F.A. Farm

  (Ferndale, Washington)
Postmodern Agriculture - Food With Full Attention
[ Member listing ]

Economies of Small Scale

Modern agriculture is oriented towards economies of scale. This is usually presented as a one-way street - get big or get out. However, there is a flawed assumption here that needs to be addressed. Economies of scale are based on a price per unit that does not fall, while the cost per unit does fall. Pretty simple. Produce more widgets in your factory and you spread the cost of your rent or mortgage payment over a wider base and the cost of each unit goes down (total cost includes cost to produce plus your overhead). You can also reduce your cost per unit by getting more production out of each worker. If we translate this into a farming scenario, we can get our chickens to produce more eggs or use our acreage to produce more crops and decrease our cost per unit by choosing better breeds, keeping our chickens healthier and happier, feeding the soil so our plants are healthier and happier, etc.The point here is that economies of scale are not based on increasing the size of the operation - building a bigger factory or buying up more land to farm. Economies of scale are based on utilizing what we already have to the fullest extent. I suspect that what is usually touted as the economies of scale is simply a marketing scheme to grow the economy in a somewhat strait-jacketed manner. Build more factories! Sell more products! Export grain to the world! Export the American way of life to everybody in the Third World! It ain't necessarily the same thing. Perhaps real economies of scale do not depend on getting bigger.

Let's look at one of my favorite sound bites: the subjective trumps the objective. Example: Back in 1965 I used to run my hogs so they would be easier to handle in the show ring. On the farm, I would just pick out one of my show animals and run her until she was tired enough that I could touch her. (I did this at twilight after chores, so she wouldn't be exhausted in the heat of the day.) Then I would pat her and scratch her ears and she really didn't have any choice but to tolerate it. This made her more used to me and other humans and easier to load into the truck and more maneuverable in the show ring. My reward was Reserve Champion gilt at the state fair and a higher price when I sold her for breeding stock. Another example: I sell fingerling potatoes at $3.00 per pound and regular potatoes for $1.50 per pound. My labor for growing fingerlings is only a little bit greater than for the larger normal potatoes, and really only in the washing and sorting. I do get more fingerlings per pound of seed planted and yield is comparable to regular potatoes, so the production costs for the two are roughly the same (I save my own seed potatoes, so seed cost is the same.) I can sell the fingerlings for twice what I get for regular potatoes because people love them. So do I and I even made my lefse the last two Christmases with fingerlings instead of regular potatoes. De var bare bra! (They were very good!) So, the subjective taste and cachet of the little fingerlings trumps the higher objective cost to the consumer per pound. Some of the more rigid academic types may quibble that I am misusing the term, but am I really? If we focus on utilization of what we have, rather than building something newer and bigger (or buying more acreage), we may find that we increase our efficiency through economies of scale. Another blogger on this site, Re Rustica, has touched on something similar that they call "efficiencies of small run production" and they made a good point. We don't have to keep increasing the size of our farms. Perhaps we can just be content to stay small and just get better at what we do.

Bookmark:    add to del.icio.us del.icio.us   add to technorati Technorati   add to Digg Digg   add to Google Google   add to stumbleupon StumbleUpon

Post a Comment:
Comments are closed for this entry.

RSS feed for F.A. Farm blog. Right-click, copy link and paste into your newsfeed reader