Phipps said...


I have pushing around an ideas like that - a sort of franchising. "McFarm's" - for lack of a better illustration.

I'll try to write up a scenario.

Anonymous said...

I already see the Birkeys type outfits are being bypassed. These BTO's go direct to the manufactures and make quantity purchases.
We are already traveling 40 mile round trip to find a dealer for parts. We are just one or two shaky grain elevators away from driving @ least that far to move a load of grain. cost of travel is up, roads need work, many landowners live out of area thus don't spend as much local.
It was mentioned above that "I could see a head farmer over 10,000 acre in 4 counties". I'd say the current average of our bto's is already closer to 20,000 acre.
Where will it end? Who will be left in rural areas? How much power will the few remaining "farmers" and suppliers have in passing on unreasonable cost to consumers? Is this in our nations best longterm interest?
I realize what I have written above might be considered fear mongering. But the things I describe are happening. I don't know if I can put in to words what is given up, but I instinctively know there is a loss.

Anonymous said...

John, I see alot of downside to this in our future. I think Greg did a fair job of describing the issue, but he no doubt has some sort of fascination with the big boys,ie. Rosentraitor. The consequences to the local towns are like dominos. Fertilizer dealers, fuel suppliers. They most certainly do bring these inputs in with them when they show up. It would be impossible to count all the medium size operators that are now gone. Would the local town and economy be better off if they were still going?? Of course they would.

Anonymous said...

Another example is the local elevator. Many are not doing real well.These BTOs dont use them at all. Those are bushels lost for the elevator. With tight margins, this has an effect. Do we want to see these long term businesses go by the wayside? Their are many implications to this.