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Thursday, September 02, 2010

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Richard, this post and the one immediately before it (as well as your visit to Indianapolis today) bring to mind Kurt Vonnegut's "Player Piano": mechanization brings efficiency, but it exacts a human toll on those caught up in its "creative destruction".

Increasing automation of factory and ag work brings huge capital costs, which in turn require huge scale. Ag is a more-recent guest at the "scale-up" party, but make no mistake, it is now a world-scale business full of huge enterprises like Cargill, Andersons, Tyson, etc. (The small-town John Deere dealer probably isn't getting a piece of that action, either.)

And so it goes.

Being relatively new at the large-scale game, some ag oldtimers probably still have the independent entrepreneur's mentality instead of the big-corp one. Big manufacturing corporations long ago made peace with the existence of labor and environmental regs, and BP notwithstanding, few are run as carelessly as some ag operations are today.

The "young farmers" (as you've pointed out previously) are sitting in classrooms in the Midwest's traditional Ag schools, then getting MBAs and coming home to roll up the old family farms in their county. That bodes well: professional managers will run their big ag corporations like big corporations. Or so one might hope.

But this does leave profitable niches that are too labor-intensive for the big operations. Big-anything is about unit volume, overhead absorbtion and standardization. Just as there are small job-shops in manufacturing that specialize in short runs and custom fabrication (and earn a tidy profit doing so), and there are small wineries alongside Gallo and the other huge operations, there will be small niche farms to grow arugula and other produce close to well-to-do urbanites.

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