Policies, technology change the agriculture industry, rural life | 2,500 Below

Patrick Westhoff grew up on a dairy farm with his parents and seven brothers and sisters.

Together, under the cover of a stanchion barn, they managed 70 cows and produced a million pounds of milk per year. The cows were locked into their stalls, they were milked and fed by hand. The family would clean up and start again the next day.

“It was pretty doggone labor intensive,” said Westhoff, director of the MU Food and Agricultural Policy Research Institute. With eight kids “we had lots of cheap labor on the farm. That’s how we’re able to make it work over there all those years without hiring anybody.”

Today, the average cow lives on a dairy farm with at least 1,000 cows, he said. They produce a proportional amount of milk without nearly the labor.

“It’s much more efficiently set up,” he said. “If you’re still trying to operate a farm or that (traditional) type of a set up, it’s darn tough to try to compete with the guys who’ve got a much more efficient way of doing business.”

This change over the last 45 years since Westhoff was living on the farm in Iowa has led to a decline in the number of dairy farms.

“The bus route when I grew up, when I was a kid, there were 13 families on the route I recall. I think 11 of us had dairy cows,” Westhoff said. “Now, there’s one left on that route.”

The same pattern can be observed in Missouri and across the country as the entire ecosystem of getting food from farm to table consolidates.

For example, out of a total of 95,320 farms in the Show Me state, only about 400 — that’s less than 1% — accounted for the top 25% of sales, as of 2017. This is in comparison to 1987, when three times as many farms accounted for the same share.

It’s a phenomenon that one MU sociologist calls the “hollowing out of the middle.” The big players get bigger, amassing more resources and dictating more and more of the way the industry operates.

It’s a familiar pattern. Big Box stores like Walmart and Kroger push out locally owned grocers and five-and-dimes. Huge online retailers like Amazon make it hard for local shops on Main Street to stay open. Big tech companies like Google and their algorithms beat out local newspapers that used to be the spot for any and all local advertisements.

But in rural communities, the impact is often much more acute, shutting down legacy farms and retailers, shuttering small medical clinics and leaving whole counties as “deserts” for goods, services and jobs.

Often those changes are portrayed as the inevitable result of progress, or as one observer calls it, the myth that “things just happen.”

But the forces that have hollowed out many rural communities were set in motion either directly by political decisions or indirectly by technological innovations and changes in lifestyle that made it hard to survive as a small store, a small farm, or a small town.

Power consolidates: get big or get out

Of all the family farms in America, only about 3% make $1 million or more in sales each year, but they account for 46% of the country’s annual production, according to a study released by the U.S. Department of Agriculture’s Economic Research Service in 2021.

“There are a lot of small farms, (but) few big ones that do most of the work,” said Bob Garino, Missouri’s USDA state statistician.

Mary Hendrickson, a professor of rural sociology at University of Missouri, said it hasn’t always been this way.

She said that many farms have been forced to consolidate because of a lack of choice in the market or as a result of the impact of corporate farming.

The term “corporate farming” can be misleading, making people think of big publicly traded firms directly owning the land and running the production of crops and livestock.

In reality, individual family farms accounted for 89% of Missouri’s agriculture, as of 2017 — the most recent year that Agriculture Census data is available. Other variations of family farms — those in partnerships (legally recognized or not) as well as those who have incorporated (often for tax purposes) — made up another 9%.

Nonfamily held corporations — the big firms — made up less than 1%.

Where those big firms come into play the most is on the back side, through processing.

In beef, pork and chicken processing, more than 50% of each market’s control is concentrated with four companies, according to a report submitted by Hendrickson and other sociologists to the Family Farm Action Alliance in 2020.

These include businesses like Smithfield (WH Group), Tyson, Cargill, JBS and a few select others.

As these major players gain more control of the markets, there become fewer choices as to whom farmers can sell their commodities.

Corporations look to buy their products in bulk, and traditional small farms don’t produce enough to be viewed as valuable. They are beat out by those that have consolidated to support concentrated operations.

One example is the hog industry. Over 95% of swine sold in Missouri in 2017 came from 10% of the total number of hog farms, all of which sold 5,000 or more hogs per year.

Another way big processing firms control the food system — without needing to own the land — is through contracts. That means the farmers don’t actually own the livestock they raise and must follow strict guidelines set by the corporation.

And though size and integration may be more efficient, a report from Auburn University Agricultural Economics Professor C. Robert Taylor explains that those factors could also be “a deadly combination that lead(s) to abuses of market power and many undesirable market and externality consequences, including an illusion of choice for consumers, unfairness and harm to the competitive process.”

Hendrickson refers to this consolidation as a “hollowing out of the middle” that has manifested over the last 50 years, exacerbated by the 1980s farm crisis.

“When you see the land consolidation in the number of farms, you know that there are fewer and fewer farms, farming more and more acres,” she said. “That is because of the structure of agricultural markets, and the ability to access markets for commodities. So a lot of our folks … have a hard time because they’re not big enough livestock producers, and not big enough crop producers, to really sell into these consolidated markets. So they get left out.”

Generally, unless farmers sell directly to the consumer through a local farmers market, they are forced to get big or get out.

“You don’t have another choice,’’ Hendrickson said.

Not only is the consolidation happening in crop and livestock production, but also in food retail.

Local grocery stores struggle to stay open, competing with big chain stores and online retailers. The decimation of local businesses then starts to affect the tax structure. The impacts of consolidation then spill over, taking a blow at rural banks, health care providers, child care and public education.

“That’s all connected,” Hendrickson said.

But how this consolidation has happened, what forces drove the change and whether the results are positive or negative is a matter of perspective and opinion.

‘It’s policy that got us here’

Tim Gibbons, a representative from the Missouri Rural Crisis Center, points to legislation in Jefferson City and on Capitol Hill as the driving force behind consolidation.

“It’s policy that got us here,” Gibbons said. “And it’s going to be policy that gets us out.”

He attributed much of the influence over policy decisions to a handful of corporations that hold control over large sectors of the food industry.

“Corporate agriculture likes the narrative that things just happen … They leave out the corporate lobbying power, the corporate campaign power,” Gibbons said. “And the more power that they have in the market, the more power they can have over our democratic process. And the more power they have over a democratic process, the more power they can have in the market. So it’s exponential, it grows upon itself.”

Many of the policies Gibbons pointed to correlate with the 1980s farm crisis, including a change in interpretation of antitrust law.

Antitrust laws, born in the early 1900s, were designed to reign in control of powerful robber barons like John D. Rockefeller and Andrew Carnegie, preventing the development of unjustified monopolies. They were based on the idea that competition was best for everyone, competitors and consumers.

This remained the de facto standard through the 1960s, when discussions in economic academia began to shift.

“There were new ideas in economics, that really what we care about in markets is that consumers get the cheapest product. And so this was called the consumer welfare standard,” Hendrickson said. “We only care about cheap, and as long as it doesn’t violate cheapness — in other words, price — we’re not particularly concerned about other harms.”

The new mindset gave processing corporations the power to pay farmers less, arguing it was an effort to lower consumer retail prices. In reality, the consumer prices still rose and corporations won out as profit margins grew.

This gap between producers’ pay and consumers’ retail cost can be seen in the beef industry — a commodity for which Missouri ranks third in the nation, producing about 2 million heads per year, according to the State Department of Agriculture.

Seventy-three percent of beef is processed by four meat processing corporations — JBS, Tyson, Marfrig and Cargill.

The concentration has led to what Missouri Farm Bureau President Garrett Hawkins described as a “historic” spread between what farmers are paid and what consumers spend at retail.

As of early June, for every $10.49 consumers pay per pound of top sirloin, farmers only receive $1.98, according to The National Farmers Union.

The more concentrated the market of beef producers and packaging groups becomes, the more power corporations hold over farmers. If only four corporations hold the majority of the market, then where else would a farmer go to sell their beef?

“Frankly, that is not an issue that you dissect easily or come up with simple policy solutions,” Hawkins said. “(It) is an ongoing discussion, particularly in Washington, D.C., amongst lawmakers as they try to figure out how to enhance price transparency in the cattle market.”

Westhoff, director of the MU Food & Agricultural Policy Research Institute, said it’s important to examine not only policies that outright favor corporations, but those that haven’t disincentivized the drive toward growth and consolidation.

“I’d argue that most of the federal (agriculture) subsidy policies, for example, that we have, tend to provide the same level of subsidy per unit of production to both smaller and larger producers,” Westhoff said. “So it’s not so much that it has an inherent bias towards larger scale, but rather that it doesn’t push back against large scale producers in any way.”

With ever-evolving technology that increases efficiency and the lack of policies attempting to regulate the scale of operation, people tend to take advantage of economies of scale, producing more at a lower per-unit cost.

“So unless there’s an act of policy, trying to push back against that, you tend to see consolidation occur. And that’s true both on the crop side and on the livestock,” he said.

From nation to state

Change in the interpretation of antitrust law is a national issue. But Gibbons said local policy also influences consolidation. He pointed to local regulation of air and water quality, a topic highly debated in the case of Missouri’s Senate Bill 391, which is currently awaiting a hearing in front of the Missouri Supreme Court.

The Environmental Protection Agency sets regulations on corporate factory farms, otherwise known as CAFOs, through the Clean Air and Clean Water acts. States’ departments of natural resources are then able to set their own regulations that are stricter than the EPA’s.

But in Missouri the Department of Natural Resources’ rules on these concentrated farms are not much stricter than federal level regulations.

“And they’ve gone down since I’ve been here for the last 15 years, like the lobbyists slowly pick away at our state rules,” Gibbons said.

This means that some large, concentrated livestock operations that rely on manure lagoons — a controversial practice that is designed to handle the mass amounts of waste collected when practicing industrial farming and keeping over 1,000 animals confined in one facility — can impact local water supplies or air quality.

For some counties, the way to set more stringent regulations on these concentrated operations was through county health ordinances. However, Senate Bill 391 challenges that.

The bill removed the ability of health boards and commissions to impose local regulations any more stringent than those of the state department.

Gibbons said that the Missouri Rural Crisis Center and many farmers and rural residents across the state, especially from north central Missouri, pushed back against the bill.

“There was little to no support for 391 other than in that building, and the lobbyists in that building, and they passed it anyways. And it just shows how nonrepresentative our process can be,” he said.

But others including the Missouri Farm Bureau, the Missouri Pork Association and director of the state’s Department of Agriculture Chris Chinn have voiced support as it goes before the Supreme Court.

“The challenge with some of the county commissioners being able to dictate how somebody runs their farming operation is that they may not have any connection to agriculture at all,” Chinn said. “We want to make sure that we’re not tying the hands of Missouri farmers and ranchers and putting them at a competitive disadvantage to farmers in other states (or counties) who don’t have those additional burdens and restrictions put upon them.”

Don Nikodim, executive director of the Missouri Pork Association, said he felt the county ordinances that did exist weren’t there to regulate CAFOs but to keep them out.

“The state has a very good program in place, the Department of Natural Resources has a set of rules and regulations that have been vetted … Counties have none of that,” he said. “You’ve got two of three commissioners, sometimes three commissioners in the county that make this decision or put this rule or law in place, without any expertise to do it to begin with, with no expertise to manage it or enforce it,” he said.

Keeping up with technological change

Not all forces that have changed the structure of our country’s farming system and impacted rural communities stem from specific decisions or policies. Some point to technological innovations. Others point to policies that don’t necessarily support bigger farms and processing corporations but don’t deter them either.

The concentration of farming has been happening “frankly, for decades,” Hawkins said. “So is there one policy that I can point to that has led to that change? No, I can’t, but what we can say is that American innovation across the spectrum, across the economy, has in large part driven where we’re at today.”

Hawkins described America as “the envy of the world” in regard to technology, not only in agriculture equipment but in crop genetics and feeding practices, all of which increase efficiency.

“It takes fewer farmers today to raise commodities, whether it’s corn, soybeans, you name it,” Hawkins said. “Most, certainly, technology has allowed for farms to get bigger and to capture economies of scale.”

Chinn is a fifth-generation farmer in Shelby County, where she and her husband work alongside his parents on a farm with both livestock and row crops. They hope eventually to pass the farm down to their son for a sixth generation.

But Chinn said just in the time since she and her husband got married in 1995, she has seen significant technological change on the farm, from larger tractors with GPS guidance to grid sampling of soil.

She also noted moving livestock from dirt lots to what she called hog barns and others call CAFOs. Chinn said this move helped her family address disease and weather issues as well as predator attacks.

“They are very expensive barns with a lot of technology,” she said. “So we call them hog barns on our family farm, and most farmers who have them, they do the same thing. And the term (CAFO) is something that really is used outside of agriculture. Because just like our tractors have changed over the years, how we take care of our livestock has changed as well.”

She said technology plays a part in the consolidation of farms and the side effects it has on rural communities, but she also said that in many areas it was a necessity because people weren’t coming home, and it may be more technology that gets them to return.

“I think if we can get broadband access to every rural community and every farm gate, that opens up another opportunity,” she said. “If you’ve got that internet access, you may decide to return to that rural community, or maybe you’ve been gone for 15 years, but you want to raise your kids where you were raised.”

Nikodim said that technology changes, and businesses have to change with it.

“People I work with, you know, they decided to adapt and change with technologies that came along and invest in their operations and be competitive. There’s not very many of them that were willing to do that,” he said. “And so those that did, it’s been very beneficial. Those that didn’t want to adapt and change, they probably didn’t stay in business because they weren’t competitive in terms of productivity.”

Nikodim also looked to changes in desired lifestyle that came from new technologies as an influential factor in the declining number and shrinking inventory of hog farms in Missouri.

“It was really hard work, and you didn’t get paid very much to do it. And so you look for other opportunities that maybe paid you more,” he said. “So just to generalize that we’ve had bad policies and made people leave the farms, I don’t think is correct.”

He recalled the story of his grandparents, farmers in southwest Missouri in the 1930s. They didn’t have electricity on their farm until 1948, the same year Nikodim’s parents decided to leave the family farm and move to Kansas City.

While farming, Nikodim’s dad made about a dollar a day.

When they moved to Kansas City his dad started working on the assembly line for Ford Motor Company. He started out making 90 cents per hour, over seven times what he made on the farm.

People who grew up on the farms saw family members in the city living a much more affluent way of life, and that was an influential push for many to leave rural Missouri Nikodim said.

In 1961, his family moved back to a farm, and even then their house lacked plumbing. There was water in the kitchen sink and that was it.

“This lifestyle, it might be great to go camping or something once in a while, but to live it full time isn’t so lucrative,” Nikodim said “And so my thought process is there’s just a lot of people over the years who said, ‘this isn’t what I want to do.’”

From a sociological perspective, Hendrickson doesn’t disagree that advances in technology and desires for a more convenient lifestyle have influenced the changes we see in agriculture and its impact on rural life.

But she believes it’s not that simple.

Hendrickson said there are two types of problems one can face — a complex problem and a wicked problem.

A complex problem, while difficult, has an answer “you can figure it out” she said.

But a wicked problem has multiple stakeholders with differing morals and interests. It is constantly evolving, and when you intervene in one way, the problem changes.

“The food system is really a wicked problem because you have more than one right answer,” Hendrickson said. “There’s some clearly wrong answers, but there can be lots of different right answers. And it’s very difficult to define what the problem actually is.”