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SW “Ohia” | chadlit,
I believe the push for consolidation and vertical integration will continue, but only as far as farmers as willing to let it go.
If I had told a fellow tobacco grower 15 years ago that all the open sales were gone, they'd have laughed at me.
But the trend happens this way. End users offer direct purchases, typically with a bit higher price than could be had on the open market. Farmers slowly begin to sell this route, after all, the price is better. "There are still plenty of other farmers selling at the auction, so it won't hurt."
Eventually the open sales can no longer compete. You either have a contract with one of the 4-5 buyers, or you don't grow it. They can now drive the price down wherever they see fit. THE FARMERS WILL KEEP GROWING IT.
Better not make them angry or you are out of the business. Better make a change if they ask for it, even if you don't want to. The stroke of a pen can remove your income if they decide you aren't needed. There are still a few open market sales, but the price is half you make on a contract. No such thing as a new/young farmer unless they have an in somewhere.
The vegetable industry is the same way, but the big change happened a while back. This pushes the small farmers out and encourages the remaining producers to grow in size. An end user wants to deal with as few farmers as possible. Less paperwork, less hassle, and less chance of group bargaining. Diversification on a farm is difficult under these terms.
Now the cattleman are direct contracting with the packers. It is going to happen again if people don't realize it and work to stay independent. Some folks might be okay with being an employee, but I am not.
The days of doing "a little bit of everything" are waning if something doesn't happen. You can't harvest some grain, feed some cattle, grow some produce, and raise some tobacco unless you do everything on a large scale. That just isn't possible, and exposes everybody to greater risk by relying on a single income.
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Who's Left on the Farm?
