Jane Sooby recently asked about wages for farmers. The paper
documents the now critically low rate of return to the production sector
relative to the seed+pesticides industry and food processors. The reason
billions in capital is flowing into both the input and processing sectors
include annual operating profits on the order of 5% to 12% of revenues;
profits as a percent of assets in the %4 to 10% range, and returns to
investors in the 10-20% range (see the paper for detailed data and sources).
The leading companies within these sectors are among some of the most
profitable in the economy. They are growing stronger and gaining even more
significant power (over prices, access to capital, markets, political) than
they had before. Conversely the ag production sector is in deep you know
what. Profits as a percent of assets are almost non-existent and are at
most 1-2% of revenue. Its a sector in decline, with seemingly no way out.
I suggest some of the implications of this in the paper. Jane, you can get
a good, simple set of tables on ag income, living expenses, etc off the Net
via the ERS website; go to the data room, and then get the tables
accompanying the most recent Ag Outlook magazine. If you have trouble
finding them, send me a private e-mail, and I'll get it to you some other
way. The bottomline is that most farm familes make 80% plus of their income
off the farm.
Debbie Ortman recently posted re Johnny's Select Seeds, biotech,
etc. There was an amazing page 1 article on biotech and vegetable seeds in
the WSJ 1/28/99 -- it is really a mind-bender. By Monday afternoon it will
be on PMAC at www.pmac.net/romo.html Its about a Mexican billion Alfonso
Romo who now controls 25% of the global vegetable seed business; an
estimated 40% of U.S. veggies come from seeds from his companies. He is
100% gung-ho on biotech. His most telling quote -- "Seeds are software and
we have the seeds." His main company has already worked out a deal with
Monsanto, so expect soon Roundup Ready everything and Bt-almost everything,
if EPA approves. (I personally cannot imagine EPA approving Bt-lettuce, for
example, but hey, they do have friends in high places...)
chuck
Charles Benbrook 208-263-5236 (voice)
Benbrook Consulting Services 208-263-7342 (fax)
5085 Upper Pack River Road benbrook@hillnet.com [e-mail]
Sandpoint, Idaho 83864 http://www.pmac.net
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