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Is There a Future for Mom-and-Pop Farms?

I trekked to Cheesehead country to address a forum of agricultural lenders in Milwaukee, WI with my good friend Dr. Danny Klinefelter of Texas A&M University. Dr. Klinefelter and I held an open forum on agricultural economics and lending for two hours with an engaging audience.

One of the questions posed to us concerned the future of mom-and-pop farms. First, this term needs to be defined because it can be very difficult to describe. Mom-and-pop farms have children and/or grandchildren working on the farm, may have have grown to be a large agricultural entity. Some own other businesses both inside and outside of agriculture. Others have become very entrepreneurial and operate more like a small business.

The structure of U.S. agriculture is much like a dog bone. On one end of the bone are the many large producers who produce much of the income and carry much of the U.S. farm debt. For example, 270,000 farms generate 80% of the revenue and carry 60% of U.S. farm debt. On the other end of the dog bone are 1.4 million smaller farms generating only 8% of the revenue and carrying 22% of farm debt. The shaft of the dog bone contains a relatively small number of farms, the majority of which are mom-and-pop farms, where they reside and operate. I agree with Dr. Klinefelter that this number is declining but is still a vital part of American agriculture. I still see a future for the mom-and-pop operations.

This group will thrive on being efficient. Some will adopt technology such as robotic milking machines, produce natural or organic products for local consumers, or depend on Schedule C, K, and W-2 income from ownership of other businesses or employment to supplement their operations.

Others will be conservative in agricultural practices and lifestyle, keeping family living costs low and avoiding excessive off-farm expenditures. These producers will not seek the “biggest and latest,” but will focus on balance in business and family experiences.

The next downturn in agriculture will find this segment to be survivors who pay their bills on time, meet debt servicing requirements, and somewhat come back en vogue with lenders and agribusinesses that have emphasized the high flying growth oriented type of businesses.

The bottom line is that character will define this group, and mom-and-pop will not look like the American Gothic painting of the old traditional farmers with the pitchfork. They will be very family-oriented, driven, and focused on managing their business holistically. Yes, mom-and-pop farms will still be around!

TAGS: Management
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