by Aubry Heinrich
Charles Blondin was the first man to walk across the gorge just below Niagara Falls in 1859. He is the greatest tightrope walker of all time, performing that history-making trek 17 more times. However, after completing the stunt once, the act of simply walking nearly a third of a mile on a rope became mundane. He added a flair to his performance in his later jaunts across the gorge, once carrying his manager on his back as he crossed from one side to another.
Farmers have to walk a tightrope that not even Blondin would want to attempt. The tremendously fine line of sustaining an operation in this year’s farming climate does not leave room for forgiveness. Every producer must maintain their operation’s stability while balancing the weight of high input costs, a lag in the supply chain and little to no moisture.
Bart Fischer, Ph.D., is well versed in the trials and tribulations of farmers. He was raised in Southwest Oklahoma on his family’s cotton, wheat and cattle operation and remains active in that operation today. He obtained bachelors’ degrees in agricultural economics and business administration from Oklahoma State University. He then went to Cambridge University for a master’s in environmental policy before graduating from Texas A&M University with a doctorate in agricultural economics. Fischer had a hand in developing both the 2014 and 2018 Farm Bills and served as Chief Economist to two chairmen of the U.S. House Agriculture Committee.
Today, he is the Co-Director of the Agricultural and Food Policy Center at Texas A&M University. He is also an AgriLife Assistant Professor of Agricultural Economics and serves as Senior Advisor for Federal Relations in the Office of the Vice Chancellor.
“We’ve all heard the quote from President Kennedy,” Fischer said. “‘The farmer is the only man in our economy who buys everything at retail, sells everything at wholesale, and pays the freight both ways.’ That quote rings true, now perhaps more than at any other time in our nation’s history. Supply chain disruptions and skyrocketing input costs are wreaking havoc on producers’ ability to cash flow this year. I would argue that the availability and cost of inputs are the number one factor impacting economic sustainability for farmers. With that said, in our part of the world, drought is also playing a major factor again this year.”
No matter the year, producers are working to make the right choices to maintain their operations for many generations to come. So, what does it mean for a producer to be economically sustainable?
“As a practical matter, I think it means something different for each producer. No two farms are alike – and no two sets of financial statements are alike,” Fischer said. “From my perspective, it’s about making sure that risk management tools meet the needs of farmers and ranchers and help them weather the risks they face so they can stay in business to do it all again next year.”
Congress provides a safety net for our nation’s producers to help catch them when the year’s circumstances get the better of them—providing farmers with staying power. The farm safety net, including Federal Crop Insurance and the Farm Bill programs, was created by the U.S. House and Senate Agriculture Committees. In particularly tough years, these risk management tools help many farmers stay in production and give their operations the much-needed support to make it to the following year. Fischer and his colleagues at AFPC inform Congress and USDA on the realities of farming, making them aware of the struggles farmers are weathering and ensuring the decisions they make have producers’ best interests in mind. Risk management differs by operation so farmers are provided with options to fit the needs of their business.
“There are a number of ways we work to help farmers and ranchers,” he said. “First, we are laser-focused on helping Congress ensure that the policies they craft in Washington, D.C., will work for producers on the ground. Second, we also develop tools to help farmers tailor risk management for their operations. AFPC provided decision aids to help analyze base and yield update options in the 2002 Farm Bill, ACRE vs. DCP decisions in the 2008 Farm Bill, the one-time ARC/PLC election in the 2014 Farm Bill, and the annual ARC/PLC election in the 2018 Farm Bill.”
The cost of production and producer margins are on all growers’ minds. It can be stressful and frustrating to think the income from selling your crop will not cover the inputs it took to produce it. What will it take for farmers to sustain themselves going forward?
“There is no silver bullet, and I think most farmers already know the answer(s). It’s about managing their inputs,” Fischer explained. “It’s about making sure the next Farm Bill continues to deliver a farm safety net that works, including maintaining Federal Crop Insurance. With that said, over the long run, I’d still argue that those producers who aggressively manage their fixed costs do the best financially and have the most staying power when variable costs seem out of control.”
There are several things causing input prices to rise and it is not very likely for them to come down any time soon. However, some of the same factors increasing the cost of production are also causing the price of cotton to soar.
“Ten years ago, if you told me farmers wouldn’t be excited about growing cotton at $1 per pound I would have told you that you had lost your mind,” Fischer said. “Farming has always been an expensive and risky business, with razor-thin margins, but never have producers had to put so much on the line just for the prospect of breaking even.”
In combination with high cotton prices, using the risk management tools and programs provided is important for producers to combat shrinking margins. By being mindful of business loans, equipment depreciation and labor costs, farmers can balance some risks of high variable costs. Being frugal with inputs such as fertilizer, water and fuel can help farmers minimize their costs while still trying to maximize crop production.
There is a finesse to economic sustainability in farming. Not everyone possesses the skills needed to be successful in this industry; however, with planning it is possible.
“It takes a special sort of resilience to scratch a living from the earth. It’s only natural to want to be very aggressive, too,” Fischer explained. “I’ve heard older producers – including my dad and grandpas – preach over and over about the need to balance aggressiveness with a personal fiscal conservatism that ensures they can survive the next downturn.”
Farmers carry the weight of clothing and feeding the world on their shoulders while they walk the tightrope of success each year. Finding a balance in their operations is the key to economic sustainability and staying power.
“We throw the word sustainability around a lot,” Fischer said. “It gets used a whole lot right now in the context of carbon sequestration and mitigating climate change. My perspective is this: if you want a farmer to be able to do all of those other things that provide societal benefits, then the focus first has to be on making sure they can stay in business. Most people who are not involved in production agriculture have no idea how much money it takes to operate a full-time, commercial-scale family farm. In a very real sense, every other use of the term ‘sustainable’ hinges on the farm or ranch first being economically sustainable.”