How Inflation Threatens the Sustainability of Your Local Farms

It’s no secret that all of us are feeling the impact of seemingly never-ending rises in the pricing of basic resources. As commodity costs drive higher and higher, industries across the nation are experiencing the strain and stress of increased input prices. Agriculture is certainly no exception. While larger commercial farm operations may be better positioned to combat economic volatility, these market changes have a profound impact on smaller, local farms. Putting the livelihoods of small family farms in jeopardy. 

Farmers already face significant levels of uncertainty that other industries aren’t as burdened by. Sudden crop or animal diseases can ruin an entire year’s harvest. Inclement weather events, something Northern New York farms experience every winter, may destroy farm buildings, equipment, or farm yield. Sudden rises and drops in demand for certain goods impacts farmer costs and profitability. Now add extreme inflation and market volatility. The ag sector is demanding more resilience than ever; levels simply impossible for many small, local farms. 

Land, animal feed, fertilizer, other soil inputs, soil itself, seeds and plants, livestock, farm tools, tractors and other large essential machines, fuel for those machines, farm buildings, property repairs, labor, licenses, farm/vet services... to name just some of the inputs that farmers must cyclically purchase to have a chance at being profitable. Prices for these necessities have grown exponentially in the past decade. While market prices for food have also increased, the correlation between the rising costs and actual realized profits is not proportional. 

Agriculture has always run on thin profit margins, requiring large quantities of product being moved, farm diversification, and/or value-added food processing (turning a raw good into a more appealing food product) to sustain operations. However, each of those come at greater costs or regulations that many rural family farms simply cannot meet. The USDA reports that 52-79% of small family farms in the United States have an operating profit margin of less than 10 percent, classifying them at high financial risk. With small family farms making up 88% of the farms in the nation and inflation further shrinking these already alarmingly thin margins, the threat of local farms going out of business mounts alongside inflation. 

Unprecedented costs don’t just strike local farm profitability internally. Inflation leads to reduced purchasing power for all, meaning the consumer’s dollar doesn’t stretch as far either. Struggling households are turning towards the cheapest, most effortless options which may hurt small farm operations that don’t have the luxury of large-scale production. While many local food products are competitively priced with superstores, convenience and the cost of traveling to a local farm or farmers market now matters more than before. As a result, farms are at risk of losing their consumer bases. 

Inflation threatens local farms from all sides. Extreme hikes in input costs combined with market volatility multiplies the already substantial amounts of strain and uncertainty that farmers face seasonally. With the majority of small family farms already suffering from minimal levels of profitability, the sustainability and very existence of many local farms around our nation are in jeopardy. Understanding how drastically inflation is impacting the small-scale farmer is the first step in helping support them. Our local farms need our help now more than ever!