by Enrico Villamaino
Chrissy Wozniak, host of the North American Ag Spotlight (NAAS) podcast, recently sat down with Damian Mason to discuss how the current state of the economy is likely to affect agricultural professionals moving forward. An author, podcaster, consultant and “agconomist,” Mason laid out his prediction of things to come in the NAAS episode “Ag Economics: Are We Headed for Recession or Recovery?”
Wozniak began by asking Mason how farmers are balancing the high costs of inputs and fuel costs with inflated commodity prices.
“We started being told that inflation was transitory a year ago…,” said Mason. “I’m like, well, wait a minute, I’ve never heard the word ‘transitory’ in all of my economic studies! We never even used that word.” He theorized that government officials were using that term because they wanted to sound more scholarly – and to convey that the situation was temporary and would not incur long term damage. He then cut the legs out from underneath this idea. “You know what else is temporary? Cancer! Cancer is temporary, until it kills you. So everything, frankly, is temporary. Wars are temporary! Life is temporary, if you just put a long enough horizon out there.”
Mason stressed that anyone familiar with manufacturing knows from experience that disrupting a supply chain by shutting down both manufacturing and consumption creates a situation that cannot simply bounce back. It takes time to restart the machine. “The lie that this ‘inflation’ was transitory really bothered me,” he reiterated.
Although farmers were considered essential workers, and did not stop work during the pandemic shutdown, they were still greatly hampered by it. “What about the machinery? All of a sudden you’ve got a John Deere tractor that doesn’t have a part because the place that manufactures it was shut down, or because it’s stuck on a cargo ship that can’t get unloaded,” he said. Farmworkers, he explained, would show up to work every day and work all day but would still fall behind due to being undersupplied.
Referencing a 2021 survey of farm operators conducted by Purdue University, Wozniak recounted that 66% of survey respondents said they had difficulty in securing enough labor to meet their needs, up from 30% in 2020. She asked Mason what he thought the fallout from this labor shortage would be. He said that the government made a mistake when it distributed money to workers with instructions to stay home. “A bunch of those folks said ‘I can make more money by sitting at home [than by returning to work.] A lot of folks, particularly within the current administration, tried to deny that that was the reality, but let’s face it – that’s the reality.”
He said that agricultural operations tend to need the services of lower skilled laborers; workers are needed on a more seasonal basis and in more remote rural areas. The government payments were very attractive to this segment of the workforce. A number of workers took the money and relocated. According to Mason, the ag industry and its overall production has suffered because of it. While he pointed to automation as one way of combating that loss, he is quick to add that it’s not something that can be done overnight and there are some tradeoffs.
“Sometimes with automation comes improvements, but in the short term you sometimes lose efficiency,” he said. To illustrate this point, he described how strawberry growers in Florida are currently experimenting with mechanical harvesting: “Right now it’s about 50% efficient, meaning it leaves 50% of strawberries in the field.” He said that farmers can’t wait for the methodology to be perfected. “They tell me ‘I’ll do it because 50% is better than none, and I can’t even get any workers to show up here!’”
Mason doesn’t think that the high prices farm operators face is going down anytime soon due to the fact that manufacturers haven’t gotten caught up on their production ability.
Despite his opinion that farmers will be facing these cost issues for some time, Mason is still optimistic that 2022 and 2023 can be successful years for farm producers. “I work with Xtreme Ag, a consortium of farmers from across the nation, and one of my guys there told me he’d rather have high input costs and high prices for corn rather than low input costs and corn at just $3. He can still make money with the high input/high price combination.”
Nevertheless, Mason is concerned that while farmers can still make money on what they produce, the overall drop in production can have far-reaching effects.
Mason cited the lessons of history to point out the country’s possible precarious position. “They taught me in history … that the United States has never won a war – we have never won a war. What we’ve always done is out-produced the competition. We didn’t beat Germany. We weren’t better strategists. We didn’t have better generals. We had more natural resources [and were able] to outlast them, frankly.” He said that the U.S. has become more and more dependent on imported chemicals from China and fertilizer from Russia. He worries that, with domestic production having plummeted downward, these foreign nations might now have the upper hand.