Record Profits No Job Creator on Farms as Owners Automate

Photographer: Victor Blue

Total planted acreage has risen seven of the past 10 years, the prices of corn and soybeans reached records last year, and profits for 2012 of $114 billion are estimated to be second only to 2011, even after the worst drought since the 1930s. Close

Total planted acreage has risen seven of the past 10 years, the prices of corn and... Read More

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Photographer: Victor Blue

Total planted acreage has risen seven of the past 10 years, the prices of corn and soybeans reached records last year, and profits for 2012 of $114 billion are estimated to be second only to 2011, even after the worst drought since the 1930s.

The property Kevin Liefer and his son, Kirk, cultivate in southern Illinois has been expanding for decades without adding a single manager. These are boom times for farming and a bust for farm jobs.

The 3,600 acres of mostly corn, wheat and soybeans the Liefers hold were about 30 separate, individually operated farms more than 40 years ago, said Kevin. As families left, the homesteads near Red Bud, about 40 miles (64 kilometers) southeast of St. Louis, melded into one operation.

Older tractors were replaced with models that cultivate more ground and serve as miniature offices, complete with global positioning systems that allow them to steer themselves. Mobile phones enable communication while in the fields.

“There’s so much more you can do now without as much labor,” said Kevin, 58. “The consolidation has been rapid.”

A U.S. farm boom showing few signs of a let-up isn’t translating into more opportunities in one of the most robust areas of the economy. Farmers, ranchers and other agricultural managers will see the steepest decline of any employment category by 2020, losing a projected 96,000 jobs this decade out of 1.2 million positions, part of a broader trend toward less labor in the sector, according to the Bureau of Labor Statistics.

The drop comes even as agricultural managers have the highest median wage of any of the top 20 declining categories, at more than $60,000 a year. Farm owners like the Liefers are able to manage larger tracts of land without hiring overseers. Full-time farm managers hired by others can handle more property for more clients, said Jerry Warner, a past president of the American Society of Farm Managers and Rural Appraisers, a farm- management organization based in Denver.

Industry Contraction

Many of the fastest-declining U.S. job categories result from industry contraction: post offices closing because of lower mail volume and textiles factories because of outsourcing, for example. Agriculture is an expanding sector with rising profits, even as overall employment, including laborers, is projected to drop 2.3 percent over this decade.

Total planted acreage has risen in seven of the past 10 years, the prices of corn and soybeans reached records last year, and profits for 2012 of $114 billion are estimated to be second only to 2011, even after the worst drought since the 1930s. Farmer debt is near its lowest in at least 60 years of record-keeping while land prices are at an all-time high. Still, all 291,000 of the farm-manager positions expected to become available in the decade up to 2020 -- net of those lost -- will be replacement jobs, according to the Labor Department.

Farm Consolidation

Consolidation tells only part of the story. The number of U.S. farms, which fell by half in the three decades up to 1986, dropped by just 3.1 percent in the past quarter-century, according to the U.S. Department of Agriculture. About one- quarter have sales of less than $100,000 annually and don’t need a full-time manager, while larger farms are more easily overseen by one person, said David Anderson, an agricultural economist at Texas A&M University in College Station.

Effective farm managers need to have multiple skills, Anderson said. They must deal with buyers, sellers and regulators of agricultural products, manage complex finances for multimillion-dollar operations, understand chemical and crop technology and like working outdoors, he said.

“The hours aren’t necessarily 8 to 5, and it’s not office work,” he said. “It’s outdoors. It’s snow, ice. It’s being able to see the signs that an animal is sick. You may need to be able to ride a horse. Not just anybody can hop up and do that.”

Farm Families

Managers hired at Farmers National Co., a real-estate and farm-management company in Omaha, Nebraska, where Warner is an executive vice president, preferably come from farm families, he said. They need a four-year degree in an agricultural-related field and five years of experience in rural lending, insurance, or perhaps with a Monsanto Co. (MON) seed-seller or Deere & Co. (DE) implement dealer. Such companies are also paying well, making it tougher to attract talent to oversee farms, he said.

Ken Schmitt manages about 13,000 acres of land for Farmers National near Jefferson, Iowa, about 50 miles northwest of Des Moines, working with about 60 different absentee owners of land used mainly to grow corn and soybeans.

That’s about twice as much property as would have been manageable when he started in 1986, he said. “Some owners are more active than others, but I can handle a lot more of them than I used to,” he said.

More Efficient

Financial software, better farming equipment and telecommunications that keeps him in touch with the farm owners, who range from investors to heirs, all make him more efficient, he said.

“It’s a lot easier to get in touch with someone and solve a problem immediately,” said Schmitt, who spends much of his day checking how crops are growing, recommending proper herbicides and assessing weather effects on properties up to 60 miles on either side of his office.

In the past, he would have to wait for farmworkers in far- flung fields to return before contacting them, sometimes after dark. Now they’re always reachable, as are the seed-sellers, chemicals merchants and grain buyers he works with. “I wouldn’t want to go back to the way we used to do things,” he said.

Greater farm prosperity is likely to increase the trend toward more automation and fewer managers in much of the U.S., said Kristi Boswell, who handles labor issues for the American Farm Bureau Federation, the largest U.S. farmer group, in Washington.

Warmer States

With the exception of California and other warmer states, where crops that are hand-picked require managers to oversee crews, ever-larger farms need fewer people, she said.

“Rather than hire a full-blown manager, a lot of farmers will rely on themselves day-to-day,” she said. “With the prices we’ve seen in the past two years, you’re seeing capital investment that wasn’t available in the past.”

The Liefers farm a third more land than a decade ago, relying on family, a part-time hired hand -- and modern machinery. Every tractor, combine and spreader has monitors that can supply weather and market data in the middle of a cornfield, said Kirk Liefer, 35.

The GPS systems steer the tractors to the most efficient planting paths. That allows Kirk to take phone calls and send text messages while out in the fields. Kevin, less enamored with texting-while-tractor-driving, said that sometimes he sits back to “just enjoy being in the great outdoors.”

Less Labor

Farming practices themselves have also lessened labor needs, the Liefers said. Their adoption of no-till farming, which eliminates plowing soil and instead relies on herbicides from companies including DuPont Co. to kill weeds normally eliminated through tillage, has significantly reduced the need for workers and managers to oversee them. The technique, increasingly common in crop production, gives them more time to cultivate ever-larger acreage on their own.

Still, for all their expansion and automation, the Liefers still see themselves as a family farm -- maybe not surrounded by as many families, yet still carrying on that tradition. Being one’s own manager has always had appeal, and the father and son are making room for two of Kirk’s younger brothers, who will oversee their own parts of the operation.

“There are still plenty of opportunities in agriculture,” Kirk Liefer said.

To contact the reporter on this story: Alan Bjerga in Washington at abjerga@bloomberg.net

To contact the editor responsible for this story: Ken Fireman at kfireman1@bloomberg.net

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