In the Wall Street Journal, Jesse Newman and Patrick McGroarty outline a nightmare scenario for American farmers. Low prices for crops, difficult export opportunities thanks to a strong dollar, and a glut of grain on world markets are combining to push farmers out of business at a rate fast enough to shrink their numbers below 2 million for the first time since the mid-1800s.
From the early 1800s until the Great Depression, the number of U.S. farms grew steadily as pioneers spread west of the Mississippi River. Families typically raised a mix of crops and livestock on a few hundred acres of land at most. After World War II, high-horsepower tractors and combines enabled farmers to cover more ground. Two decades ago, genetically engineered seeds helped farmers grow more.
Farms grew bigger and more specialized. Large-scale operations now account for half of U.S. agricultural production. Most farms, even some of the biggest, are still run by families.
As farm sizes jumped, their numbers fell, from six million in 1945 to just over two million in 2015, nearing a threshold last seen in the mid-1800s. Total acres farmed in the U.S. have dropped 24% to 912 million acres.
Russia, meanwhile, has swung over the past quarter-century from the world’s largest wheat importer to the biggest exporter, said Dan Basse, president of Chicago-based research firm AgResource Co. Farmers there planted even more wheat last year to take advantage of the U.S. dollar’s recent climb against many currencies. That encourages Russian farmers to export as much wheat as possible for dollars, which convert to about twice the number of rubles they did three years ago.
The strong dollar also allows farmers in some countries to undercut U.S. prices.
“As the dollar stays strong, U.S. farmers don’t have a lever to pull,” Mr. Basse said. “It’s a slow bleed, not a cut to the jugular all at once.”
Read more here.
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