Latest / Conservation Stories / Beyond Overproduction: Rethinking the Future of Agriculture with Damian Mason

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Beyond Overproduction: Rethinking the Future of Agriculture with Damian Mason · Conservation Stories

• 0:00
  Speaker A: Foreign.
• 0:15
  Speaker B: Welcome back to another episode of Conservation Stories. I'm your host, Tillery Timmons Sims, and this Conservation Stories podcast is brought to you by the Sand Hill Area Research association, or Sarah, as we like to say, because it's a lot easier. I am always excited about the people that we have on for guests because they're always exceptionally innovative and smart and talented. And I'm really excited and kind of fangirlish over this particular guest, Damian Mason, who, who host the Business of Ag, which is like, in my opinion, the number one ag podcast. Damien, thank you for coming.
• 0:57
  Speaker A: Well, you're being very, you're being very gracious and I appreciate that. The Business of Agriculture show has actually grown very nicely and I'm glad you're a listener, follower watcher. It's like I just was glancing here on YouTube, my, my, my episode about sauerkraut with the biggest, the biggest sauerkraut maker in the country. 11, 000 views on YouTube.
• 1:18
  Speaker B: So I found it fascinating because, you know, I was in Poland last May and we saw like, you know, some of like historically oldest sauerkraut production there in Poland. Amazing.
• 1:31
  Speaker A: So I brought it on. For instance, you know, my show releases every week. And one thing I like Hillary, about that one, I'm a kraut maker. I mean, I hobby kraut. You know, I grow cabbages in Indiana at my farm and I ferment them in a crowd down in the basement. But the business side of it, it capitalizes because we always say the Business of Agriculture show. We talk about the business side of ag and you know, fermented food has been on a pretty popular run. Probiotics and there's food as health as a growing thing. It was kind of building. And then the RFK Junior sort of threw a little bit of lightning into this area. So it's a, it's, it's where things are going. And I guess there's probably somebody that says, well, I don't know, I'm a corn and soybeans person. Why do I care about you talking about the crowd? Well, look at what we just covered. Trends in the marketplace, reacting to consumer demand, getting ahead of what could be regulatory stuff with RFK partnering with local farms, a contractual arrangement, which I see more and more of that where there's going to be food processors that, or in your business, cotton or they say we're going to do the traceability thing and that's going to become something that we'll see more. So that's where I guess I appreciate somebody like you that listens and like, hey, this isn't just an episode about how to make kraut, because it's not even about how to make crowd. It's about the business that ties into and all those other things. And that's where it's kind of fun for me to connect the dots.
• 2:55
  Speaker B: Well, I'm just, I mean, really appreciate you joining us. I know that you are super, super busy, and we want to respect your time and pull as much information out of you as we can. And that really, what you're touching on is the thing to me that I enjoy the most about your podcast is helping farmers have a more holistic, global look and also like, right next door look. Like, what is the big picture? What are the trends that are coming? What are, you know, ways that, you know, you may could do something that you never thought you would want to do or would do? And I mean, we, My, My family, my extended family, my brother in particular, then my parents, they transitioned from row crops into grapes because they saw looming water crisis. And, you know, and so that. It's been a horrible year for grapes. Wine is down. Like, wine consumption is down 30%. So, I mean, it's, It's. It's a problem. But, you know, all told, it's been a good, you know, overall, a good industry for a transition there. Seeing those type of opportunities. That's what I really appreciate. And one of the things that I hear you say that I don't hear many people say is about overproduction. And we always say here, like, if we can flood the market, like, we'll do it in two seasons. So can you speak a little bit to that? Like, expect. Because I. It's just not something that you hear. And I've recognized now that a lot of the groups that, you know, that are, that are, we're. We're putting in our money for, you know, marketing, which I have been very good for us, and when you're growing a particular commodity. But now we're looking at diversification and, you know, are we gonna, like, we're competing for acres, you know, and so. And does that mean that we're gonna be growing less of something that we've always grown? And if, if, if. So, like, is that gonna make prices go? You know what I mean? Like, how. How are you seeing true potential for farmers to look at different ways of marketing outside of what we've seen and trying to respond to that overproduction in the market? Because I just don't hear people talking about overproduction. Much.
• 5:11
  Speaker A: Hilary, let's go with the elephant in the room that, as you said, I pointed out on my commentary videos. I put it out on my Business of Agriculture show. I get on stage and speak at agricultural events. And I pointed out. And what's interesting, interesting, it's either telling agriculture something they don't want to hear, but it's also, they look at you like you got snakes coming out your head because they've not heard it. And so it's kind of like, I have a background in comedy. Way back when I started out, I became a political comedian. And the thing about comedy, I always say this, is that it's tremendously difficult to turn it into a business. It's very easy to explain. So in other words, it's hard to make it a job because there's a lot of people trying. And it's actually very easy to explain. Comedy is observation with point of view and perspective with a punchline. So I start with observation and tell people something that once you explain, like, oh, crap, yeah, of course, I see that we've been in an oversupply look at the United States, number one crop, corn. And I'm from Indiana, obviously, we grow corn. You know, it's. It's in the. It's the eastern corn belt. And so it's one of the ice states. So we've been in overproduction of corn since the early 80s. We, we went fence row to fence row like Secretary Earl Butts told us to in the 1970s. There's no end in sight. Boys go out there and plant from fence row to fence row. God, the world's going to start without us. And we, we just produced and produced and produced and produced. 70s were amazing. And all of a sudden the 80s come along and the 80s farm crisis. I shot a video you may have seen about this, that some people say, well, it's because of the grain embargo that Jimmy Carter imposed in January of 1980. Well, that didn't help, but there's a bunch of other reasons. The underlying, the underlying problem for the 1980s farm crisis began with oversupply. We had too much stuff. We are amazing at producing the mindset in agriculture. Whether you're talking about cotton or canola or, you know, cranberries to cattle. What we like to do is make stuff. How many pounds can we put on that steer in the feed yard? How many bushels could we yank off there? Whatever that thing is, we, we are geared to production and we are amazing at it. So what it has done is, is created this thing where we're so geared about it, we think that the race is how much we can make in terms of quantity. You know, I talk to people all the time, like, I'm from a dairy background. Like, yeah, right now dairy's really in the crapper. We're losing about $100 per cow per month. I said, what are you gonna do? Well, we're gonna get bigger. Like, no, nobody else would say we're losing a hundred dollars per unit. Let's get more units. Yeah. So we're very geared to that and we're good at it. Right now you can look across the board and say there's only one thing that's really two things that are agricultural products that are not in an oversupply situation. That would be eggs, which is completely due to an externality known as a virus that caused the culling of hundreds of millions of birds. And then beef, which beef is a beef cycle. It takes a long time, as your listeners know, because they're in Texas, the number one beef state. You know, you've got a, you got a nine month gestation cycle and then you've got a minimum of 15 months before that calf, you know, the calf hits the ground. It takes 15, 16 months before it, it becomes a steak on somebody's plate. So you're talking about those two things. Everything else, we are completely glutted. There's a reason. What are your, what are your listeners now selling cotton for? Is it like 80 cents? Not even.
• 8:29
  Speaker B: Oh, not even. I think it's in the 60s, 60s or 70s. I don't, haven't looked in a couple weeks.
• 8:35
  Speaker A: Okay. And break even. Break even probably is north of that.
• 8:39
  Speaker B: Yeah, like I know, I know for sure that like, like, yeah, you can easily lose, you know, money every acre.
• 8:46
  Speaker A: So we're, we're in a surplus situation on just about every commodity because we're so good at making it. And I know we have challenges in your part of the world, it's water. And it might be drought in the Midwest or it could be late spring weight. Late, wet, cold spring usually happens in parts of the, say, you know, corn country, whatever. But through those challenges, the trend line has been increased by several percent per year per acre of productivity.
• 9:15
  Speaker B: Well, because we here, we got to have more food. We got to have more food. We got to have more food. We got to have, have more people. We're going to have more people. We got to have more food. I mean, you know, so it's like this moral imperative to feed all of these people. And, and, you know, I know I've heard you point this out, to which I've been like, oh, wow, somebody's saying that, like, hey, the population is not. Have you looked at the numbers?
• 9:36
  Speaker A: Yeah, so we, we're, we're geared, we're inclined, We've been told this. And so the mindset, and that's a difficult thing to adjust to. Daryl Bricker, that wrote the book about population decline, and I had him on, on my show, and that's been something I've been talking a great deal about. He uses the term vertical knowledge. Vertical knowledge is that which you know it because you've always known it. It's not even questionable. You know, some politicians, like you might remember Obama called it settled science. Settled science. Well, the truth is there's no such thing as settled science. There's also a thing called vertical knowledge. Some things you know so well that you don't even consider that you could be wrong. And that's the one where we're talking about that demand will never decline.
• 10:17
  Speaker B: Yeah, confirmation bias.
• 10:19
  Speaker A: So we believe the demand will never decline. And the reality is, let's just say on just about every given thing that we produce in agriculture, we can go up by 2 to 5% on productivity per year. That's probably a real number. I mean, corn or soybeans or cotton or whatever, we're growing. Certainly the trend line is you go, you increase it. So that means demand has to go up by a few percent every year just to, just to keep the supply to eat up what's there. And that's difficult moving forward because none of our people and I have ever heard, oh, yeah, the population is not going to continue to increase. And also, once you start having an older pop. I'm sorry, once you start having declining fertility rates, meaning once women are not having. My mom had nine kids. None of my sisters have nine kids. You know, I'm saying. So once this happens, then with fewer babies, your population starts to get older. I was born in 1969. The median age in the United States of America was around 27 years old when I was born in 1969. Here we are 55 years later, and our median age is about 38 and a half, pushing 39. So we've aged 12 years in a half century. And what. And people say, why does that matter? Well, look at this way. Invite your grandma over and feed her dinner and then have your teenage son and feed him dinner. Who eats more? The teenage son is going to eat double the amount of calories per day that a 70 year old woman eats. And as we get older, we're not only going to have less mouths to feed, we're going to have mouths that don't eat as much. And also in your business, Cotton, a 21 year old or a newly minted professional that's 25 years old and they're making money, they go shopping and they buy clothes. Does a 70 year old go to the store or go on Amazon and buy fashion? No. So cotton demand goes down.
• 12:21
  Speaker B: So here, here's an agreement on my side which, you know, this may be controversial for you know, some people listening. This is just, we're just talking, don't get offended. So what, what's the solution? What like, okay, so we, we feel, I feel like it's like what you're saying about dairy. It, what it seems like to me is that size is always equated with efficiency. So I'm going to get bigger because I think if I get bigger I'm going to get more efficient. And I know you've mentioned this before, like when you reach a certain level of efficiency, every gain is extremely difficult. So you reach this kind of peak in efficiency and what it seems like is, is that middle, the middle of ag. That's I would say kind of, we're kind of in the middle and you have the people that are input side and then the people that are buying. So the people on either side of us are looking at this and where do they make their money? You know, it's going to be directly connected to us. And so how do we, how do you as farmers especially, we're also independent. So it's like herding cats to get everybody to agree to do something. Right. How do we combat the continuing rise and influence to grow more and then on the other side the push to sell for less.
• 13:51
  Speaker A: So the, your original question, I know that we're, and again, you know, my degree is in agricultural economics and I, we can pull up charts and do all that and, and this industry does frankly, I think too much of that. We, this is the old proverbial forest for the trees. We've got very well educated, successful, smart people that listen to rural radio. I just did when I was coming home from hiking in the mountain preserve with my dogs. And they're talking about current sales, they're talking about exports, they're talking about the markets, they're talking about where we're going to be in April 1st contract prices. Okay, great. Now let's go. April of 2030. Oh no, no, you can't sell Then I'm like, I'm not talking about actually a contract. I'm not talking about a contract to deliver. I'm talking about big picture here. And so big picture is this doesn't get better because we are so geared to over to producing. And by the way, if you're going to manage for either surplus or deficiency, you sure as hell would prefer to manage surplus versus shortage. Right? So, you know, because hungry people, hungry people riot.
• 15:03
  Speaker B: Hungry people are not peaceful people.
• 15:05
  Speaker A: Exactly. And nobody wants to be hungry. You know, there's the thing about folks like you and me that are from an ag background. I've seen grown men start to tear up when they see images of starving children. Because this is something that we, we, we are personally vested. Right. Nobody wants to see that. So what we got is this reality that we're really good at making stuff. We've been programmed to produce stuff and we produce it. So what happens? You said, what's the solution? Well, if you're a pure economist, you say the cure for high prices is high prices. The cure for low prices, low prices. Because then the marketplace catches up. The problem is there could be devastation, not just some pain, there could be downright devastation. You're talking about, you know, you and your husband are very frank about having to go through bankruptcy protection because agriculture is a low margin, capital intensive business. It has been for a long, long time. It's a consolidating industry. And the way it consolidates is people exit the market, sometimes voluntarily, sometimes because the bank tells them to. So that means, and to your bigger point, when this is something, I did an episode about this, I said when efficiency gains aren't enough. Because what we always do is we look at increasing supply and doing so with less budget, less dollars per unit of production, Right. So we've always addressed it as let's get more efficient. And efficiency gains certainly can help and keep you at, you know, break even or in a profit margin situation to a point. And then at some point it never addresses the demand side of it. And you'd say, well, I can't control that. Well, we kind of do. We invented the checkoff programs that are allegedly going to go out there and prune remote everything from beef to watermelons has a checkoff program. And part of it is supposed to be to, to increase demand. And you say, okay, at some point, all of addressing efficiencies of production, Tillery, do make it so that you maybe improve your bottom line to a point. But demand remains roughly stagnant. And I and I've pointed out. And it's going to begin declining. And what happens, I could see, I could see a push, maybe not right now, under the current Washington D.C. administration. I could see a push to double the amount of conservation reserve land. And I'm not in any way saying I'm a fan because somebody right now is mad. They're saying, damn it, he wants it. I said, no, I don't want anything.
• 17:36
  Speaker B: You have no idea. It is extremely dutchy subject around here. Yes, sure.
• 17:40
  Speaker A: Yeah. And I'm not, I'm neither pro nor anti. I'm just pointing out that, yes, there's about 26. 26. Right now there's about 26 million. So in the United States there's roughly 360 million acres that do all of the production. I'm not talking about rangeland. There's like another eight or nine hundred rangeland acres that are privately owned. And about 360 million acres produce everything. All of the, from the almonds to the canola to the corn to the sorghum. In your part of the world, it's all 360 million and there's like 26 million of conservation reserve program. Let's say you doubled that. That'd be big, right? That take, you know, that take another like 8% of the existing cropland. Of course, conservation land program payments tend to take the worst. Nobody in Champaign, Illinois.
• 18:30
  Speaker B: Right.
• 18:31
  Speaker A: Feet of topsoil is going to enroll a square, flat, 160 acre corner section into the CRP.
• 18:37
  Speaker B: No, we have a lot of CRP where we are. It fits really well here. Yes, well, not just the water. We have a lot of marginal. This is dust bowl territory, which, you know, side note, also was impacted by overproduction.
• 18:50
  Speaker A: Yep. So what? What is the answer? I could see a push to increase crp. I could see some pain and suffering where then just some acres go away. But again, we're so darn good at production that we're going to probably just continue to have the production. But the idea that. And this is really hard for ag people. I just had a guy I just met the other day and he's not an ag person. He suffers from the same dilemma. He's asking about pork because I'm going to be speaking at a pork industry event here this month. And he said, what's going on? How are they doing? I said, they're not doing very well at all. I said, they're about break even at best. He said, why? I said, because there's too much pork. He said, well, you need to Put more pork salesmen on the. On the street. I said, okay. And because that's been the ag mine, he's not an ag guy at all, but he's got the same mindset that, by God, we've made this stuff, we've produced this barge of corn. Now find somebody that'll buy it. And eventually you run out of. Everybody that wants corn has it. Everybody that needs a pork chop has everybody that can afford a pork chop. Right. Well, I'm sure we could go and sell pork in some part of a third world country, but they don't have refrigeration, they don't have infrastructure, nor do they have the money to buy it. And that's where we've got it. We've got this real dilemma, and it's been going on for a long time. Tillery and I'm from a dairy background, we had too much milk 40 years ago. They invented the dairy buyout program in 1986. We have. I was telling an ag audience, I said, do you remember government cheese? And you've got to be our age. You've got to be our age to remember. And so I've got an image of President Ronald Reagan holding up a big old hunk of cheese. And it was the 1983, 4 5, because the dairy industry was going broke. So the government kept buying milk. And then you can't, obviously, milk's a perishable product. So they turn it into cheese, which has a lot longer shelf life. And then they're storing it in caves. And I tell people this that are like 35 years old, and they're like, oh, you're making this up. Like, oh, no, trust me. Trust me. I am not. Go and look it up. So anyway, the government became the big buyer, the biggest buyer of milk to then turn it into cheese. And it wasn't just any cheese. It was really bad cheese.
• 21:06
  Speaker B: Oh, it. I mean, really bad cheese. This is a huge chunk of really yellow cheese. Butter's not yellow, by the way. Butter is not yellow.
• 21:19
  Speaker A: No, it was pretty, pretty bad cheese. And they, they, then they gave it away. So we got so much of this, it's sitting around in caves. We're storing it in caves. So pretty much for a long while, if you just showed up somewhere and was supposed to go to poor people school, launch programs, you know, free food programs, they gave away cheese everywhere they could for a long while. And so you'd say, well, it must have worked. No, it really didn't. What ended up happening was globally. We started finding places to get rid of milk and cheese and dairy products. And we. Cheese consumption, God knows it wasn't the government stuff, because it was such a bad product, has gone up. I don't know if most people realize this. We're eating about three times the amount of cheese that we did in the 1970s.
• 22:09
  Speaker B: Oh, my goodness. I didn't. I mean, I can see that, because I don't remember cheese being a thing when I was a kid other than that cheese. And I. And I also. Because I was definitely well into adulthood before I realized there was something besides big old yellow cheese.
• 22:24
  Speaker A: Well, of course, pizza. The pizza thing helped. And. And then, you know, charcuterie boards and wine. And like you said, though, now this is gonna. This is gonna be a problem because cheese went right along with the wine. And as you said, wine's down by a third. And I've got an episode with Agamerica Lending guy that's got a finger on the pulse of the whole country. And he said, yeah, remember that thing 10, 20 years ago that yuppies wanted to retire and have a vineyard in California? Nobody wants a vineyard in California now because we're glutted on wine. Too much wine, too little consumption.
• 23:00
  Speaker B: Yeah, we just. I mean, we. The industry here has been really good for Texas. It's. We have 5,000 acres of grapes that produce an economic impact of 20, 20 billion on the state. We have 5 million acres of cotton. It's a 24 billion impact because all of it stays in the state. We don't even export.
• 23:19
  Speaker A: So here's the thing. Here's what ag people and, you know, this. This is what happens. This is what happens to ag people. The ag person listening to this is going to say, oh, well, by God, if wine's good, let's go ahead. And. Because what. We are always our worst enemy. We look across the fence line and we see that somebody might be making a nickel. And so what do we do? We go and produce ourselves out of profit. And them. So ag's been doing this forever. Oh, that feed yard over there, hell, they're. They're making money off of all those Angus deers. You know what to do. Let's quadruple our production. And so that's what's going. That's what's happened on the wine front, making stuff. And this is a tough one, Tillery, that I'm beginning to tell my ag audiences. And again, the. Your initial reaction will be to take it personally and get mad. Making stuff is no longer a challenge. Okay, Damon, you just offended me. I'M a farmer. You trying to say this isn't hard? You like Michael Bloomberg who went on TV and said nothing's hard about farming. No, I didn't say that. Remember? He was very insulting. He said it doesn't require any gray matter. You dig a hole and you put a seat in it. I didn't say that. What I'm saying is with the technology that we have in the year 2025, the resources available to us, the great colleges like you're right there, Texas Tech or your arrival A and M or my home amount or Purdue University or name any of these wonderful land grant agricultural institutions, they are doing research. They are learning how to make stuff better. More efficient production of everything from slinkies to cars to steel to cotton is not the challenge that it was 20, 40 and 60 years ago. And that's where we must understand we are now in a situation of managing surpluses. And it's not just agriculture. Again, why do you think we put up these huge tariffs, 100 tariffs on electric vehicles from China? Because China can make the heck out of electric vehicles better than we can. Not better, more cheap than we.
• 25:24
  Speaker B: Cheaper. I'm not sure they're better.
• 25:25
  Speaker A: Yeah, yeah, yeah. Take it the right way. I was talking about from economic standpoint. So what are the. So what's their answer? Just like us, hey, we made all this cotton. Let's find somewhere that we can go and sell it. China says we made all these electric vehicles, by God, we don't need them. Let's go somewhere and sell it. That's what we got to understand. Making stuff, whether it's electric vehicles or cotton, is not the fundamental challenge today that it was as recently as a few decades ago. And that's why I can make the case that we are in permanent oversupply of just about everything.
• 25:58
  Speaker B: Yeah. And you know, one of the things that you've mentioned on a couple of podcasts and I've seen this like coming, is the value valuing crops based on their nutritional levels, certain specific kinds of nutrition that people are looking for. You know, and I've, it's so interesting to me because I have seen and heard science on both sides of this. If you take a tomato that's grown here, it has X amount of all these vitamins versus if you take a, you know, conventionally grown tomato, it has, you know, X amount less vitamins. You know, and so I don't, to me, the science is kind of conflicting to which that point you go, who's paying for it? But I know for sure. That if I grow a tomato, it's going to taste a lot better than if I get one at the grocery store. I don't need science to tell me that. Right. That, that type. Of course we already do that. We already do that in cotton, you know, and other commodities do that. You know, they're classed and they're, you know, get paid by how good quality your cotton is. But are you thinking that this, that kind of shift is going to happen globally? Like, because I know for sure, like the eu, like, they, they cannot eat stuff that we eat all the time. And I think like the red dye that, that all of a sudden FDA just decided was bad for us, which has been banned everywhere. I'm like, that had to been like, oh, RFK is coming. Let's be in this real quick. So that he sees that we, we're on his side.
• 27:32
  Speaker A: Yeah, I, I would say that when it's pretty obvious that we had red dye number three or whatever it was in our food for eons, and then once it looks like we got the RFK effect, okay, now we're going to get rid of it. So there was no question, they kind of, it was like feeling the footsteps or if you will, a preemptive. So to answer your thing about what will happen on nutritional quality, it will go with money. Okay? And for instance, if you are in sub Saharan Africa, you need calories so badly that it doesn't really matter. You don't care about the environment. You sure as hell don't care if it's GMO or non gmo. You don't even know, you know, that you're starving and that you, and your stomach hurts. You will eat whatever. And then you go to the opposite of the spectrum. United States, Canada, wealthy countries, Europe, countries like ours, where we have general affluence. And I know there are poorer people here. I know what inflation has done. We're up, you know, 40% across the board in the last five years. I get all that and I'm not in any way being calloused. I was raised very modestly and I, you know, I just went to school with the, you know, the kids that were on free lunches. Trust me, I understand all this and I, my heart goes out to them. But in general, we're obviously a very affluent customer base. And the places like the United States will be the ones that start to switch and put premiums on nutrient quality, nutrient density. And because we have the ability for traceability, because now we have traceability and we have the technology to do so and because we've already satisfied the first thing, meaning we're no longer starving. So now let's go to plan B, Plan C. So it's kind of like the old Maslow's hierarchy of needs. At the base, at the base of the pyramid is, you know, food and water and shelter. And then at the upper end of the hierarchy of needs are self, self fulfillment and things like this where we could go in places like the United States and. Yeah. Is it the poor among us? No, but the more affluent, the top half of our customer base pays a premium and says, I didn't just get the cheapest strawberries, I got strawberries that have a actual analysis.
• 29:54
  Speaker B: The nutrition. Yes.
• 29:55
  Speaker A: Yeah, yeah. And by the way, if you read like, you know, I've referenced it before, Mark Schatzker's book, the Dorito Effect. Yeah, he talks a lot about flavor, artificial flavor versus natural flavor. Flavor and nutrition are, are absolutely correlated. They're. Our bodies crave something, be it protein or, or something. Some, a lot of times we crave it and we associate with a flavor, but it's because our body needs something. You know the old thing pregnant women are craving, you know, eat pickles because their body needs sodium, what have you. Is it a similar thing? And you could make the case that we're going to get a better tasting product and a better nutrition oriented product. And we can do this because we've already got bulk quantity covered. We figured that out.
• 30:54
  Speaker B: Today's episode is brought to you by Evan Stone with Clear Rock Farm and Ranch, part of the Clear Rock Realty Group in Lubbock, Texas. Evan understands west Texas land, agriculture and what it takes to buy and sell farms and ranches in our unique region. If you're ready to make your next move, trust someone who knows the lay of the land. Visit Evan at clearrockrealty.com serving Lubbock and the surrounding communities, Clear Rock Farms and Ranch, your partner on the plains. So in, in that, okay, so when that, let's just say we're for 10 years down the line and that's like consistently something. You have a row crop farmer that's farming, you know, 2,000 acres. Are they diversifying into, hey on this, you know, 50 acres I'm going to grow, I don't know, eggplant that's traceable, that has, you know, it's going to go directly to Whole Foods or you know. Yeah, whatever.
• 31:54
  Speaker A: Yeah, I've, I've, I've, I've proposed a thought and again I'm out here Giving you a big picture again. Let's just start with the basics that we've got bulk quantity production mastered. That's why we're taking 40% of our corn and inventing laws that require us to burn it in our tanks with ethanol. And I'm not being mean, the ethanol people have been my clients and they understand it's demand that exists because of the renewable fuel standard. So start with that basics and then say, all right, what if we say, you know what, I'm that person in Champaign, Illinois. I can produce the heck out of corn and I got this prairie soil. I'm gonna go and produce basic corn and it's gonna go to the ethanol plant. And then I've got this 100 acres over here. This is corn. That's going to be corn for humans. And we've kind of had that before. Like you GRE food grade corn that went to tortilla shelves. But that was on a contractual arrangement. What if there's just a bifurcation of the market that says this corn is either for ethanol or cow feed and this corn is. So there's going to be some infrastructure changes because right now you take it all to the same elevator and you just dump it. Whatever. But look, as we already said cotton and you're the expert on cotton, not me, but I know that there's pima and there's fiber length and the strand. There's a different. All cotton is not created equally and you get paid differently and there's even different marketplaces. This type of cotton goes for this type of a product, this goes for the other. Milk does a better job than most of our commodities in terms of the. I'm talking about the infrastructure. You take in milk and you get a premium based on your solids, your protein content, your butterfat content, etc. So could we get there on more broad acre stuff is the question. And that would generally, if you're then farming for a different set of quality outcomes. I'm not saying what we produce now is of low quality. It's not. It's just that it's not been. We've not been rewarded for things like nutrient density. If we can put that in place, it would probably tend to lower supply because now we're pushing for nutrient quantity of.
• 34:21
  Speaker B: Right.
• 34:21
  Speaker A: This kernel of corn versus just how much test weight. Yeah, this is yield versus yield.
• 34:26
  Speaker B: Yeah. So we have locally a young man that's put in a stone mill and, and I know that like people are, you know, looking at growing locally certain, you know, different types of grain, heritage grains I think is what they call them, you know, and so not just him, but other, you know, there's other people that are wanting to contract those farms, you know, and I don't know, talk about confirmation bias. I guess my, my thinking has always been that's just going to have such a small footprint across agriculture that you just aren't going to see that. It's, it's just doesn't seem like, oh, it's going to be there in 50 years, 60 years, I mean. I see. But is there some of this, that kind of reverting back to some of that more local supply chain and that potentially staying?
• 35:25
  Speaker A: Sure. Well, obviously the big one then is of course the big picture is is it profitable? Right. You know, we can talk about sustainability. Well, sustainability is a cute word and we've been using it for more than a decade. But true sustainability means financial sustainability. Sustainable.
• 35:42
  Speaker B: That's right. It has to be.
• 35:43
  Speaker A: All three has to be. I mean look at your.
• 35:46
  Speaker B: Well that's where the word came from, right? Sustainability came from that triple, triple bottom line economics of people, planet and profits.
• 35:55
  Speaker A: The coffee shop closed minded, more bumpkin mentality. Farmer is going to haram for ground that that dumb kid over there with a stone mill, my God, you know he gonna make no money. And that person that we're talking about that's got their arms folded and judging is probably in business because of USDA policy versus being an entrepreneurial thinker. So entrepreneurial thinkers are going to look at how can I do this beyond policy that just rewards bulk commodity production and exceedingly low margin. The marketplace has to be there for it. And one good thing, this whole Covid thing, which we're now a five year anniversary of, proved to us that a consumer is more willing to go on their device and order some food product. Yeah, you ordered curtains. You ordered. You know, nobody was really into the go online and buy food. That has changed. Also the whole foods concept, the eat local, this stuff is sort of converging in a, in a, in a way that I guess there's more opportunity for these small brands. We talked about, for instance the Kraut. None of those, that guy I had on that talked about Kraut. They've got five different brands of Kraut. None of them are Vlasic. No, no, you know what I mean? None of them are Heinz. So there's an acceptance in the marketplace that is greater than it's ever been. Tillery for the Non, Heinz non, Non, Kellogg's, non. And that's Good for the thing you were talking about where value added processing.
• 37:45
  Speaker B: Well and you know, I, I don't, I guess the reason I'm, what I'm thinking about this is because we have really good friends that pioneered the organic cotton market and to which I was like this is a fad. It's going to go away. And you know, I think it's convert. I mean it's kind of coalescing into maybe a regen type idea. But it, it hasn't gone away. It has not gone away. More people eat organic food and, and to you, like, I mean I'm kind of the same mindset of like how much you know of this is marketing, you know. And, and but if, hey, if you can find a market, good on you, you know.
• 38:28
  Speaker A: Yeah. So when you look at where the, the, the future is, it's not going to be 100 of the market because almost nothing is. And our, our again our industry has always been so gung ho on production that we're about 5% promotion and we're about 1% promotion and 99 production and the mix needs to move. When you have a customer base, is everybody going to eat organic? No. But we know that around at least a solid 10% of the marketplace does and will and, and pay a premium for it. Now you can make the argument that eventually organic starts to lose its margin and becomes more commoditized because that's what usually happens with niches. But there's, there's a marketplace that looks very willing even right now we know things are a little tight because we've had such run up in inflation over the last five years. But go to the, go to the store and you'll still see value added brands, smaller brands. The bigger thing that you said that most of us aren't talking about is the oversupply. I just always say when, when I have the folding arms crowd that wants to just be, you know, commodity mindset, I say great, you, you, are you ready for another 80s? Because I, I could, I can give you compelling evidence that we're moving right into another 15 year window of, of below break even prices because of surplus globally.
• 40:07
  Speaker B: Yeah, well, yeah. Add to that, I mean also just the impact that Brazil particularly has had on the cotton market. I mean they're just, you know, number one goal is to figure out how to outproduce this, you know.
• 40:20
  Speaker A: Yeah. So they're usually dealing with, there's the argument about Brazil that says okay, well they don't have as rich of soils as the United States in General, I've not been there and I'm not an agronomist, but I've heard that argument. What they have though is a boatload of acres, right? They could and they can bring on more. One stat says that Brazil could bring on 90 million more without even touching the rainforest. 90 million more acres of that is currently savannah grassland. You know, that kind of stuff. You're talking about the equivalent of US corn is 90 million acres. And so there's that they're dealing with a cheaper, they've got economies of scale because there's generally no small farms in Brazil. And so you've got the fact that they're already scaled up and they've got the ability to do it on a cheaper basis. Right? We've got, we've got higher basis and then, I'm sorry, costs. And then you've got the fact that what's held them back as infrastructure. Well, what's China.
• 41:24
  Speaker B: Yeah, China's building it all up. Right?
• 41:26
  Speaker A: There you go. So yeah, then you say, okay, maybe the future looks like the United States is more high premium, high value. Maybe we have the traceability, maybe we have a few other categories. And we also, maybe we start more nationalizing our own consumption versus us. Just saying we're going to just find a barge to put this on and ship it overseas. We can see that Brazil is a lower cost soybean producer than us. And we say, but we're going to have high oleic soybeans, et cetera, et cetera. That maybe becomes our thing that we concede bulk. You know, we, we concede, we concede that. And, but we then go down the road of a more specialized, a more quality, a more nutrient oriented, whatever that should be.
• 42:21
  Speaker B: Right. Well, I've wondered too if like, you know, a lot of people think of industrial farming, they think, you know, that some big corporation owns, you know, huge hundreds and thousands and thousands of, you know, acres of land and they are, you know, growing this under slave labor and stuff. You know what I'm saying? You get the, you get the mindset, right? And so what I'm like wonder though is like if someone like say a big company whose name might start with a C says, you know, it really would be more economical for us if we literally just bought all this land somewhere where it's cheaper like Brazil or you know, and we're just gonna, we're gonna be vertically integrated. We're gonna, we're just gonna, we're, we're done. We're gonna just forget the, you know, 2,000, 3,000 acre farmer and we're just gonna grow it all ourselves.
• 43:18
  Speaker A: Sure. Well the, the argument for that is, you know, you hear that is why do it when the margin isn't made on the production? Yeah, I mean 20, 21, 22, 23 it was. But in general it's not been the production where the big money is made, it's all the steps afterwards. So in general you look at like the four big ABCD grain handlers, would it make sense for them, would they want to be in on the production? Well, the margin's made after it leaves the field generally. And also there's the diversification of risk. So that's.
• 44:01
  Speaker B: Yeah, that's true. Right. Yeah, that's true. They're not taking the risk and also they're paying so little for it. And you know, I was in D.C. and having a conversation with someone in the last administration about all the climate smart stuff and I, I said, okay, so my local sprouts, There is a $2 can of, of conventional soup next to a $4 can of organic soup next to a $7 can of regenerative soup. And, and like what that is, like no one even knows what that means. Right. But somebody's buying that and saying okay, you are, you're paying said processor, you're giving them money to pay the farmer to grow this and they're coming up with all of these new products which we don't even know, no one's even proven yet that like what's, what's healthier, you know, and, and so, and then these grants are going to end and the, you know, money that's being subsidized to the farmer to do this is going to go away. There's no label, like, there's no, there's no certification for this. They're going to keep these products on the shelf.
• 45:23
  Speaker A: Yeah, probably not. That's why, by the way, that's, that's the tough part about government. Government attempting to get into something that then created, branding, etc is probably short lived. But there is the marketplace obviously for that. I mean obviously look at organic. You know, USDA doesn't use usda. All they did was set the parameters on what it takes to be qualified as organic. And then there's the, then the market free market took over and it works. And there's people that are making a premium on doing that. Of course, again, most of agriculture, most of these people that you and I work with and for and have been around, we think that consumers think like us and it's usually A very foolish way to look at the marketplace, to assume that the marketplace, that consumers are like you, not necessarily remember ag people are cheap.
• 46:14
  Speaker B: Well, and I think that's such a good point too, because that is another thing that we do is we talk about how far removed people are from the farm, but we are far removed from, from, from them. And what other business do you ever go in where you do not do market analysis?
• 46:31
  Speaker A: Yeah, when I had a role once doing marketing for dairy entity and I had the dairy farm guy tell me that he didn't like, didn't like our, our ads. And I said, how many gallons of milk do you buy a week? And of course, when's the last time you went to a store? So himself hadn't been to a grocery store in multiples of years.
• 46:56
  Speaker B: Right.
• 46:56
  Speaker A: Nor had he bought a gallon of milk in three decades, but was questioning the marketing. So yeah, we love to carry on. Well, the average consumers, four generations removed from the farm and they don't understand we got to educate the consumer. And I always say, all right, well good, let's agree that you need to educate also. What are you talking about? Well, you have no idea. I live half the year in the suburbs of Phoenix. I'm sitting in my, my office in Arizona right now. These people that are next door to me, I would, I would say the people that are next door to me, you're in agriculture. You have no clue how they shop. You have no clue what they, what, what drives them. And that's, that's a very important point that you just made.
• 47:37
  Speaker B: No, that's, that is really. You know, and what I've actually just the, the podcast I recorded before this, we were discussing this same issue and how far removed we are. And I'm like, and, and what I see is that there's, there'll be, you know, someone, an influencer or someone that comes up and they're going to like, we're going to educate consumers. But pretty soon they are, they're so invested in the problems within agriculture that that's what they're addressing. And then all their followers become people in agriculture and not people outside of agriculture because they become invested in political things. And so they lose a lot of that following.
• 48:21
  Speaker A: Yeah, we're were huge on that. Oh, I'm an ag influencer. I, I am an advocate, which is not a real word, it's a made up word. I'm gonna, I'm, I'm gonna, I'm gonna tell, I'm gonna tell everybody about agriculture. Well, actually, you don't Because I just looked at your entire Twitter following, all 800 of them or whatever, all 10,000 of them. And every one of them works in our industry. And so you're telling them about, you know, you're, you're, you're going and telling ag about how good ag is. Fantastic.
• 48:48
  Speaker B: Singing to the choir.
• 48:50
  Speaker A: Yeah, right. Preaching the choir. We do that. I always pointed out if agriculture, if the industry was a person, we'd be the insane man at the park who's muttering to himself and throwing, you know, throwing swear words at the pigeons. Because that's, we talk to ourselves non stop. One of the things like you said, and I think that that's something I try to explain to my audience as best I can. Say, you know, you keep going on about we need to educate the consumer. I said, well, let's just educate you, huh? I know about Eric. Yeah, that's exactly what you know. You don't know about the mindset of a consumer. You think that they go to the store and all they care about is how cheap it is. If that was the case, Whole Foods would not exist. But as it is, there's hundred thousand whole food stores, right? And there's not one thing, there's not one skew, not one skew at Whole Foods that comparatively is less expensive than it would be at any other Costco, Walmart, Kroger, Biggly Wiggly, whatever. Not what heb. I guess HEB is the best.
• 49:53
  Speaker B: I feel so sorry for people that do not have heb. I know it is, it is literally an institution that, that it's, it's just wonderful. It's wonderful. I cannot say enough about H E B. So I love that they support, you know, our Texas, all of our Texas stuff too. But I, I think that we've been hard on, on our, our, our culture. And I want people to know like that I, I, you just like you. I too have, I mean like I'm, I'm deeply invested in the success of the, my neighbors and, and the farmers that are farming our land. And I want people to know and understand that. One thing I have a really wise friend who told me one time, like for every strength you have a coordinating weakness and you can't impact one without impacting the other. And I think that we are the most, we have more grit and determination and then the flip side of that coin is stubborn and unchanging. But you know, I think that the solution is like pushing into our strengths. You know, how, how do we get our industry to really push into their strengths? And, and do what we do really well and, and help to bridge the gap that we are seeing. You know, not, it's not just consumers. We have all of these silos. You know, this industry only talks to this industry and this, you know, school of education only talks to this school of education. They don't ever, you know, cross over. And that's one of the things that we've been focusing on is how can we, how can we cross over into other industries? Let us help you tell your story. You help us tell our story. You know, and I think those kind of partnerships are, are vital for the promotion of the things that, that our world needs, whether it's fossil fuels or corn. But we have to do it in a way. We've got to become more self aware as a, as just a group of people.
• 52:03
  Speaker A: Well, I mean that might happen, it might not happen, but I mean it would, as you said it would be a good first step. Would. Again, commodity mindset is very pervasive and I mean going back to how we started the whole entire show and, and it's got us to a situation of oversupply and we continue to believe that, that we're going to just find another place to buy our stuff, you know, develop new markets, etc. Well, that to a certain point, you know, Mexico, Mexico has come on as our number one ag customer, you know, where, where are we going to keep putting this stuff? So there's that and I mean, I'm still optimistic about the future, to be honest. I think it's going to be entrepreneurial vision from outside of agriculture that comes in and gives us good opportunity. And I'm talking about on the technology front. That's what's happened. But again, technology generally comes to ag and addresses production and processing and it says let's make it more efficient, do it for less. Okay, again, none of those took care of the demand, none of those sold more stuff. They just made it cheaper to produce stuff. When efficiency gains are no longer enough to attain profitability, then you've got to look at the next thing. Entrepreneurial vision coming in from outside of agriculture. You know, could be branding, it could be this whole front on nutrient density, it could be on this whole front of less but better, which is probably where. Not probably, it's where the rfk, I think he's a little misguided and he's an organic zealot, but he's, he's obviously out here beating the drum of saying we've got plenty of quantity. Look at the obesity rates. 42% of Americans are not just a little bit overweight, but obese. You're talking hundreds and 200 pounds overweight. So we've got quantity covered. Now let's go back to the drawing board and start working on nutrients and, you know, quality. And I think that that can happen. You know, let's face it. This is a fairly recent phenomenon. We were not 100. We were not 42% obese 30 years ago.
• 54:09
  Speaker B: Well, I. You know, I think it has. It does say, I guess. And one thing I can align with him on is I do. I mean, I do think that processed foods, like, we. They're not good for us. You know, I'm as guilty as anybody else because. But, you know, our society is. Is. We are. I feel like just culturally, as a society in the United States, we are so focused on being productive, working hard, you know, that. That. Not. It's not even discipline. It's just like being busy means we're being productive, you know, and we are so busy. And that is one of the things I noticed when we were in Europe and actually we visited with a man there, that he's a landowner in Texas and a European landowner, and someone asked him which one he liked better, and he said, well, people live a lot longer here, and it's. It's. It's because of. Of their lifestyle and how they eat, you know, and he's like, so, you know, it's. It's nice to be here. We enjoy being here, you know, and that's what I noticed, too, was just that, like, even. Just the level of stress that people seem to be carrying there is so, you know, little bit. It's. It is a cultural issue that we are all so busy and. And how. How you exit that, I have no idea, because I would like to figure that out because I don't know. I don't know. You know, I'm. I'm as busy or busier than anybody else, so pointing fingers at myself saying, you know, part of the. Part of the problem is that we live in a society where processed food for a lot of people is the only way to. To actually literally have time to eat and function. And we have. We haven't taught people how to cook. Now, I do think that Covid brought a resurgence of. Of some of that, you know, but.
• 56:05
  Speaker A: Yeah, you get me. Until you're getting me kind of concerned, because now somebody's gonna listen to this and say that we need more government programs to teach people how to. And, no, we need. We need less of all that. We just, you know, we don't.
• 56:16
  Speaker B: Well, you know, we already have that. It's called extension. And we just, you know, we haven't. We. That, that's who was on my, you know, just recorded right before this. And in that whole, like so much of, of that original type of support that they gave just kind of fell out of fashion. But it's coming back in, you know, and so I, I bet we'll see them pick, pick that up. But it's already there. We don't have to have program for it. I just, if it doesn't get cut, we'll see. Or as you said the other day, like the blowtorch, the blowtorch method, if it withstands the fire. So anyway, well, this has been as wonderful as I thought it would be and I'm just super grateful that you, you came on and enjoyed the conversation. I hope it wasn't discouraging to our ag friends. I hope it's encouraging like for them to be able to be thinking like, what, what next? What's going to come next? What can I do that will be different, you know, and, and I hope that, that they're able to kind of begin to embrace some of the, maybe some more foreign ideas than we have in the past. But I appreciate your time and appreciate what you do for the industry and I can also see how you're a comedian first. I just learned that in one of your podcasts though. Like, I think if, if people are not listening, they definitely need to be listening. Business of agriculture. I know you're really pushing your YouTube channel right now. So what, what are, where do they go to find your YouTube video?
• 57:46
  Speaker A: It's real easy. Just go on YouTube and type in Damien Mason, D A M I A N Damian Mason and hit subscribe. It's free and you can see all my stuff, my video commentary of me on my hikes where I talk about big picture ag stuff and, and then of course the Business of agriculture show, which you're a fan of. And I appreciate you having me on. I appreciate you having me on here on the conservation stories.
• 58:08
  Speaker B: Yes. Thank you so much, friends. Thanks for joining us again and we are excited about this podcast and if you have enjoyed it, I hope that you will like and share it with your friends. We will visit with you again on another episode, Conservation Stories.