As I write at the beginning of the new year, I’m like thousands of other farmers who have just finished a flurry of bill paying. Farmers use cash accounting to push income for tax purposes somewhere far in the future. We do that by making end-of-the-year purchases of next year’s inputs. It was pretty easy to offset the revenue from $4 corn sold in 2020 and delivered and recognized for tax purposes in 2021 with $1200 per ton anhydrous prices this fall. The year-end run-up in commodity prices meant that I also had margin calls for Christmas. Since I pay taxes on the changes in my hedging account each year but don’t recognize gains in inventory until the grain is sold, I’ve no doubt overdone the whole minimize income thing. We’ll see how it all shakes out come February.
When I wasn’t trying to figure out how to avoid the taxman, I read a couple of books about farming this year, both highly critical of the present day state of my profession. Both Sarah K. Mock, author of Farming and Other F Words and Beth Hoffman, author of Bet the Farm, agree that the corn-soybean rotation used on my farm and throughout the Corn Belt is environmentally unsustainable and doesn’t produce “real” food. The authors go on to say that it is economically untenable, arguing that commodity farmers are on a treadmill of debt and government bailouts, working for peanuts for a lifetime with no chance of financial success or even an average income. In their opinion, off farm work is the only reason such farms survive.
Conservative critics of farm subsidies used to point out that farmers’ incomes and wealth are well above the national average. Of course, that was when “conservatives” had a problem with government spending. Now, that argument isn’t heard as often, but the fact remains that larger farms, almost always operated by families, are often profitable. The USDA estimates that farms with gross sales between half a million and a million dollars had net cash farm income of over $200,000 per farm in 2020, and income for those farms is estimated to be nearly a quarter of a million dollars in 2021. Now, I realize that this income may be split between more than one farm family. I’m not sure how those figures handle principal payments, and they are, after all, government estimates. On the other hand, I have, deep down in my soul, the perhaps mistaken notion that those farms are also deducting as business expenses some costs that might, just might, be more correctly accounted for as income.
Both Mock and Hoffman avoid talking about such artistry, instead quoting the figures for average farms, which, as Mock readily admits, contain many farms who may have over $1000 in farm sales necessary for inclusion in the USDA statistics but are not really businesses, but lifestyle choices. The inclusion of these farms drives down the average farm income to poverty levels, which helps both Mock and Hoffman make the argument that the present way agriculture is organized in the U.S. is a crime not only against the environment but economic common sense as well.
The inclusion of small farms in the statistics, and to be honest their very existence, offends Mock greatly, as she argues that those lifestyle farms drive down the prices for full time operators. True enough, but both authors gloss over what should be obvious to any casual observer of the farm scene: many full time farmers make a nice living even though incomes can vary a great deal from year to year.
Both authors are critical of what they call the agrarian myth, and would dearly like to replace present day farmers with agriculturists who are more diverse and less, well, Republican. As far as I can tell, both would define the myth as including self-reliance, independence, family, and farming families serving as sort of a reservoir of the moral qualities that sustain the rest of society. As a farmer, I’ve pretty well bought into that story, but there are admittedly some problems. As recently as two years ago farmers received over 40 billion dollars in federal subsidies. There is much to admire about farmers, but we are a few billion short of being self-reliant.
Which leads to a problem for those of us who have invested a lifetime and a career in the agrarian myth. While we can in good faith argue that government help in the face of droughts or market disruption serves a social purpose, what happens if the questions Mock and Hoffman are asking enter the political mainstream? If our opponents and our friends are both arguing that our industry can’t survive without constant intervention and help from the taxpayer, the ever patient taxpayer may someday ask if farming in its present form is worth the effort.
Farmers exacerbate the situation by being reluctant to admit when our farms are profitable. After all, modesty is surely part of the agrarian myth as well, and even in a time when all traditional restraints on government spending have been lost, it’s easier to ask for government spending when our incomes are presumed to be low.
So, even though I’ve pushed cash accounting to an extreme, and even though my hedging account is as red as the federal budget, I’m pretty sure that an economic accounting of the past year would show that my farm, like most others, made a comfortable profit. I’m not as good at this farming business as my neighbors, but I’ve survived for over 40 years, in years when government subsidies were high and years when there was very little help. I think the “agrarian myth” is largely intact, but it may need some attention around the edges. We ignore writers like Mock and Hoffman at our peril.
Blake Hurst is a farmer and greenhouse grower in Northwest Missouri.
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