Keeping them on the farm getting tougher

JEFFERSON CITY, Mo. -- In recent years it has become more difficult for Missouri farmers to tend their crops and raise their livestock and still produce a profit. The nation's recent era of high technology, while boosting the incomes of virtually every one involved, also served to point up the contrast between so-called "techies" and the state's tillers of the soil.

Indeed, the startling revenue differences, shown graphically by recent U.S. Census Bureau estimates of Americans' incomes, highlight the fact that virtually all of Missouri's low-income counties are directly dependent on some form of agriculture. Only a handful of farm-dependent counties, most of them in the Bootheel region and scattered areas in Northwest and central Missouri, even reach the state's median income levels.

Alarmed by what some view as a steady march toward wholesale bankruptcy for small-acreage farmers and increasing profit obstacles for larger farm operators, several organizations in the state have launched studies to determine if remedies can be found to reverse a trend that began nearly a decade ago. One of the most ambitious projects has been started by the Center for the Study of Rural America, a program of the Federal Reserve Bank of Kansas City, Mo. Launched nearly three years ago, the center's staff includes Mark Drabenstott, its director and a Federal Reserve vice president, and several economists and associate economists who work full-time on efforts to restructure the Middle West's agricultural economy.

Product markets

Nancy Novack, a center staff member and an assistant economist with the federal bank, has just unveiled a new study that could lead to a restructuring of the farm economy in as many as 50 or 60 counties in Missouri. Discussing the latest center findings, Novack said, "Traditionally, agriculture was an industry of farmers producing standardized commodities for a common market, but today's new agriculture has changed -- the focus is increasingly on end products rather than raw commodities." She thinks these so-called "product markets" have opened opportunities for producers -- and new challenges.

Studies launched by several farm groups in Missouri have noted that crop and livestock producers alike have seen profit margins vanish as real commodity prices have fallen.

At first it seemed the only way to manage the risks of commodity production was to get bigger, and thus lower costs, or else exit the industry.

Now it appears there is another viable option -- product agriculture. This answer has emerged largely in response to the increasing sophistication of consumer preferences. Consumers demand high-quality, safe, nutritious foods that are easy to prepare. This demand has created so-called niche markets that large processors and retailers have been quick to exploit.

But individual producers have found it difficult to tap these new markets because reaching the consumer often requires more resources than a single farmer can supply.

One way to get specialized products, the study said, is the creation of supply chains that are effective mainly because they offer a good way to coordinate activities from production to marketing.

This coordination creates cost efficiencies and allows the quality and safety of products to be monitored.