Insights roaming the land of 2 million farms
Pita Alexander's five-week trip to the United States to study the country's farm systems has left a lasting impression, the farm accountant writes.
The weeks have passed since I made a 23,100-kilometre farm-study tour with sheep farmer John Scott and dairy farmer Robert Mackle in the United States.
Some might see this five-week farm study tour as a road trip with a few mates and I could not possibly comment on that.
But over the course of that time on many highways and byways through 35 states we got a good look at US agriculture, and were able to speak with many farm and farming-related people.
The bring-home messages might have been few and far between for farm management in New Zealand but the trip made a lasting impression. Being an accountant I have a fascination with numbers and they often reveal an underlying story. Furthermore, it is worthwhile having an understanding of US agriculture. The US is an agricultural trading force and a destination for many of the primary products we export.
Many of our observations were confirmed when I looked up the US agriculture census for the 2012 year. The census is full of many insights into the internal ticking of this large country.
Since 1850 the definition of what constitutes a farm has been altered nine times and today a farm is interpreted as any enterprise generating more than US$1000 per year. The US has 2,109,303 farms compared with about 58,068 in New Zealand and 370 million hectares of farmland (14.4m ha) and the average farm size is 176ha (about 248ha).
Cropping takes up 73.5 per cent of their total farmland and the average size of cropping farms is 102ha with 83 per cent of the total crop area harvested. The total irrigated area is 22,590,490ha yet only 6 per cent of the total farm area is irrigated.
The market value of agricultural products is US$394 billion and the average market value of agricultural products per farm is US$187,097 (about NZ$222,900).
The average farmer age is 58 years which is similar to the average age of sheep and beef farmers in New Zealand.
In many respects the US dwarfs New Zealand and its population of 310 million is about 70 times more than ours.
The market value of their agricultural output was about 16-17 times higher than New Zealand in 2012, with their farmland area about 25 to 26 times higher than here.
The market value of agricultural production on crop land was US$212b – 54 per cent of total value – and livestock was US$182b (46 per cent). Total farm production expenses were US$329b –
Pita Alexander’s 35-state road trip into the heart of United States farming made a lasting impression on him. about 83.5 per cent of total output which would be perhaps 15 per cent to 20 per cent higher than New Zealand. Corn grain farming dominates many of the numbers around cropping with its 348,500 farmers and 35.3 million ha of growing area.
Corn silage has 86,365 farmers and a farm area of 2.9m ha compared with the wheat area of 19.8m ha, barley 1.2m ha and oats 404,600ha.
Not to be dismissed are soya beans grown on 30.7m ha and cotton on 3.6m ha.
Forage land for hay, haylage, grass silage and green chop accounts for 22.6m ha.
Another fact is that 54 per cent of farms made net losses in 2012 although that year coincided with severe drought.
I have already mentioned, in accounts of the trip before, the main numbers behind the US beef industry but it is worth noting the key features around the dairy industry. The US has 9,252,272 milking cows which is about 50 per cent more than we had in 2012.
Milk was produced on 64,098 farms and there were 4481 farms with between 500 to 2500 cows.
This compares with 568 farms with more than 2500 cows.
As is widely known, the average cow production is much higher than New Zealand due to the ‘‘Club Med’’ diet they are fed.
A comparison of the US average production for each hectare does not exist because about 98 per cent of their dairy cows are kept inside.
California produces about 21 per cent of the US milk production of about 90 billion litres of milk annually which is about four times that of New Zealand.
As mentioned before, almost all their dairy cows are housed and milked indoors.
Dairy cows housed indoors do not have as long a life as dairy cows farmed outside, like in New Zealand.
Much of the mid to northern US has a more continental type climate than New Zealand – that is higher temperatures in summer and lower in winter.
It is hard to be specific but I get the impression the overall cost of production for each kilogram of milksolids produced by New Zealand dairy farmers is not much lower than that of the typical efficient US dairy farmer – the gap is certainly narrower than it was only a few years back.
About 60 per cent of the ‘‘Club Med’’ diet that the typical US dairy cow is fed indoors every day is derived from corn.
In 2012 the US had a major drought with many non-irrigated corn crops failing and this increased the price of corn significantly and feed costs rose markedly.
While this will probably happen every few years and will have a marked downwards effect on US dairy farm profitability, there probably would not be much effect on total milk production at present milk prices.
When corn is expensive and milk prices decrease, then the US dairy farmer will be a much less formidable competitor.
And formidable they can be – in the first three months of this year US dairy exports increased by 39 per cent.
The US pays its dairy farmers on a 100-pound-of-milk basis and in April 2014 the payout in US dollars was $25.30 per 100 pounds (equivalent to just over $9/kg of milksolids in New Zealand terms).
In April 2009, this payment was US$13.15 per 100 pounds – and farmers find it hard to cope with volatility of 92 per cent.
Many US dairy farms milk their cows three times a day and some of the larger operations are operating 24 hours a day, seven days a week.
You see so few dairy cows and sheep outside on pastures when you are driving around the US that when you do, you tend to stop the car and take pictures.
The US dairy farmer can crank up production faster than a Kiwi farmer because of their factory style operation but the corn price and milk price variations mean they face much more volatility than a grass based structure.
On a lighter note, other insights into the psychology, intellect and humour of the average farmer came from many of their sayings that also have business connotations.
Here are some of the pearls of wisdom we came across: Never miss a good chance to shut up. Find the problem before you find the solution.
The only good reason to ride a bull is to meet a nurse. Never betray a trust. Don’t talk down to anyone even if it means getting off your horse. Don’t get even, get over it. Water and truth are freshest at their source.
Don’t go in if you don’t know the way out. Suspicion ain’t proof. Brace your backbone and forget your wishbone.
Friends last longer the less they are used.
If you find you’re drinking your entertainment out of a can it’s time to look for your fun elsewhere.
The best way to set a record is to be a good ways off from any tape measure, scales or witnesses.
If your job is to shovel and all you can see ahead of you is dirt it’s time to change jobs.
A good pard will ride with you until hell freezes over – and a little while on the ice.
A Texas breakfast is a two pound hunk of steak, a quart of whiskey and a hound dog – if you are wondering why you need the dog, somebody has to eat the steak.
You can’t weigh the facts if you’ve got the scales loaded down with your opinion.
When you are riding a high horse there ain’t no way to get down off it gracefully. There’s a high cost to low living. If you meet up with an alligator and he’s as scared as you are the water won’t be fit to drink.
You generally learn the value of money from a lack of it.
Most anybody can be a cowboy but it takes a damn genius to make any money at it.
The old saying that familiarity breeds contempt does not apply to rattlesnakes.
As you all know, a road trip can’t be all work and no play.
Pita Alexander is a specialist farm accountant at Alexanders.