Size matters. Big U.S. farms get even bigger amid China trade war

By Mark Weinraub

HAZELTON, N.D. (Reuters) - As the 2018 harvest approached, North Dakota farmer Mike Appert had a problem - too many soybeans and nowhere to put them. Selling was a bad option. Prices were near decade lows as U.S. President Donald Trump's trade war with China weighed heavily on the market. Temporary storage would only buy him a little bit of time, particularly in an area where cold weather can damage crops stored in plastic bags. So Appert, who farms 48,000 acres (19,425 hectares), cut a check for $800,000 to build eight new permanent steel bins. That allowed him to hold onto his bumper crop and wait for prices to recover. He sold half of the 456,000 bushels stored on his farm throughout the following summer, earning about $1 more per bushel and avoiding storage at nearby CHS elevators or an Archer Daniels Midland Co. processor in the area. But most farmers do not have $800,000 to spend on steel bins, and many are going under. The number of U.S. farms fell by 12,800 to 2.029 million in 2018, the smallest ever, as the trade war pushes more farmers into retirement or bankruptcy., who will have fewer suppliers. Additionally, farmers will have less need to rent space in the merchants' grain silos as big farmers like Appert have plentiful storage on their own farms. Roger Hadley, who farms 1,000 acres in Indiana, was unable to plant any corn and soybeans this year after heavy rains added to farmers' woes. He spent most of the summer trying to plant a combination of grasses, a so-called cover crop, so he could apply for government aid and try again next year. "The guys that got rich are getting richer," Hadley said. "It has frustrated a lot of guys."

In farming, size does matter. The farms left standing after the trade were will likely be some of the biggest in the business. Appert's operations are more than 100 times bigger than the average American farm and the advantages provided by that magnitude are becoming even more critical as the trade war stretches into a second year...MORE 

 The economy of scale for access to capital, purchasing of equipment, etc., exists whether there is a trade war or not. To the extent, however, farmers are going bankrupt as a result of the trade war and thus making more land available to others for expansion, that hastens the decline in number of farmers and increases the expansion of larger farms.