Letter to America
As farmers we can learn a lot from our United States cousins, both good and bad.
I've been reflecting on a six week "farm study" tour covering 41 states and a foray over the border into five Canadian provinces.
By the time we parked the car we had done 30,144 kilometres and had picked up many observations and lessons along the way.
I was surprised to learn that 99 per cent of farming in the US is through family farms – some are small farms but overall they still account for 89 per cent of total agricultural production. The US farm feeds on average 168 people a year in the US and abroad.
If the global population increases to more than nine billion by 2050 then this would mean the world's farmers will have to grow about 60 per cent more food than now – America could probably cope with increasing its share.
Farmers represent just 2 per cent of the American population yet produce 262 per cent more food than they did in 1950 with 2 per cent less inputs. Total US agricultural production is valued at about $US 575 billion with some $140b of this being raw products exported and exports exceed their agricultural imports so there is a positive farm trade surplus.
The main farm export to China is soya beans at US$15b with cotton at about US$3.4b. Their main export countries are China, Canada and Mexico, in that order, and they represent 49 per cent of total exports. The US is easily the world's biggest food exporter and is more than six times New Zealand. Netherlands is second and the UK, Australia, Thailand, Poland, Malaysia and Mexico all export a little more food than NZ.
A lot of farm land is rented and the average rent for pasture is about US$15/acre (US$37/hectare) and crop land is about US$130/acre (US$310/ha) and the exchange rate during my tour was on average US$1 was $1.45 in New Zealand money.
Land values differ from state to state but pasture land seemed on average $1200/acre ($2975/ha) and cropping land about $4100/acre ($10,130/ha). The average farm debt to gross farm asset ratio is 13.9 per cent. In 1985 this figure was 22.5 per cent and down to 12 per cent in 2006. The NZ overall average ratio at present would be more like 20-25 per cent. There are 922 million acres of farmable land of which about 14 per cent is irrigated.
For me there were many take home messages from talking to farmers and people servicing farming. It's my experience that US opinions seem to be more important than facts. United States President Donald Trump needs to buy a fire engine as he lights a lot more fires than he puts out.
The US is productive agriculturally and could increase its production if prices and climate, were reasonable and the inclination was there. However, US farming is in its fourth year of declining profitability. Also declining are their sheep numbers at 5.3 million.
Mr Trump and his Republican Party seem to want to go down different paths – the looming Tax Bill will be a real test here.
I came away feeling reasonably sure that their cattle industry plus Brazil's was going to produce more supply than demand over the next few years and NZ needs to anticipate some lowering of our beef sale prices. Synthetics have caused all sorts of problems for our wool industry and when a country like the US spends many millions of dollars a year on synthetic meat and synthetic milk then it is hard to see it doing much positive for NZ.
The New Zealand lamb rack is popular in the cities and better restaurants as is our white wine. We tried to drink local white wines but they were no cheaper and it did not work. School geography for many Americans seems to stop at Australia and many students would struggle to find us on the map. Americans love our geographic isolation even though they struggle to know where we are.
The US dairy scene is comfortable with its 'cut and carry' type operational structure. Over the last 30 years many small dairy farms have failed, or converted to beef and crop, but the 500 cow plus enterprises would not go back to a grass fed type operation.Their cows, almost all black and white, have a 'Club Med' type diet and their production is about 2-2.25 times the NZ per cow production.
There is no dairy grazing as we know it over the winter, partly because they are all housed inside, milked three times a day, and even quite large units do not own much farm land. Their cows though do not live as long as NZ cows and are bigger and heavier, getting little exercise.
Pork and poultry are gradually eating into the beef meat market – when I spoke to several Walmart Company meat purchasing officers they said lamb is a good product but relatively expensive. A small percentage of American people liked and had no trouble paying for it, but about 70 per cent of Americans tended to buy overall on price and poultry benefited from this.
You do not need to look very deeply into America to see the inequality of income and wealth. There are about 11-12 million Mexicans in the US – some legal but many illegal – and they are good workers who send money back to Mexico and do much of the heavy lifting in the construction, big dairy units, feed lots and heavy industries. The US would struggle without them.
As for Mr Trump and Mr North Korea, one way or the other I feel they are going to cause the world all sorts of problems. They both seem to be big boys with unfortunately very big toys.
Pita Alexander is an accountancy and agribusiness director at Alexanders