November 22, 2013
Thanksgiving is our holiday – a holiday celebrating agriculture. The Pilgrims and Native Americans did not gather to give thanks for the latest iPhone or a new fall fashion line. They gathered to celebrate a bountiful harvest, and the food that would sustain them in the winter ahead. Today we should be thankful for the same. This year, however, I add one more item to our thankful list: I think we should be thankful for another Golden Age of Agriculture.
“Another” implies there must have been a first. To find the first Golden Age of Agriculture, go back 100 years to the decade leading up to the First World War. A website dedicated to the Northern Great Plains described the first Golden Age of Agriculture as a time when “the average gross income of farms more than doubled, and the value of these farms more than tripled.” Hmm. That sounds like a spot-on observation of our own recent history. I see one big difference with the first Golden Age. Today’s Golden Age is high times for grain producers, but livestock and dairy producers were not invited to the party.
The first Golden Age of Agriculture is more than interesting historical trivia. The years 1910-1914 became a statistical benchmark for calculating parity, or price and profit levels on par with the Golden Age. Talk about an idea with legs! Seven decades later, my college classmates and I were still learning to understand parity, as the concept was embedded in our agricultural policy. The concept lives on. Failure to enact a new farm bill threatens to throw us back to the “permanent law” of 1949. We would return to a government policy of crop allotments, marketing quotas… and parity pricing.
I believe we are in the midst of another Golden Age of Agriculture. Why is it important to recognize the current Golden Age? Two reasons. First, when farmers are thriving, the companies that sell products and services that support farmers also thrive. Look at the bottom line of equipment manufacturers, seed developers and grain merchandising firms. Check out ag lenders, crop insurance sellers and fertilizer distributors. The rising tide has lifted all boats.
Second, we are welcoming a new generation of grain producers who don’t know bad times. There are young producers who have never experienced an enduring bear market, or multiyear stretches of low or negative margins. That lack of experience may cause trouble when the good times end.
But I’m not ready to call an end to the current Golden Age of Agriculture. I admit that $4 corn is a concern. Is this the new normal, or just a brief setback in a long bull market? Either way, it’s important to note that soybean and wheat prices remain solid.
It’s a funny thing about Golden Ages – we rarely recognize them as they occur. It is only years later, after the bloom is gone, that we look back and say “things aren’t as good as they were back then.”
I say hurrah for the new Golden Age of Agriculture, something for which we should all give thanks.
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