Imagine that you are involved in a very, very large farming operation. No, much bigger than that. Maybe it is an operation larger than you can imagine. Farm Bill commodity programs are not even a blip on the radar screen of the management, but your Congressman stops by for a tour one day and asks what the federal government can do to help. How do you respond?

Such large farming operations do exits, and generally have acreage or livestock well into the five-digit range. Payment limitations are not even an issue because management time is better spent on maximizing revenue from various profit centers, integrating products and resources with allied industries, and solving million dollar problems. Purdue economists Mike Boehlje and Allan Gray looked at several large agricultural operations in their research on the industrialization of agriculture. They found there were several farm policy issues that need to be addressed which would benefit such operations, and beneficial changes might assist smaller farmers as well. We’ll visit those operations, then review the policies.

Fair Oaks Farms Dairy spreads across I-65 between Indianapolis and Chicago and is partially owned by the Bos family, which also owns the Bos Dairy, and collectively milk 70,000 cows. Fair Oaks has 30,000 cows, milked by 10 units that hold 72 cows with milking underway 24 hours per day. Value added products are integral to the business, which also is concerned with crop production, cow comfort, energy production, and waste handling. Milk is processed in Kentucky to take advantage of a higher price afforded by the Southeastern US Milk Marketing Order.

Tom Farms LLC is composed of 12,000 acres of corn, soybeans, and tomatoes in the US and 4,000 acres in Argentina, with commercial seed corn production being a central focus. It also provides custom farm services to 28,000 additional acres. The operation either produces or manages 30,000 total acres of seed under contract with Monsanto, including processing and transportation to retail locations. Management is focused on return on investment rather than accumulation of land assets.

West Texas Organic Dairy owns 50,000 acres of native pasture and through irrigation is producing corn and soybeans for the dairy rations. The center pivot irrigation systems cover 160 acres, but on the low productive land not reached between the pivots are facilities for 3,500 dairy cows. The organic corn is fed as silage to the cows. The organic soybeans are shipped to a Kansas processor who returns the meal to the dairy, and markets the organic soybean oil. The organic milk is shipped to the Eastern US in return for a substantial premium over conventional milk, valuing the organic corn at $7 per bushel. Another 50,000 acres have been acquired for corn production to provide feedstock for an ethanol plant, as well as ten more dairies with 3,500 cows each.

Louisiana Rice and Row Crop Farm is a Central Louisiana operation with 26,000 acres, including 12,000 laser-leveled acres to supply rice to two rice plants under contract. Investment is being made in a river terminal for both export of products and import of inputs. Another operation of 30,000 adjacent acres may be brought into the business complex.

Past and current farm programs are focused on income transfer based on planting records, price supports, and payment limitations. But economists Boehlje and Gray say the structure of US agriculture continues to move toward industrialization, and many operations have already moved beyond farm programs, except to the dairy operation that is only taking advantage of a distortion in the marketplace created by the milk program. But what would the management of these farms really need in the way of federal farm policy to enhance their operations? Boehlje and Gray suggest:
1) Programs for transition assistance to assist farmers in finding other opportunities, should international competition or other dynamics create a need to buffer farmers from market forces.
2) Develop an institutional structure around a vertical market or supply chain that provides open access to information, prevent anti-trust issues, and help manage risk and rewards in an effort to enhance economic growth.
3) Revisit the rules about intellectual property rights to ensure that current patent and copyright laws are capable of managing the needs of the marketplace in the wake of global competition.
4) Support funding for public sector research and development to ensure that private funding of technology development does not lock it away from the marketplace.
5) Federal support for health care programs, work place safety, and improved immigration laws are needed to ensure a skilled and healthy workforce.
6) Regulations that promote food safety through traceability programs, regulation of antibiotics and additives, and market access to other nations where those issues are of concern.
7) Ensure there are entry-level management positions for young farmers in a career path to accelerate them to be an agricultural leader of tomorrow.

Summary:
While typical Farm bill provisions address the issues needed by most of the farms today, some farming operations are growing well beyond those regulations, and will require some forward thinking policies to allow their growth and success. Some operations with tens of thousands of acres and head of livestock need strategic change in farm policy, not just tinkering with per bushel payment levels.