How the Internet keeps 'em on the farm

An hour west of Chicago and two miles south of DeKalb, Ill., on a country road that runs through some of the world's richest loam, Bob Johnson runs a farm. Before turning into his driveway, however, throw out anything you think you know about agriculture.

For starters, there's no barn (torn down years ago to make way for an equipment shed). Those antennae on the tractors and combines link to positioning satellites overhead for pinpoint accuracy in spraying and harvesting a field. And if the red corn crib seems a throwback to simpler days, don't be fooled. The small wooden structure houses a computerized system that mixes hog rations two tons at a time.

Even Mr. Johnson's role has changed. He spends far more time behind a desk than in front of a tractor these days. "We are part of a very sophisticated food-production and -delivery system," he says.

Across the Midwest, farmers are plowing up decades of tradition to find ways to squeeze more profit out of razor-thin returns. Farms are getting bigger, more technologically savvy, more factorylike.

Instead of tending their fields, they're hiring full-time crop consultants who pore over computerized yield data collected by the combine. Rather than buying seed and fertilizer from local dealers they've known for years, they're purchasing directly from the manufacturer, increasingly through the Internet. Most surprising of all: Many farmers are trading in their legendary independence for the security of long-term contracts with food companies that dictate every move they make.

But America barely notices. Stuck somewhere between Jeffersonian idealism and Norman Rockwell romanticism, the public's vision of farming verges on myth. The gap between public perception and agricultural reality has never been wider, analysts say - or more dangerous, as agriculture moves into another technology-driven change that promises to transform rural America. Without a clear idea of where farming is, these analysts argue, the nation can't easily determine where it should be headed.

Farming "is scientifically based, technically advanced, managerially intensive, financially innovative, demand driven, market-oriented, and internationally competitive," says Luther Tweeten, professor of agricultural economics at Ohio State University in Columbus. But "farm fundamentalism pervades this country. It's this romantic, nostalgic image of the family farm - a simpler, more moral time when people were decent, caring - a time that never was but we'd like to think it was."

Some of the old ways still hold here outside DeKalb. Johnson leads the same 4-H group his father once led. Like his dad, Johnson and his three family partners still face the same questions about planting and harvesting. But their answers are far moresophisticated.

On the Johnson farm, each field gets broken up into four- or five-acre plots, from which a soil sample is extracted and tested. The results are fed into a computer that tells the farmer exactly how much fertilizer to put on each plot. When the combine rolls through at harvest time, it automatically collects the yield from each plot so Johnson can track how well the crops are responding.

On the livestock end of the operation, Johnson and his partners track exactly what each group of hogs is fed, how much it costs to raise them, and what they fetch at the market. The precision gives managers far more control than they ever had before.

"What we're really doing is reducing the variation ... much like they do in a manufacturing process," says Mike Boehlje, an economist at the Center for Agricultural Business at Purdue University in West Lafayette, Ind.

But to afford these technologies, farmers are trying to get bigger. Johnson and his partners have just doubled the size of their livestock operation and will produce this year 25,000 hogs - a total that would have been unimaginable in his father's day.

"As producers, we hold those values of Norman Rockwell, but at the same time the business realities dictate a profound new scale," says Max Schmidt, a large hog farmer in Elma, Iowa. When he started farming in 1969, he owned a dairy operation, farmed 200 acres of land, and produced 300 hogs a year. Today, the dairy cows are gone. Mr. Schmidt employs three full-time workers, farms more than 2,600 acres, and produces 18,000 hogs a year. And though that's large for northern Iowa, it's small compared to the hog facilities in the Southeastern and Western United States.

From a production point of view, size makes a huge difference. But it gets all muddled up in the public's thinking. That's because three-quarters of the nation's farms are small, but they only produce 9 percent of the nation's food and fiber. Even farms producing $50,000 to $100,000 worth of goods a year are usually run by part-timers, retirees, or families where at least one spouse holds another job to make ends meet. And to really make a go of it without outside income, the US Agriculture Department figures operators need to run farms with sales of $500,000 or more. But most of these commercial operations remain family run, not corporate entities.

Bigness connoted a certain amount of wealth.

"People in church come to me and say: 'We're so glad you can help out those poor farmers,' " says Professor Tweeten at Ohio State. But "farmers aren't poor!" At least, not anymore. After decades of earning two-thirds of what the average US household did, farm families caught up in 1972. Of course, they do better during good years and worse during bad ones. The largest family farms earn 10 times the US average. And while smaller, full-time operators rake in far less, they nevertheless own far more assets than the typical American homeowner.

But bigness is straining social ties. When one of Paul Grewell's neighbors fell ill last year, the Hugoton, Kan., farmer and two fellow church members pitched in to harvest his field of milo (a corn-like plant). It's a common practice in farm country but increasingly burdensome as farms get bigger. The three farmers cut 3,000 acres of milo, which cost Grewell $2,000 in diesel fuel alone.

"Three thousand acres is a lot of money," he says. "That's probably the last time you'll see that happen."

Another withering social contract: sales between farmers and local feed and seed dealers. Farmers are getting so big they're saving money by ordering directly from the manufacturer. And even smaller producers are banding together to do the same. Johnson and his wife run a buying cooperative of 1,500 midwestern farmers, who get a price break by pooling their orders.

And new services, such as the Internet, threaten to put even more middlemen out to pasture. Online companies such as five-year-old lets farmers and agricultural companies buy and trade everything from feeder cattle to pesticides online. "Farmers are forced to buy everything retail and sell everything wholesale," says Warren Clark, vice president of marketing for the Chapel Hill, N.C., company. On the Internet, they can negotiate with a much wider number of dealers.

Farmers are starting to skip the middleman on the selling end, too.

After growing commodity corn and soybeans all his life, Don Villwock of Edwardsport, Ind., decided to branch out into popcorn 10 years ago. The business meant more work but also an extra $100 an acre premium. As the premiums went down, Mr. Villwock started growing white corn (for tortillas) and soybean seeds (for seed companies wanting to boost their supplies).

Each deal meant signing contracts with large companies. They dictated what he grew and how he grew it, squelching his independence but also reducing his risk. "I found out I wasn't getting paid a lot to have that free will," Villwock says.

By 1997, nearly a third of what American farmers produced - almost $60 billion worth of crops and livestock - was grown or sold under contract. While not unusual for other parts of the country, contracts are relatively new and spreading in the Midwest. More than 80 percent of the nation's hogs are sold under contract to a few large firms that dominate the industry. To gain leverage, the Iowa Pork Producers and other groups are forming marketing co-ops with the idea of selling in bulk and, perhaps, branding their product the way Florida orange growers have marketed Florida orange juice as a premium product.

While most agricultural observers see these changes as inevitable, a few voices are being raised in protest.

"It's ironic that at a time when most economic sectors are talking about moving into a post-industrial age, agriculture continues to talk about industrialization," says John Crabtree, market-structure project leader at the Center for Rural Affairs, a nonprofit advocacy group in Walthill, Neb. "It's not inevitable."

For example, a small but growing number of operations are moving to small, labor-intensive agriculture, selling things like organic produce and free-range pork at premium prices. If supermarkets really offered consumers a choice of locally raised, small-farm products, Americans might see a return of the farming that many believe still exists.

(c) Copyright 2000. The Christian Science Publishing Society

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