Dobbs, Thomas L.

Murra, Gene

Smolik, James D.

Taylor, Donald C.

English

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South Dakota State UniversityOpen PRAIRIE: Open Public Research Access InstitutionalRepository and Information ExchangeEconomics Commentator Department of Economics6-1-1992Statewide Results of a Study of SustainableAgriculture in South Dakota; Hog CommentsThomas L. DobbsSouth Dakota State University, thomas.dobbs@sdstate.eduDonald C. TaylorSouth Dakota State UniversityJames D. SmolikSouth Dakota State UniversityGene MurraSouth Dakota State UniversityFollow this and additional works at: http://openprairie.sdstate.edu/econ_commPart of the Agricultural and Resource Economics Commons, and the Regional EconomicsCommonsThis Newsletter is brought to you for free and open access by the Department of Economics at Open PRAIRIE: Open Public Research AccessInstitutional Repository and Information Exchange. It has been accepted for inclusion in Economics Commentator by an authorized administrator ofOpen PRAIRIE: Open Public Research Access Institutional Repository and Information Exchange. For more information, please contactmichael.biondo@sdstate.edu.Recommended CitationDobbs, Thomas L.; Taylor, Donald C.; Smolik, James D.; and Murra, Gene, "Statewide Results of a Study of Sustainable Agriculture inSouth Dakota; Hog Comments" (1992). Economics Commentator. Paper 278.http://openprairie.sdstate.edu/econ_comm/278ECONOMICSCOMMENTATORStatewide Results of a Study ofSustainable Agriculture in South DakotabyThomas L. Dobbs &Donald C. TaylorProfessors of Ag EconomicsandJames D. SmolikProfessor of Plant ScienceThis issue of the Commentatorcontains excerpts from the recentlyreleased summary of a study of sustainableagriculture in South Dakota. The summarywas published as SDSU AgriculturalExperiment Station Bulletin 713--Farm,Rural Economy, and Policy Implications ofSustainable Agriculture in South Dakota.Single copies are available at no chargeat County Extension Offices in SouthDakota or by senlling a mailing label and$0.98 in postage to: Bulletin Room,Lincoln Music Hall, South Dakota StateUniversity, Brookings, SD 57007.Sustainable Agriculture Research at SDSUSouth Dakota State University (SDSU)has been conducting research since themid-1980s on what has come to be calledsustainable agriculture. We have beenexamining farming systems in whichproducers adopt management-intensive,holistic system orientations in planningtheir farms. In practice, suchsustainable producers use crop rotationsand other natural soil-building andcultural practices to partially orcompletely replace sjmthetic chemicals(e.g., fertilizers, pesticides). Theysubstitute on-farm produced resources forexternally produced, purchased inputs.In response to grass-roots initiatives from farmers, SDSU began research onsustainable agriculture in 1984. Initialwork of plant scientists involved monitoring "conventional" and "sustainable"farmers' fields in the east-central partof the state. Production practices, soilfertility, yields, pest populations, andother agronomic parameters were measured.(Continued on page 2)fawatfSOUTH DAKOTA STATE UNIVERSITYNo. 309 June 1, 1992Hog CommentsbyGene MurraExtension LivestockMarketing Specialist/Economics DepartmentThe following article also appears inthe June issues of "Porkline", distributedby the South Dakota Pork ProducersAssociation.Some of you may have read an articletitled "Pork Industry's Numbers Shrink AsIt Heads to Maturity" in the April 15thedition of Feedstuffs. If you didn't, itmay be worth your time to do so. Some ofthe comments in the article are worthfurther discussion.First, the article includes astatement that by the year 2000 the U.S.will need only 50% of the sows currentlyin.the inventory to supply our pork needs.The statement is based upon assumptions ofa stable per capita consumption of 64pounds (a reasonable assumption), 19 pigsper sow per year (also reasonable) and a290 pound average slaughter weight (maybea little high but not impossible).Second, the article includesconsiderable discussion regarding thegrowth in numbers and market share of theulta-large corporate farms and the declinein numbers and market share of the small-scale producers. It was noted thatNational Farms has plans for a 20,000 sowunit in Texas, not a typical hot-spot forhog production. Also, Tyson Farms isadding 30,000 sows in Oklahoma to the30,000 it already has in Arkansas. Otherlarge-scale operations already are inproduction or are planned for California,Mississippi and North Carolina.Finally, the article includes somediscussion of vertical integration, andthe use of standardization and the use of(Continued on page 3)Page 2Intensive monitoring has continued on oneof the conventional farms and on one ofthe sustainable farms. Agriculturaleconomists have joined plant scientistsin data collection and analysis.SDSU's sustainable agricultureresearch was incorporated into agronomytrials at the Northeast Research Stationnear Watertown, starting in 1985. Long-term trials, still underway, comparevarious combinations of crop rotations andcultural practices. Conventional, reducedtillage, and alternative or sustainablefarming systems are being studied.See previous Commentator issues 270and 298 for some of the economic results,as these are not reported in Bulletin 713or this article.The sustainable agriculture researchprogram expanded in 1988 to include abroader perspective on sustainable farmingpractices across the state. A mail surveyof "sustainable" farmers in South Dakotawas conducted that year, and 32 usableresponses were returned. A grant receivedin late 1988 from the Northwest AreaFoundation (NWAF), in St. Paul, Minn.,helped fund expanded research work withfarmers--initially through follow-up, on-farm interviews with 22 of the sustainablefarmers who responded to the mail survey.Locations of the 22 farms on whichpersonal interviews were conducted areshown in Figure 1. Detailed economicanalyses of the crop systems wereconducted for 12 of the 22 farms, andeconomic analyses of the livestock systemsalso were conducted for the nine of those12 farms which have livestock.For purposes of policy and ruraleconomy analyses, five of the 22 farmswere used as case studies. The five farmsrepresent sustainable systems in differentagro-climatic areas within South Dakota:south-central, east-central, northeast,northwest, and southwest (see Figure 1).These five "sustainable" farms werecompared with five "conventional" farms,one of which is an actual operating farm(in the east-central area) and four ofwhich are "synthetic." The east-centralactual operating conventional andsustainable case farms are the ones notedpreviously for which SDSU has beencollecting data since the mid-1980s.Data for the "synthetic" (or hypothetical)conventional farms came from a variety ofsources, including: the AgriculturalCensus, Cooperative Extension and SoilConservation Service reports, andinterviews with knowledgable individuals.Fig 1. Locations, by region, oftfie22 personally interviewed stjstainabfefarmers and of case farm areas.MrrnSouthwest* Personaily intefviewed farmeraB Case farm areasSouth-centralIn the final stages of the NWAF-supported study, panels of sustainable andconventional farmers. Extension agents,and other agriculturalists wereinterviewed in each of the five agro-climatic areas. The panel interviewsfocused on perceived differences between"sustainable" and "conventional" farmingsystems and on farmers' reasons for usingdifferent types of systems.ConclusionsSustainable agriculture takes ondifferent agronomic dimensions indifferent agro-climatic areas. Forexample, differences between sustainableand conventional farmers in applicationrates of synthetic chemical fertilizerstend to be much greater in the easterncorn-soybean areas of South Dakota than inthe northeastern and western wheat areas.Consequently, economic differences betweensustainable and conventional farmers alsovary by agro-climatic area.In the corn-soybean areas, whenorganic premiums are absent, sustainablefarms are less profitable than conventional farms. However, there appears tobe less difference in profitabilitybetween the two types of farms in thewheat areas. In fact, when organicpremiums for those farms that qualify arefactored in, sustainable farms in thewheat areas appear to be slightly morej profitable than their conventionalcounterparts.Higher energy prices and federal farmpolicies which permit greater plantingflexibility without sacrifice of supportpayments would enhance the relativeprofitability of sustainable systems. Inwheat areas, such changes in the yearsahead could often tip the balance, makingsustainable systems more profitable evenwithout organic premiums. More dramaticchanges in prices or federal farmprograms--or in a combination of thosefactors and in environmental policies--would be required for sustainable systemsto generally be more profitable thanconventional systems in corn-soybeanareas.Although the implications of a numberof policy options were clarified in thisstudy, further research is needed todesign policy sets which incorporatecombinations of federal farm commodityprogram policy and environmental policy.Rapid widespread conversion fromconventional to sustainable farmingsystems could cause some economicadjustment difficulties for ruralcommunities. However, most economicconversions take place gradually. Hence,some adverse effects would likely bemitigated. Moreover, there could be anumber of positive long-term effects onrural communities from conversions tosustainable systems. However, theseeffects are difficult to quantify inadvance. If systems can be developedwhich enhance the long-run economic andenvironmental sustainability of moderate-sized family farms, then the economichealth of rural, communities also may beenhanced.This study identified some keydifferences at the present time between"sustainable" and "conventional" farmingsystems in South Dakota. It also providedsome tentative ideas about the relativeeconomic attractiveness to farmers ofselected systems, given current, andpossible alternative farm andenvironmental policies.Much of the analysis was based uponcase studies. Case studies are extremelyvaluable in providing specific, detailedinsights. However, caution must always beused in generalizing from such studies. Agreat deal of judgment is required inselection of cases for study, and whatevercases are selected will not be representative of all systems or situations in agiven agro-climatic area. Consequently,profitability comparisons should beconsidered indicative, not definitive.Moreover, technologies and systemsfor a more sustainable agriculture arevery fluid at the present time. With muchof the research on sustainable agriculturehaving begun since the mid-1980s, and withmany farmers now themselves experimentingwith more "sustainable" practices andsystems, new insights are rapidlyemerging. As research and farmerexperimentation bear fruit, farmingsystems thought by some to be best todaymay be replaced by other farming systems afew years from now.(Continued from page 1 ... Murra)brand names. Some of the ultra-largecorporations, such as Tyson andSmithfield, will be in production,processing, wholesaling and maybe evenretailing.What does all of the above mean tothe typical, small-scale pork producerfound in the Midwest? First, the industrywill continue to move closer to the typeof structure found in the poultry sector.More processing and increased emphasis onbrand names will be seen. That likelywill result in increased per capita porkconsumption in the U.S. but also willincrease the emphasis on uniformity. Astandard weight, fat thickness and othermeat qualities will be stressed.Producers who don't meet those standardslikely will find it difficult to findmarkets.Second, the changes in total outputand price from year to year and evenwithin a year will be less drastic.Fairly level year-round production, ratherthan a Fall and Spring pig crop, will bethe rule. Large-scale output usuallymeans continuous production, especiallywhen tied to the processing and wholesaleends of the business. Also, large-scaleoutput often means lower variable costs,even though fixed costs are higher. Sincea firm will produce if price is highSOUTH DAKOTA STATE UNIVERSITYEconomics DepartmentBox 504ABrookings, SD 57007Address Correction RequestedPage 4enough to cover variable costs, prices cango very low before production is reduced.The net result of the above, if itdoes indeed occur, is that small-scaleproducers must emphasize efficiency,uniformity, quality and marketing tocompete. The industry in the year 2000probably will be much different than theindustry today. Largeness, brand names,vertical integration, horizontalintegration (maybe through contracting)and standardization will be the keywordsin the late 1990's.ECONOMICSCOMMENTATOREDITOR: Don Peterson, Agricultural EconomistECONOMICS DEPARTMQfTSouth Dakota State UniversityBox S04ABrookings, SD S7007Phone: (60S) 688 - 4141400 copies of this piislication were produced at a costof less than S100.

Statewide Results of a Study of Sustainable Agriculture in South Dakota; Hog Comments

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Statewide Results of a Study of Sustainable Agriculture in South Dakota; Hog Comments

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