Bullish on Farming

In a time with low grain prices and farm incomes taking a dip from the record-setting highs earlier this decade, Mike Pearson is bullish on the future of farming and the future of farm income.

Pearson was the keynote speaker on National Ag Day at the Red Oak Chamber & Industry Association’s Ag Appreciation Breakfast. He is the host of Iowa Public Television’s Market to Market program and a farmer.

For those in attendance at the Montgomery County Fairgrounds Auditorium, Pearson laid out the reason for his optimism.

“Over the past 117 years, agriculture has seen four periods where demand skyrocketed and drove prices to new heights – 1917, 1946, 1973 and 2012,” he said, noting the approximate 30- and 40-year gaps.

“The question is, what is the next 20 years going to look like, moving into the future? There are a lot of ag media experts, a lot of economists, who take a step back, and look at those prices we received in 2012 and the expenses farmers assumed in 2012. They say prices are coming down, production is rising, we have massive stockpiles of soybeans, wheat and corn, and huge crops coming out of Brazil - it looks like we’re headed into another 1980s type farm crisis. There are people who believe that. If we look back at those four demand spikes, two of them were followed by a farm crisis - the 1920s crisis was a horrible time for agriculture, and of course the 1980s farm crisis. 

“But when I look at history, I’m not so quite as pessimistic. There was another boom cycle, that peaked in 1946, that wasn’t followed by a crisis. In 1946, we had farmers earn record net reveneue on the farm. We had farmers from 1946 to 1955, do a lot of incredible things to increase production on their operations. In fact, from 1950 to 1955 we sold more tractors in this country in that five-year period than have been sold from 1955 to the present – huge increases, as farms mechanized. We saw huge gains in production all across the world. And yet, the 1950s and 1960s were not crisis years in agriculture. 

“In the 1950s, 1960s, we saw massive increases in production, matched with massive increases in demand. We saw farmers’ net revenue shrink a little bit, we saw net margins get a little tigher, but on the whole, they were pretty good decades for American ag. When I take a step back and look at the current situation we’re in today, I am a lot more excited about the future looking like the 1950s and 60s than I am the 1980s. 

 

“Why? Because, we’re in a world with seven billion people in it today. By 2050, it will be nine billion people. We’re adding two billion people to the global population. But, two billion people, when it comes to our bottom line, really doesn’t matter if they can’t buy what we’re selling. The reason I am excited about the future for agriculture is because for the first time since the industrial revolution in Europe and North America, we can see growing global population combined with growing per capita wealth. That’s what matters as we look around the world today.

The Red Oak Express

2012 Commerce Drive
P.O. Box 377
Red Oak, IA 51566
Phone: 712-623-2566 Fax: 712-623-2568

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