I view this talk as a chance to reflect on what I've learned about family farming....things I've learned first hand with rural people sharing their pain, their worry, their joy, their hopes and their dreams. I've been privileged to be a witness to a special people in special circumstances and to tell their stories. I moved to the Midwest in 1974 and have been a provider of counselling services for rural families since that time. I started writing for the public in 1982.
How can farmers be good stewards of the land? How can they survive in today's harsh economic climate in agriculture? What principles of living help the farm family nurture each other as well as the livestock and animals they raise? Indeed what does it take to sustain a family in happiness and a farm family on the land? Given current trends, I'll try to project ahead and describe what might be the future of the farm family.
Right from the beginning, I stood in awe of the lives and values of farm families. This was unique; different than anything I was used to. I've tried to understand and I'm still trying. I've written and written about unique themes, stories and lives playing themselves out in the Dakotas, Minnesota, Iowa, the Prairie Provinces and in agricultural communities in general.
I've learned of the values and mythology of family farming. Those deeply held beliefs that sustain heroic effort and commitment both to agriculture and to family life. I am talking about such things as rural neighbours; sense of community; raising children around nature; raising children to take responsibility; true husband wife/partnerships; time together; common goals; love of nature; privacy; being one's own boss; identity; the rhythm of seasons.
I have also learned that no matter how good management might be, basic things like weather and prices remain elusively outside of one's control. The highs and lows in farming are anything but predictable. Working in a family business is complicated. Rural community life is busy and demanding.
Family life based around crops and animals is out of synch with the rest of society, which can channel their work hours into controllable and predictable blocks of time. The rhythms, culture and the goals of farm life are different. There is little understanding or even awareness of the needs and lifestyle of farm families. School extra-curricular activities are demanding. Kids are on the go and are just as busy as their parents.
The debt load and the cash flow in this business would astound most non-agricultural people. Equipment wears out. Work has to be timely and with good organizational sense. These are physical dangers. Being in too much of a hurry or too stressed increases farm accidents.
Even if farmers produce good crops they have to contend with a global economy, consolidation in meat packing, corporate hog farms, international grain corporations, vertical integration, cheap food policy and divided politics of agriculture. The need to get bigger and bigger pushes mid-size and smaller size operations into being less competitive. It is a devil's choice of expanding and taking on more risk and longer hours versus a gradual attrition of your equity base. Poor markets can nullify endless hours of hard work and wonderful crops. Witness 1998.
My talk is divided into five parts. In the first part, I will take on the task of describing the economic trends and how they impact farm management. In that section, I will refer to two main strategies for survival - low cost, high volume production and niche production.
Part two will describe family management strategies for success including intergenerational transmission of farming skills and management, husband/wife partnerships, and family life.
Part three will describe family business principles that will provide for the greatest opportunity for success.
Part four will be a summary of challenges and recommendations for farm families as they enter the daunting 21st century in agriculture. After my talk, I will entertain questions with the time remaining.
I'll start by defining the term, family farming. For the purposes of this talk, I am referring to a farming business, either large, mid-size or small, where the family are owners, provide management and some of the labour. The family farm could be a large corporate entity rivalling any non-family corporation engaged in farming.
There are two million farmers in the United States of which 18 percent are large and produce 83 percent of farm products. Some of the two million are hobby farms. I'm sure the statistics in Canada are somewhat similar.
Some are farms sustained primarily by off-farm work. Some family farmers are "custom" farmers where they own equipment and farm for others. Some farmers have given up some of their management in exchange for vertical integration with larger corporations.
I'm going to talk primarily about the future of the traditional family farm that is an independent competitive unit that is trying to survive as such in our modern economy. A family farm may be a husband, wife and children or it could be a multi-family operation.
Families in agriculture form the bedrock of modern agriculture because of the heritage of farming skills and knowledge being passed on from one generation to the next, along with the opportunity to farm. Farming requires tremendous commitment to work and long term goals, a socialization to a way of life, an asset base of land and machinery that is usually intact because of family inheritance and intergenerational co-operation.
Changes in agricultural economics as well as global economics drives significant social changes at the farm level. The farm family has to adapt because of the changing economic reality.
What are these factors in agricultural economics? Number one is technology. With bigger equipment and improved technology, productivity grows despite the reduction of the number of farmers needed to farm the land. For those farmers producing an undifferentiated commodity, the price is driven down. Farmers are forced to compete on the basis of volume. That means expansion. A manufacturing production model drives down the costs. Hog production and dairy are starting to follow the model that has dominated poultry production.
Farmers have to keep ahead of the curve when it comes to technology. They use good judgement about the cost/effectiveness as to when to introduce innovations. Information and communication technologies through computers permit acquisition of new technology and allow purchasing and marketing opportunities far beyond the local town, sale barn, and grain elevator. Leading edge technology provides a competitive advantage until the other farmers catch up and then the increased productivity creates new pressures for additional growth.
Low cost producers. Producers compete by increasing their quantity of production while keeping their costs low. Their basic management strategy is using technology and large scale production methods to cut costs wherever they can. They will take the price risks of the global marketplace. They will farm more efficiently and with better methods to stay competitive.
Farmers retain their independence but at the expense of assuming price risk in increasingly competitive markets. They also manage risk by diversifying their production to be able to withstand low prices in a particular enterprise. Some farmers diversify by adding an on-farm business to their main farming business.
Management of stress. As more information and technological choices become available and as farm size increases, the challenge for farmers is to manage the multiple facets of financing to marketing to production. Adopting new technology means taking measured and costly risks. Farmers of the future have to be able to handle the stress of complex decisions and financial considerations. This is more stressful than the physical stress in agriculture.
The stress factor takes many families out of agriculture. People wear out in an occupation that combines high risks, hard work with uncertain rewards. When farming works, it really works and when it doesn't, it takes a big toll on mental health and family well-being. Some families recognize this and choose to leave farming for a less stressful way of life. Unlike the mid-80s, the farmers leaving farming today are leaving while they still have equity. Farming has stopped being fun. They see the path they are on as a treadmill where the personal and emotional costs outweigh the benefits.
The trend for bigger farms seems inexorable, unrelenting - a fact of life. The growth of the farm is tending to outstrip the family's ability to provide all of the capital inputs, management, and labour. They reach the point where there aren't enough hours in the day to cover all the work that needs to be done.
Managers of people. Farmers have to change to becoming managers of people: hiring, training, supervising, delegating and contracting with others. This requires a major shift in mentality from letting go of "hands on" production to becoming a manager of people. It is letting go of the fun and direct control of working on the land and instead, working through others to accomplish management objectives.
Marketing. Family farming of the future, and today for that matter, also requires devotion to marketing. In the United States, with "Freedom to Farm" legislation, farmers are forced to contend with price variability based on supplies, demand, world-wide weather situations and world-wide production. Keeping up with the markets and having a marketing plan is about as important as the production. Production is the least of the farmer's problems. It is what he does best and what he has most control over. This year is a good example - best ever crops and low, low prices.
Marketing is also a primary concern in Canada, though the responsibility for such may lie above the farm level. The marketing pressures are just as great and because farmers depend on others to do this, it may be one more factor that is beyond their direct control.
For U.S. farmers, this requires a mentality shift also. They need to sell a crop before they plant it. It means giving up the farmer's gambling mentality of trying to outguess the markets and make it big. If farmers haven't already made that shift, they soon will. The current environment is too risky not to cover cost of production.
This is the brave, new world of "Freedom to Farm." Politically, it will be difficult to beat back the historic U.S. governmental retreat from providing an income safety net for farmers. During good years the bins will bust, creating pain and contraction to bring supply and demand into harmony. This policy has consequences for Canadian producers. In the U.S., there are too many independent farmers and food choices are too great for farmers to unite on their own to gain control over prices.
Canadian and U.S. farmers alike during the next two decades will have to have enough of an equity base to withstand the downturns and be there for the up-cycles and the bad weather years. Farmers put themselves in a precarious position by their tendency to over invest in productive capability without leaving enough liquidity to manage cash flow problems during tough years.
Export markets. The technology that drives American agriculture drives the agricultural producing countries of the world. It is a global economy and ideas flow everywhere with lightening speed. For years the domestic market has been relatively flat - a one percent growth a year based primarily on the lack of population growth in this country.
Agricultural exporting nations depend on foreign markets. Some of the countries that were formerly depending on American and Canadian agriculture, are adopting technology and are no longer food dependent. Some nations are turning from being food importers to food exporters. Former communists countries with infamously inefficient agriculture are turning into market oriented economies. In twenty years, China and Russia will be major exporters and competitors.
Third world countries that need food don't have the resources to purchase it. Periodic global recessions such as the current "Asian malaise" also dry up markets as people cut back on the variety of foods they consume.
So what am I saying by all this? Pioneer Hi-bred International projects that by the year 2020, there will be 500,000 farmers in the United States instead of 2 million. I'm sure the attrition in agriculture in Canada will mirror those statistics. That is a loss of 3/4ths of the current farmers. Many will go to off-farm income and then transition out of agriculture. It will be a gut wrenching time in agriculture. If bigger means survival, bigger is better.
Farmers who have hung in there in the past through self-sufficiency, cutting back and making do during hard times will find that there isn't enough income to conserve. From 1989 to 1998 in North Dakota, input costs have gone up 58 percent while yields have risen only 7 percent.
The tenacity and optimism of farmers is legendary. The decision to leave agriculture won't be made without hurt and pain. We are going to see more of that hurt and pain this year.
Low input farming. There is a small but persistent niche for low input sustainable agriculture fuelled by environmental and consumer demands. These operations will be more labour intensive and require a total systems approach to maximizing productivity on the farm. Many of these methods will be adopted by mainstream conventional farmers. This industry depends on building up a marketing infrastructure to promote and distribute their specialized and certified product.
Niche farming. There is a second track for staying in agriculture besides being a high volume, low cost producer. I call it getting connected. Producers can compete by producing a specialized or value-added product that is integrated into the needs of the food processor, distributor and consumer. Co-operation is the name of the game. To compete, farmers gain marketing clout through direct contracting, buying or marketing co-operatives, alliances and networks.
The shift to being a specialty producer who commands premiums in the marketplace will require awareness of technological advances as well as skills in negotiations and relationship building with their business partners.
The processor and distributor have considerable clout in specifying the attributes of the product. This type of agriculture will be technology driven, information driven and characterized by increased use of alliances, networks and co-operatives in doing business. There are a number of institutional innovations that are changing the face of agriculture.
Family farmers producing specialized products will trade their independence for secure financial gain. They won't have to be as cost conscious or be high volume producers. What they need is relationship security with the other parts of the product distribution system. They have to have an attitude that the other players in the system are bona-fide and can dictate what the market and consumer will accept.
New skills are required in terms of in creating and maintaining these alliances. The risk is not price but in losing the relationship with the buyer of the specialized product. Farmers have to be able to negotiate contracts with skills.
Not every farmer is suited for handling this loss of independence. It is radically different from Midwest and Great Plains agriculture in the United States with its emphasis on independence. It is a value shift from independence to interdependence.
The importance of relationships in economics is the new wave and those who understand it will find it easier to fit into a market niche that will cost them some independence. It helps to know the big picture and where you stand.
All these trends toward large-scale farming, technological innovation, marketing, management of people, and high stress decision-making represents a shift from agriculture as a way of life to a business mentality. Years back, I ran across a number of highly educated farmers in the Williston area who commuted from town to their grain farms. Their lifestyle was indistinguishable from the Chamber of Commerce types with whom they mixed socially.
Larger operators have lost their sentimentality with agriculture. What is lost is the intimate connection with land, animals, neighbours, communities, and spirituality that have been the tradition of family farming. A way of life has to be sacrificed in order to be competitive in modern agriculture. The complexion of the family changes. The complexion of rural communities change.
Many farm families recognize the changes required by modern agriculture and are adapting, even though they don't like the changes very much. If the lifestyle is the reason for staying, the high powered agriculture of the future will not very appealing. These people will be among the 3/4th who choose to leave, many voluntarily. There is anger and disillusionment with where agriculture is going; yet it is hard to argue with the trends and the formula for success.
Chuck Hasselbrook, a member of the U.S. Department of Agriculture's commission on Small Farms wrote this: "As one successful farmer told me, his farm can survive economically into the next generation, but without neighbours and a community, his sons won't want to farm."
A woman from western North Dakota wrote a concise summary of the changes she saw in her rural community and farm economy and how it is affecting her family:
I would have answered the survey questions much differently ten years ago. Those ten years have seen these changes: our community has lost the high school, bowling alley and snack bar, legion and little league baseball, grocery and hardware store, many couples retiring to larger cities, many young people to out-of-state jobs and 'Women of Today' and other organizations.
What remains is a bar, cafe, and car dealership with gas and service. There are no health services, but there is a bus service for the elderly. There are three churches. Two are in danger of closing because of low membership, clergy recruiting and money problems.
Our family has lost: the joy of farming, farm profitability to disease and poor markets, retirement income to keep the farm afloat, marriage satisfaction from fewer social activities and outlets, grown children to far away jobs, good friends to out-migration and good mental health to stress.
We also have one son who is beginning to get involved in the farming operation. I can foresee lots of problems should he marry and try to find a girl who would be happy living here, or if he should have to commute and not live on the land. Also, there is the question 'Can any of the next generation afford to farm or ranch no matter how good their management skills are?' We are hanging on to our sanity by a thread out here on the plains of Dakota!!
I have described the economic context for change. Now I will describe what I think is the formula for success. Besides being comfortable with a business mentality and technology, what kinds of farm families will continue to thrive in agriculture? What is the secret of their success? How were their parents able to survive the various weather and price shocks to the agriculture economy?
The majority of today's farmers owe a debt to the management practices and commitments made by their parents, grandparents and past generations. At various points in the history of their farms, these families adapted to the changing conditions and weathered the downturns of bad years and bad prices. Here are three reasons why I believe they have kept the farm going.
Do any of these expressions sound familiar? "We work hard." "We do it right." "The chores are done at a certain time." "We get things done on time." "Get the crop in and out on time." "Fix it before it is put away." "Don't slop in a crop." "Keep the fences mended." "The buildings are always fixed up." "We are careful about debt." "The machinery is always ready to go." "We always keep an ample supply of feed on hand." "Our fields are clean."
Perhaps the genius of the operation has been careful fiscal management and record keeping. Perhaps it was early adoption of new technologies. Perhaps it was an aggressive approach to learning from neighbours, universities, farm shows and keeping up with new developments. Some families have histories of being good judges of cattle. Others may have a knack for marketing. The overriding values and management practices are understood and may not require a lot of discussion in a farm family. It is just the way they've learned to do business. Yet on a certain level they know why they've been successful though it may not be articulated outside of the family.
The apprenticeship is long. The wisdom of the older generation is respected. Their very survival is evidence that they have made the right decisions. With all the variables that go into farming, it takes years to get a full perspective on all the factors that affect success.
The economic facts of life dictate that the farm has to become more productive and efficient. Risk-taking within rational limits is necessary to develop more resources for family use. They combine a conservative management style with a willingness to adopt new practices without major exposure to risk. They are farmers who are "doing something," who follow the proven successes of more aggressive "pushers" and "plungers."
There are other times when opportunity costs are too great or risky to undertake. Families with a conservative use of credit and modest entrepreneurial goals survived the down years better than those who took high-risk strategies.
Another reason for a family's longevity is their clear commitments to keeping the farm in the family and grooming successors who become good managers in their own right. The succession and eventual success of the next generation in agriculture depends on relationships within the family as well.
By early adolescence, teens have formed their feelings about farming based on their attachments to the land, close working relationships within the farm family, the independence of farming and prospects for the future. Financial strain on the parents affects the attitude of the children. If the parents see no future in agriculture and/or are angry and bitter over their farming experience, their children plan to leave.
Young men are more likely to enter farming or develop a strong preference for living in a rural area if they come from highly productive farms and do not have any or many brothers. The parental help is necessary to get them started. This process is easier when there aren't as many male children competing for family resources.
During times of prosperity, the holdings of the parents and the economic prospects of the farm help sons make the decision to farm regardless of the interpersonal qualities of the father and the harmony in the family.
* Fulltime farming. Sons of farmers, who lease or labour on farms, do not enter farming at the rate of those whose fathers own and operate their own farms. Children of landowners are taught more, given more opportunity to learn skills, taught the work ethic, and have more parental encouragement for their aspirations to farm. Sons choose to farm more readily when their father is a full time operator and when the relationship between them is positive. Sons watching their fathers who combine farming with off-farm employment aren't as apt to identify with the lifestyle or the profession.
* Warm and supportive fathers. Young men are more likely to prefer farming or a rural way of life when they identify with and enjoy a close supportive relationship with their father in a family atmosphere of minimal conflict. The quality of the relationship with the mother isn't a dominant factor in this life choice. The young men who leave agriculture have the same work history and involvement on the farm as the ones who stay. The difference is the type of relationship they had with their father. Sons who enjoy close contact with fathers who are warm and supportive develop a strong attachment for farming and a preference for the rural lifestyle even when economic times are bleak.
* Harsh and critical fathers. During hard times in agriculture, the personal qualities of the father and the quality of the father/son relationships is a major factor in the decision to choose or persist in agriculture even when prospects appear bleak. Marginal economic prospects coupled with fathers who are experienced as harsh or punitive in their parenting, or have marital conflict, turn their sons off to farming. Fathers who are harsh and hostile are more likely to have adult sons who are also harsh and hostile in their parenting style. Fathers are role models for how their sons may be someday. Sons who move away from their fathers have much less continuity of parenting style. Transmission of hostile parenting styles is much more prominent in farm families than any other sector of society.
Children, particularly boys, who grow up with positive relationships with their fathers, who experience a positive lifestyle on the farm and learn the multiple skills of being a farmer, get farming in their blood. Fathers in these operations were good, kind teachers who gave plenty of "hands on" experience, delegated well and tolerated mistakes.
The reality of the next generation's ability to farm will depend on the economic conditions ten or 15 years from now. However, the motivation and decision to farm is being formed by pre- and early teens right now. What are they seeing and feeling?
The parents are generous in their sacrifices to cushion the entry of the next generation into agriculture - providing the opportunity while sharing in the management. They developed a track record for getting along as family and established congenial ways of working out their differences.
Despite the obvious difficulties of entering a high risk, high stress occupation, there will be young people with a love for farming who want an opportunity to farm. Parents encourage experiences away from the farm as a part of their preparation and commitment to come back and be a part of a family operation. When they come back, the family has attitudes of respect and appreciation for each other's knowledge and contribution. There is fairness and genuine give-and- take in the management decision-making process.
Part of survival depends on family harmony outside of the actual farming. Clear boundaries and cordial relations between generations and including the daughter-in-law as a full partner, are factors in intergenerational co-operation.
In some ways, the survival of a family farm depends just as much on the human relationship skills the family has cultivated over the generations as their successful and proven farming practices.
* Strong marital partnerships. Strong marital partnerships are a key. They always have been. They are even more important now. Women have increased expectations of their rights and roles in marriages. Farm women expect respectful relationships. They want a life that isn't based on endless hours devoted to farming. Men are responding by building leisure into their lives, by being better husbands and fathers, and by being true partners instead of driven bosses of yesteryear. Men find their "workaholism" questioned and the farm has to meet family goals instead of vice-versa.
There is the age-old battle of bringing farm work and family life into balance. Farming has its own peculiar rhythms and demands that often take precedent over other activities. Many farmers are prone to workaholism and don't give enough priority to relationships. However, younger farm couples seem to understand the need to have a balanced lifestyle.
The need to change marital dynamics has been forced by the wholesale entry of farm women into off-farm employment. The income is either needed and/or off-farm work meets a woman's needs for satisfaction and personal growth. Some of these changes cause marital conflict. Traditional patterns and expectations are hard to break. This means adding a demanding job to an already stress-filled life. Husbands and wives have to adjust and co-operate to the new demands and give up former expectations of family life.
Farming is such a tough game that it doesn't work well without husband and wife being mutually supportive and involved with each other's lives. It is a stressful, lonely, hard working life with uncertain rewards. Both husband and wife have to be committed to each other first and nourish each other.
A farmer without his wife's support has trouble sustaining the energy required to do what he needs to do. Without her heart and warmth, it won't seem worth it. A wife who is not involved, feels shut out or unloved has difficulty wanting to devote her life to her husband's work and the farm.
The farm should be a means to an end. The end result should be the happiness of the family. The family life should be loving. Her needs and the needs of the children need to be met. Family farming should create memories. It should be fun. Too much work and not enough leisure also defeat the specialness of the family farm.
More and more people have resorted to two off-farm jobs plus farming to keep the farm. People are fatigued and worn out from too much work. This puts even more pressure on the marriage, child rearing, and community participation.
People are living busier and more stressful lives. There is a greater need to prioritize and manage life according to a conscious plan rather than let outside forces dictate one's basic choices. Volunteer work in the community has to be cut back or undertaken with greater limitations.
A wise South Dakota woman offered this commentary of the stressors on women today. "People get out so much more. Everyone has an education. They are all so very busy. They belong to a lot of things. Women get out and work so they can pay for everything. They are on the road. They do it to hold things together. The children are suffering from it. Children need a better home life. A lot of women are carrying guilt. Things are going too fast. I wished there were not as much rushing. That is my deepest concern. Christianity is being spread so thin because of a lack of time. I hope we get our priorities in order."
Another farm woman comments, "It's the time element, especially for women. There is not enough time. My time is completely taken up."
Changes in consolidation and centralization of services in the rural community also add to the complexity of life. The ever-enlarging rural community (and shrinking local community) makes commuting longer distances more likely. This is more stressful and less efficient for the family.
Families also choose to commute for specialized experiences for themselves and for their children. Farmers want more choices for their lives and are willing to travel to get what they want. Cost consciousness and entertainment also take people to malls and Walmarts or the Canadian equivalent rather than shopping locally.
Here is a brief summary of what I've covered. These are the things required for farmers to continue to be stewards over their land and their families.
1. On the business side, I've already mentioned being ahead of the technology curve, adopting a coherent strategy of large scale, low cost farming or niche farming, co-operation with other farmers, negotiation skills, hiring and managing people, marketing expertise, comfort level with stress and high stakes decisions, and comfort with a business, unsentimental approach to farming, a well-defined management philosophy and a conservative approach to fiscal management.
2. On the family side, I've mentioned the importance of gentle parenting, a loving and mutually supportive marriage, leisure and family fun. With all the business mentality, the farm family of the future will have to consciously shift to a family mode and protect and prioritize family time. That will take a lot of discipline when the business is just outside the farmhouse door.
3. Being in business with family members has its own complexity and stressors. The principles of family business organization and communication are becoming more widely known. Professionalizing the management practices of family business and bringing in a business communication focus through family business meetings, long term planning, co-ordination and shared decision-making. They need to become comfortable with the use of consultants and advisors in managing a family business.
What are the common failings of family businesses that are not on this par?
* Failure to have systematic business communications.
* Unresolved conflicts that add stress and tension to daily living.
* Lack of clarity about goals and commitments, unclear roles.
* Intrusive and controlling management styles that cause hurt, resentment and anger.
* The lack of inclusion of the in-laws in the long term planning and decision-making.
* Poor communications (anger, disrespect) and problem-solving skills.
Why are farm families successful with multi-family operations? I believe it is a combination of aggressive business ideas and a family system based on love, commitment and good communications skills. They walk the tightrope of business conflict and family harmony without falling off. A successful family business combines the resources of several families toward unified goals. It is a tough act to beat.
4. Farmers will have to manage their life first, then the farm. Some of the smarter decisions will be made on the basis of leaving agriculture in an orderly way. There is life after farming. Here is a brief formula for facing this decision head on.
"1) Face reality. 2) Be candid with everyone. 3) Don't just do things right but do the right things. 4) Change before you have to. 5) If you don't have a competitive advantage, don't compete. 6) Control your own destiny."
For all these changes here are some things I hope won't change about farm families.
1. Understanding how important it is to be a good neighbour and community member. Awareness of other people, their children, and their needs. Hometown counts for something and that generally means healthy regard and concern for one's neighbour. Hopefully rural people won't get so caught up in themselves that they forget what makes rural life special.
2. Farm home hospitality.
3. Strong moral base for living - taking personal responsibility, flexible problem-solving, and commitment to each other. Teaching children the work ethic and contributing to the family as they grow up.
4. Traditions, celebrations, family gatherings with the extended family, family fun, family worship - all of the things that make for great family life.
Farm families have been faithful stewards over fundamental values and decency that make them among the best people in the world. As economics transforms their lives into business people operating at higher and higher levels of efficiency and complexity, they also face the challenge of conserving the lifestyle and family togetherness that makes family farmers special. That is a daunting stewardship.