You might counter that modern farms have massive hidden internal costs in depreciation of soil quality, with long term yields being suppressed, and vulnerability to drought massively raised.
Hence these better farms should do much better on financing costs.
And huge not-so-hidden costs in terms of chemical inputs. There are a number of stories in Gabe Brown’s “From Dirt to Soil” (well worth a read if you’re interested in large scale regenerative agriculture) that illustrate how financially precarious modern industrial ag can be.
Search for videos with pattern "Gabe Brown" or "Treating the farm as an ecosystem" (a 3 part series, first one already posted here by someone), Masanobu Fukuoka (posted too), Jean-Martin Fortier / Les Fermiers video series and other videos by him, The Market Gardener book by him, Richard Perkins farm / Ridgedale permaculture in Sweden, Aanandaa Farms in North India near Chandigarh, Clea Chandmal short video about how forests harvest maximum sunlight and how that can be copied by farms, Geoff Lawton work on permaculture in Australia and consulting about it worldwide, etc., Elaine Ingham video "The Roots of your Profits", etc.
I’d give this comment more upticks if I could. The hidden internal costs of the modern farm is the unit scale example for all our environmental problems. I’d add that many of these costs exist beyond the discount horizon and are therefore not factored into land-use decisions.
That's the kicker, isn't it? Their output will be lower than an industrial farm of equal size. However, the quality of product will be higher (this is an assumption btw), and they will be able to charge more for the product for being grown organically and using less pesticides and the like. There may also be subsidies involved, depending on the location.
But profit should not be the goal. It's necessary, but it shouldn't be the target.
I'm not sure it is a goal. It certainly hasn't been the goal of most farmers since I started farming, and I am not sure it ever was. The goal of most farmers is to build wealth. Much like tech startups, they are willing to forego profit in the name of growth. Asset rich, cash poor is the name of farming.
> It's necessary
It's more or less necessary for a farmer to find profit somewhere, but that doesn't have to come from the farm. Most farmers also have off-farm jobs.
Hence these better farms should do much better on financing costs.