When farmers are marketing their crops, they’ve got all kinds of market data, weather data, trends, current political situations, and plenty of market commentators to help make that decision. When farmers are looking at prices for their inputs, however, less information is available.
Farmers don’t know how the prices they pay for seed, chemicals, and other inputs compare to other farmers locally or in other parts of the country. But, one company hopes to change that.
Farmers Business Network, a relatively new data-sharing company, is trying to give you more information. Farmers sign up and provide data about their farm — location, input costs, varieties planted, yields, prices received, etc. Farmers across the country are entering data. Thousands of them. Now, you can see not only how well a particular variety of seed performed on farms across the country, but you can also see how much farmers in different places paid for that seed. The same goes for chemicals and other inputs.
What Farmers Business Network has found is that prices are very different based on where your farm is. Are you being quoted a higher price than average or a lower price? That’s some handy information to have when you’re budgeting for next year’s inputs.
That’s the power of collective action. One simple act — sharing farm data — repeated by farmers across the nation can reveal the inner workings of seed and chemical manufacturers’ pricing plans.
That’s the input side of farmers’ profit equations. What if there was a way collective action could help with gross profits, as well?
Most U.S. farmers must accept prices for their crops set by a global market, which can be influenced by any number of factors. Mostly, it comes down to supply and demand. In a recent DTN/Progressive Farmer article, National Farmers Union President Roger Johnson stated the problem plainly. “There is no economic signal to a farmer to produce less when we have too much,” he said.
Since U.S. agriculture has been tied to at least a partially free global market for several decades now, farmers have only one thing they can do when prices get low — produce more of their product. This drives down the overall prices they receive for their goods.
The problem has become dire in the dairy industry, with smaller dairy farms going out of business at an alarming rate. It’s so bad that farming organizations are beginning to support a controversial concept — supply management.
It’s hard to blame them. Dairy farmers, who are receiving milk prices below the cost of production, only have to look north to Canada where milk prices are above the cost of production.
That seems like a pretty good deal, and now more farmers are interested in how the Canadian supply management program works.
Supply management can involve complicated sets of programs, but a lot of it boils down to cutting back production when supply outstrips demand.
Yes, it’s that thing we all love to hate — government regulation. However, if you think about it, it’s just another form of collective action. Call it collective action with teeth. Call it herding cats. The government has the authority to enforce actions on farms across the board, meaning all our ships are headed in the same direction.
If we can use that power to even out the highs and lows of the price cycles and make sure farmers receive fair prices for their products, we stand a chance of both reducing government subsidies and increasing the viability of the family farm.